LNG Production Sees Brighter Future in North America

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Researched by Industrial Info Resources (Sugar Land, Texas)--As the new year begins and oil prices prices continue to rise, energy projects are picking up. Among these are several planned liquefied natural gas (LNG) projects that have been on again, off again for a few years. The main hurdle these projects face is the commitment from off-takers for the LNG produced, which usually applies to a 20-year period.

Currently, 60 projects with a combined investment of more than $85 billion have the potential to begin construction in North America this year. These range from the large, multi-billion LNG production and export terminals to the smaller, micro-LNG plants, as well as LNG peak shavers.

The majority of these projects are in the U.S. Southwest region, where 25 projects worth more than $40 billion are planned to begin construction in Texas and Louisiana. These two states are the most popular due to their onshore and offshore natural gas access, established infrastructure and ports.

In Lake Charles, Louisiana, Magnolia LNG received approval from the Federal Energy Regulatory Committee (FERC) in the fall of 2016, followed by approval from the U.S. Department of Energy (DOE), to export to countries that do not have a free trade agreement (FTA) with the U.S. The site, which has an initial investment of more than $2 billion, will produce and export 4 million metric tons per year of LNG, utilizing two production trains. A final investment decision is expected in the second half of this year, with construction set to begin before the end of 2017.

In Texas, a site in Brownsville is being planned by Texas LNG that will initially produce and export 2 million metric tons per year. This site will have an initial investment of $1.5 billion. Texas LNG has formally filed with FERC and is anticipating funding this year.

Western Canada is in second place among North American regions, with 11 projects planned to begin construction this year with a combined investment value of close to $25 billion. These projects are in British Columbia, where investors need national and province permits, as well as permission from First Nations. Woodfibre LNG has been granted financial approval to construct an LNG production and export facility in Squamish, British Columbia. The first phase is valued at approximately $1 billion and will produce 2.1 million metric tons per year of LNG for export.

Atlantic Canada and the U.S. West Coast follow with three and four projects, respectively, that are planned to start construction this year with a combined investment of $15 billion. Pieridae Energy Limited (Halifax, Nova Scotia) is proceeding with the permitting process for a 5 million-metric-ton-per-year LNG plant in Stormont, Nova Scotia. Also known as Goldboro LNG, construction on the site is expected to commence in the latter half of 2017. The first phase is expected to cost $5 billion. Goldboro LNG will require natural gas to be sent from the U.S. to supplement its Canadian supply; the DOE already has approved the natural gas supply, and has approved the produced LNG to be exported to FTA and non-FTA countries.

Smaller projects, such as the micro-LNG and peak shaver plants, are planned across the U.S. These sites are used by fleet transportation and utilities. The micro-LNG plants produce 100,000 to 300,000 gallons per day of LNG and, more often than not, service a fleet vehicle company, such as FedEx or UPS, or a large trucking company. Some are designated for maritime transportation, while others service drill operators. The peak shavers, which are owned by utility companies, are used to fuel the utilities' fleet vehicles and are delivered to customers out of reach of existing pipelines. Some peak shavers are connected to the utility's grid and have vaporization units that convert the LNG to a gaseous state, which is fed into the pipeline.

Oil and gas projects can be heated up and activated just as quickly as they can be cooled and set on ice. Since the fourth quarter of 2016, a growing number of companies have announced a resurgence of investment in oil and gas projects. These include drilling rigs that have been mobilized back to the fields; an increase in gathering-lines construction; and the approval and construction of pipelines, planned processing facilities and storage terminals, including natural gas and NGL caverns. As long as the pricing stays in the $50 to $60 range and shows a potential to rise, more companies will be moving forward with investments in the oil and gas sector. This will continue as the U.S. establishes itself as a major exporter of oil and gas, particularly LNG, in the coming years.

Industrial Info's Oil & Gas experts will discuss market trends and spending outlook for that industry at Industrial Info's upcoming Market Outlook & Networking Event at the George R. Brown Convention Center in Houston, Texas, on January 17, 2017. The event is complimentary but space is limited, so be sure to RSVP today!

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.