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Tough Competition Ahead for Cheniere Energy

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Projected US liquefaction capacity

US (SPY) (SPX-INDEX) liquefaction capacity is expected to rise manifold in coming years. There are six LNG (liquefied natural gas) facilities under construction, including Cheniere Energy’s (LNG) two facilities at Sabine Pass and Corpus Christi. The other four remaining facilities are Kinder Morgan’s (KMI) Elba Island, Freeport, Cameron, and Cove Point LNG terminals. Kinder Morgan started construction after receiving the authorization from the US Department of Energy in December 2016.

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liquefaction capacity
According to the EIA (U.S. Energy Information Administration), “Liquefaction capacity from all projects currently under construction is projected to expand by 1.4 Bcf/d[1. billion cubic feet per day] in 2017, 1.9 Bcf/d in 2018, and 3.8 Bcf/d in 2019. Once all of these liquefaction projects become operational, the United States is projected to have the third largest liquefaction capacity in the world at 9.4 Bcf/d, after Australia and Qatar.”

Cheniere Energy currently has long-term contracts for 87% of the expected LNG production from its seven trains. The company’s uncontracted capacity might face tough competition once peers’ liquefaction projects come online. However, the company is not expected to face much competition in the next two years, given the timeline of the projects.

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