Proposed U.S. LNG Bunkering Hub Gets Offtake Arrangement

Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)

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Summary

The developers of a planned Galveston LNG bunker port signed an offtake agreement with an international shipper. The facility has permits for construction.

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Galveston LNG Bunker Port Secures Delivery Arrangement

Developers of a proposed bunkering port for liquefied natural gas (LNG) off the coast of Texas announced they have signed fueling commitments with an international shipper.

Galveston LNG Bunker Port (GLBP), a joint venture by Pilot LNG (Houston, Texas) and Seapath Group (New York, New York), said it signed a "heads of agreement" with an undisclosed international shipper to deliver LNG as a fuel from a planned facility in Galveston Bay. A "heads of agreement" is a non-binding document that outlines the basic terms of a tentative transaction.

"This commercial milestone builds on the recent announcements that the GLBP project has secured all necessary major state and federal permits for construction and has selected its EPC (engineering, procurement and construction) contractor," the company said last week. "Collectively, these achievements underscore GLBP's credibility and project maturity to deliver essential LNG bunkering infrastructure and strengthen U.S. maritime fuel resiliency."

GLBP (Houston) by May had secured the permits necessary for construction from the U.S. Army Corps of Engineers and U.S. Coast Guard, according to its developers.

The developers have yet to announce a financial investment decision (FID) on the project.

The facility would be able to process as much as 66 million cubic feet per day of natural gas to yield 500,000 metric tons per annum of gas in the liquid form for shippers.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production Project and Plant databases can learn more about the bunkering terminal--including capacities, investment values and necessary equipment--in a detailed report and plant profile.

Industrial Info has tracked the project since 2020. The project has faced a number of delays.

Current plans call for the project's completion in 2027. It would be the first dedicated marine bunker port on the U.S. Gulf Coast for LNG, according to its developers.

By the Numbers

• 2027 is when global maritime shippers need to clean up their act
• 500,000 metric tons per annum of LNG is expected from Galveston
• 2030 could be when LNG markets are oversupplied

U.N. Wants to Clean Up Shipping

The International Maritime Organization (IMO), a U.N.-backed agency overseeing the global shipping industry, in April drafted legislation that would outline new fuel standards and global-pricing mechanisms for emissions. Set for implementation in 2027, the standards would apply to vessels of more than 5,000 gross tonnage, vessels that are responsible for more than 80% of the global shipping emissions.

The agency already has standards that mandate reductions in sulfur-dioxide emissions and other pollutants. To meet those standards, shippers have installed onboard devices called scrubbers that clean the ship's exhaust or otherwise looked to fuels other than the sulfur-rich heavy fuel oil (HFO) more commonly used today.

Use of LNG is seen as one way to help meet the new fuel standards.

LNG is cooled considerably, lowering the overall volume. And because it's derived primarily from methane, which is made up of carbon and hydrogen atoms, it has no significant sulfur content, satisfying some of the IMO's mandates.

U.S. Already Ahead of the Global LNG Pack

The U.S. is the world leader in LNG exports, though domestic markets may be strained by the mounting commitments. The International Energy Agency (IEA) said as much as 1 trillion cubic feet per year is expected annually to 2030, possibly leading to a supply glut that would discourage investments.

The exceptional growth spurt, the IEA said, could lead to construction and other delays for projects not yet shovel-ready. The drain on supplies, meanwhile, is expected to drive the wholesale price of natural gas higher, potentially leading to higher consumer bills during what's been described as a U.S. affordability crisis.

Henry Hub, the U.S. benchmark for the price of natural gas, was trading at $4.10 per million British thermal units (MMBtu) at the start of trading Friday. Henry Hub was closer to $3.10/MMBtu at the same time last year.

Key Takeaways

• Galveston bunkering port one step closer to reality
• LNG helps satisfy U.N.-backed guidelines in cleaner fuels
• More LNG commitments from the U.S. could hurt domestic markets

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).