Cheniere Eyes FID for Sabine Pass LNG Terminal Expansion in Louisiana

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

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Summary

A planned expansion at Cheniere's Sabine Pass LNG export terminal will be supported by engineering firm Bechtel. A final investment decision could be made by early next year.

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Market Dynamics Warrant More LNG

With global supplies of liquefied natural gas (LNG) at a premium due to conflict in the Middle East, Cheniere Energy Incorporated said it could be ready for a final investment decision (FID) on expansion of its Sabine Pass facility in Louisiana by next year. According to Industrial Info Resources data, there are 15 active capital Cheniere projects, with a total investment value of $39.5 billion.

In its NATGAS Today report for Thursday, IIR Energy found Sabine Pass received 4.7 billion cubic feet (Bcf) of feed gas to turn into LNG for exports. The facility is currently the largest operational facility of its kind in the U.S. The IIR Energy graph below shows Sabine Pass feed gas levels from 2019 to the present.

The LNG exporter said Thursday it had signed an engineering, procurement and construction (EPC) contract with Bechtel to support the first phase of the planned expansion at Sabine Pass. The project involves construction of a seventh liquefaction unit, or train, along with supporting infrastructure and tie-ins to the existing terminal as part of the expansion. Once completed, it would add about 6.5 million tons per annum (MTPA) in LNG export capacity, according to Industrial Info Resources data.

Maria Sanchez, a senior natural gas analyst at IIR Energy, said, "The fact that Cheniere is already awarding EPC work before final FERC (Federal Energy Regulatory Commission) approval highlights the industry's confidence in future LNG demand growth."

She added, "LNG exports remain one of the strongest structural demand drivers for U.S. natural gas and continue to support a constructive long-term outlook for gas prices."

Cheniere said it expects to reach an FID on the first phase of the planned expansion by early next year. That decision depends, among other things, on securing federal approval to export LNG to countries without a U.S. free-trade agreement.

The seventh liquefaction unit would be part of larger plan to develop up to three liquefaction trains. Including estimated debottlenecking opportunities and supporting infrastructure, the plan could boost total peak production capacity at Sabine Pass by as much as 20 MTPA, according to Cheniere.

Subscribers to the Industrial Info Resources Global Market Intelligence (GMI) Oil & Gas Production Project Database can view a detailed project report of the expansion.

Cheniere Chief Executive Officer Jack Fusco said the expansion comes at a time when "market dynamics highlight the criticality of secure supply in the global energy system."

"We look forward to bringing this much-needed LNG capacity to the market and providing our customers with reliable and flexible LNG from Train 7," he said.

In February, Cheniere marked the 10-year anniversary of the first LNG exports from Sabine Pass.

Global Markets on Edge

Global supplies of LNG are at a premium due to conflict raging in the Middle East. Qatar, one of the world leaders in LNG exports alongside the U.S., saw its volumes curtailed by a drone strike on its facilities earlier this year.

Qatar Energy estimated that about 12.8 million tons per annum (MTPA) of LNG would be sidelined for as long as five years because of the attacks. That's a little less than half of the export capacity of Sabine Pass.

IIR Energy on Thursday reported that natural gas production was suppressed, likely by regular maintenance, though exports remained strong. Piped deliveries to Mexico are running at around 8 Bcf, just shy of the all-time high of 8.4 Bcf.

Exports from the California border led the charge, with deliveries up 100 million cubic feet per day above year-ago and month-ago levels.

Overall levels of feed gas supporting LNG exports are well above year-ago levels, although that's supported by the start of new facilities along the Gulf Coast this year. As of Thursday, IIR Energy estimated the total amount of feed gas at 17.5 billion cubic feet per day (Bcf/d), a 22% increase from the same period last year.

Key Takeaways

• Bechtel on board, but FID awaits.
• Cheniere also needs federal approval for non-FTA exports.

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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) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).