Cheniere Energy's Sabine Pass LNG Train 3 Project on Verge of Completion

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Researched by Industrial Info Resources (Sugar Land, Texas)--Cheniere Energy (NYSE:LNG) (Houston, Texas) is commissioning its 4.5 million-ton-per-year Sabine Pass Train 3 liquefied natural gas (LNG) liquefaction facility in Louisiana, company executives said Tuesday, with expectations to have it online in March. The $2.5 billion project increases total LNG capacity at the facility to 13.5 million tons per year.

Industrial Info is tracking 20 active Cheniere Energy Projects worth more than $40 billion. Cheniere expects both Train 3 and Train 4 at Sabine Pass to come online this year, bringing total annual capacity to 18 million tons. The company's goal is to bring new LNG trains online faster and more efficiently, executives said during Cheniere's fourth-quarter 2016 conference call. Train 3 loaded its first cargo in January, according to the company. For more information on the Train 3 project, see Industrial Info's project report.

Chief Executive Officer Jack Fusco said that Sabine Pass LNG trains 1 and 2 were both operational for nearly all of the just-ended quarter, as cooler weather and continued fuel displacement stimulated global LNG and drove prices higher, despite a supply surge. Cheniere delivered 24 commercial cargoes from Sabine Pass in the fourth-quarter. For all of last year, the Sabine Pass operation loaded and exported 56 commercial cargoes to 17 countries, the company reported. For related information, see October 14, 2016, article - Cheniere Gets OK to Double LNG Export Capacity at Sabine Pass Facility.

Cheniere saw more than $500 million in LNG revenue in fourth-quarter 2016. Chief Commercial Officer Anatol Feygin said during the earnings presentation that there was more than 28 million tons of global demand growth in the just-ended quarter, with countries such as China and India underscoring their demand potential. Demand from India was up 4 million tons year over year, Feygin said, while China saw a 60% rise in LNG exports in the fourth quarter.

Cheniere also has two LNG train projects, each capable of producing 4.5 million tons per year, under construction in Corpus Christi, Texas. Train 1 is expected to reach completion in late 2018, and Train 2 is expected to see completion in 2019. Each of the projects are valued at $5.5 billion. Fusco said he saw no reason why a Train 3 project at Corpus Christi isn't the next project to receive a final investment decision.

Cheniere is also still mulling a mid-scale LNG project, with the results of a project assessment expected in mid-2017. Fusco said development of such a plant at one of Cheniere's existing facilities would be "superior to greenfield development," Fusco said. For more on the project, see Industrial Info's project report.

Cheniere Energy reported net income of $109.7 million for fourth-quarter 2016, compared with a net loss of $291.1 million in fourth-quarter 2015. For all of 2016, the company reported a net loss of $610 million, an improvement over a net loss of $975.1 million in 2015.

With its energy security, price transparency and infrastructure advantages, the U.S. is well-poised to take advantage of the next phase of global demand for LNG, according to presenters at Industrial Info's recent 2017 Industrial Market Outlook in Houston, Texas. Shane Mullins, Industrial Info's vice president of product development for energy markets, said the next phase of demand will begin sometime in the early to mid-2020s, when the global supply and demand balance improves to the point where the commissioning of new LNG trains could be justified. For related information, see January 30, 2017, article - Industrial Market Outlook: More LNG Project Spending On Horizon.

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