South Korea Energy Companies Eye Participation in U.S. LNG Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--As President Donald Trump calls for a new era of U.S. energy dominance, South Korea energy companies have announced a slew of memorandum of understanding (MOU) agreements to promote the development and export of U.S. liquefied natural gas (LNG).

As part of the administration's Energy Week events, Trump said the "golden era of American energy" is under way. "We will be dominant. We will export American energy all around the world, all around the globe."

According to the Department of Energy (DOE), gains in U.S. natural gas production are expected to continue, with the U.S. Energy Information Administration's latest Short Term Energy Outlook projecting an average dry natural gas production rate of 73.3 billion cubic feet per day (Bcf/d) in 2017, the second highest on record. As a result, the U.S. is transitioning to become a net exporter of natural gas, according to the DOE. The department has authorized 21.33 Bcf/d of natural gas exports from planned facilities in Texas, Louisiana, Florida, Georgia, Maryland and the Gulf of Mexico.

In keeping with the Energy Week festivities, Korea Gas Corporation (KOGAS) (Seoul, South Korea) announced last week it would look at participating in the Lake Charles LNG Liquefaction facility project in Louisiana. Lake Charles LNG is a joint venture of Energy Transfer Partners LP (NYSE:ETP) (Dallas, Texas), Energy Transfer Equity LP (NYSE:ETE) (Dallas) and Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands).

Energy Transfer entered into a memorandum of understanding with KOGAS to study the feasibility of joint participation in the project. BG LNG Services, a subsidiary of Shell, will also participate in the study. The first phase of the project, which would have a production capacity of 5.5 million tons per year of LNG, could begin construction in the fourth quarter of this year, taking about three years to complete. This could be followed by two additional production trains, construction of which could begin in 2018 and 2019. The projects have a combined total investment value (TIV) of more than $9 billion, with each train contributing about $3 billion in TIV. For related information, see May 19, 2017, article - LNG Helps Lead Louisiana to $19.7 Billion in Planned Second-Half 2017 Project Starts.

On Thursday, the DOE said it approved two long-term applications to export additional liquefied natural gas (LNG) from the proposed Lake Charles LNG Liquefaction facility. The DOE authorized an additional export of 0.33 billion cubic feet per day (Bcf/d). The DOE previously authorized the export of up to the equivalent of 2 Bcf/d of natural gas from the facility to countries with and without a free trade agreement (FTA) with the U.S. For more information, see Industrial Info's project reports.

KOGAS also signed an MOU with subsidiaries of Sempra Energy (NYSE: SRE) (San Diego, California) and Woodside Petroleum, Ltd. (Perth, Australia) regarding the development of a proposed LNG liquefaction project in Port Arthur, Texas. The MOU provides a framework for cooperation and joint discussion by the parties regarding key aspects of the LNG project, including engineering and construction works, operations and maintenance activities, feed gas sourcing, offtake of LNG, and KOGAS as a potential purchaser of LNG from, and equity participant in the project. The proposed Port Arthur LNG project includes two natural gas liquefaction trains, LNG storage tanks, marine berths and ancillary facilities. Each of the trains would process 700 million standard cubic feet per day of natural gas for export. See Industrial Info's project reports for Train 1 and Train 2.

Another MOU was signed Wednesday by KOGAS and the Alaska Gasline Development Corporation (AGDC) that involves the potential of joint development of the proposed Alaska gas pipeline and LNG infrastructure project, which includes a $4 billion, 733-mile line from Prudhoe Bay to Cook Inlet, a $350 million compressor station in Prudhoe Bay and a $140 million compressor station in Wiseman. For more information on the proposed pipeline, see Industrial Info's project report.

Meanwhile, Reuters reported that South Korean energy conglomerate SK Group signed an MOU with General Electric Company (NYSE:GE) (Boston, Massachusetts) on Thursday to jointly develop U.S. shale gas fields.

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