Cheniere's Sabine Pass LNG Plant Expansion Makes Headway

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Researched by Industrial Info Resources (Sugar Land, Texas)--Last week marked important progress in Cheniere Energy's (NYSE:LNG) (Houston, Texas) project to build a fifth and sixth liquefaction train at its Sabine Pass liquefied natural gas (LNG) production terminal in Cameron Parish, Louisiana.

On Tuesday, June 23, the U.S. Federal Energy Regulatory Commission (FERC) rejected a challenge from the Sierra Club (San Francisco, California) regarding the expansion project. The environmental group claimed that construction of the two trains would lead to an increased in natural gas production (hence more pollution) and higher natural gas prices. FERC denied the Sierra Club's request, saying that it had no authority over upstream natural gas production. The decision paved the way for Cheniere to make a final investment decision on the project, which the company would not do until the matter with the Sierra Club had been cleared.

On Friday, June 26, Cheniere announced that it was arranging approximately $5.8 billion in financing for the construction of Train 5 and that once the financial arrangements were in place, it would tell engineering, procurement and construction firm Bechtel Oil, Gas and Chemicals Incorporated (Houston, Texas) to proceed with construction.

Also on Friday, the U.S. Department of Energy issued its final authorization for Cheniere to export an additional 1.38 billion cubic feet per day (Bcf/d) of natural gas to countries without a free trade agreement (FTA) with the U.S. In 2012, the agency authorized the facility to export an initial 2.2 Bcf/d to non-FTA countries. The latest permission allows the Sabine Pass facility to export up to 3.58 Bcf/d for a period of 20 years.

In a recent press release discussing the financing of the two additional trains, Cheniere stated that it had entered into six sales and purchase agreements for the LNG production of trains 1 through 5 for an aggregate of 19.75 million tons per year. The company reported that as of May 31, construction of trains 1 and 2 was approximately 90.8% complete. The first train is expected to be completed late this year, paving the way for Cheniere to be the first large-scale exporter of U.S.-produced LNG.

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