Texas Company May Export Natural Gas

PITTSBURGH – By the end of 2015, natural gas produced in the Ohio Valley could be on its way to such locales as Spain and India via Cheniere Energy’s liquefaction plant under construction along the Gulf Coast in Louisiana.

Houston, Texas-based Cheniere is building the massive $2.3 billion facility on 1,154 acres of marsh land along the Sabine River in Cameron Parish, La., two miles north of the Gulf of Mexico. It will be the country’s first “bi-directional” terminal, meaning liquefied natural gas, or LNG, can be both imported and exported there.

As development of shale formations such as the Marcellus and Utica ramps up, Cheniere officials believe the supply of gas will overwhelm domestic demand for the resource.

“Without LNG, there’s not enough demand to consume all the gas that will be produced,” said Corey Grindal, Cheniere’s vice president of supply, during the recent DUG East Conference and Exhibition in Pittsburgh.

When complete, the Sabine Pass terminal will be capable of processing up to 3 billion cubic feet of natural gas per day. The facility will consist of up to six “trains,” each about three football fields long. Four trains are already permitted, with the first two expected to come online in late 2015 and the next two in 2016 or 2017.

Although the facility is well-situated to take advantage of the nearby Barnett, Woodford and Fayetteville shale plays in Texas, Oklahoma and Arkansas, it will also accept gas via interstate pipeline from the Marcellus and Utica shales to the northeast.

Grindal said Cheniere already has locked up purchase agreements with a number of companies worldwide, including BG Group in Singapore, Gas Natural Fenosa in Spain, Korea Gas Corp., GAIL Unlimited in India and Centrica PLC in Great Britain. These are “take-or-pay” style contracts, meaning the purchaser agrees to accept a certain quantity of product or pay a financial penalty for any product they do not take.

Worldwide demand for LNG is expected almost to double by 2025, particularly in Europe, Asia and Latin America.

“The countries that are buying LNG, they have no natural resources,” Grindal said.

Grindal noted Cheniere is committed to purchasing from American manufacturers, even when doing so may not be the least expensive route.

Federal Energy Regulatory Commissioner Tony Clark, whose agency oversees permitting processes for facilities such as the Sabine Pass terminal, agrees that LNG exports are poised to become big business in the years ahead.

That, Clark said, is a major shift from a bit of conventional wisdom held for many years – that America is destined to import more natural gas than it exports.

“That assumption has proven demonstrably false,” he said.

In addition to the Sabine Pass facility, there are 13 more LNG export terminals in various stages of the permitting process, according to Clark.