Coming Up, Part 5 - The Experienced, Deep-Pocketed Team Behind the Golden Pass LNG Project

It’s crunch time in the race to advance the next-round of liquefaction/LNG export projects along the U.S. Gulf Coast to a Final Investment Decision (FID). And if we’re to assume that only a small number of these multibillion-dollar projects will get their financial go-aheads, it would seem eminently reasonable to put a win-place-or-show bet on a joint venture that includes the world’s leading LNG producer (by far) and one of the largest U.S. natural gas producers — oh, and the partners have very fat wallets too. Size and money aren’t everything, of course, but as we discuss in today’s blog, the team behind the Golden Pass LNG project plans to build its liquefaction trains at the site of an existing LNG import terminal with strong interconnections with coastal pipelines already in place.

2019 will be a pivotal year for the second wave of U.S. LNG export projects. Global demand for LNG continues to rise, and LNG marketers and customers — acutely aware of how much it takes to build new liquefaction capacity — are eager to line up the incremental LNG supply they will need in the early to mid-2020s. Want proof? Royal Dutch Shell, the lead partner in the LNG Canada project, on Tuesday (October 2) announced a FID on the 14-million-metric-tonnes-per-annum (MMtpa) liquefaction/export terminal in Kitimat, BC. (The project’s other partners are Petronas, PetroChina, Mitsubishi and Korea Gas.)

As it turns out, the U.S. is in many ways one of the best places in the world to locate a new liquefaction/LNG export project. There’s ample natural gas supply in the Marcellus/Utica, Permian and other U.S. plays, an extraordinary network of gas pipelines in place, and a skilled workforce capable of executing these very complicated facilities. By the end of next year, there’s a good chance that at least one new liquefaction/LNG export project will get the financial go-ahead and start construction. More may follow in 2020.

This is the fifth episode of our blog series on the projects that appear to be in the running. In Part 1, we reviewed the dramatic shift in U.S. expectations regarding LNG a few years back. Through the 1990s and the first two-thirds of the 2000s, the general thinking was that U.S. gas output had peaked, and that over time, increasing amounts of LNG would need to be imported to keep pace with gas demand. It became clear by 2010-11, however, that the Shale Revolution — and the resulting boom in U.S. gas production — had eliminated the need for LNG imports. Almost overnight, many of the companies that had just finished building LNG import terminals started exploring the possibility of adding liquefaction plants at those sites to export LNG instead. Since then, six liquefaction/LNG export projects advanced to FID and construction — and five liquefaction trains (four at Cheniere Energy’s Sabine Pass in southwestern Louisiana and one at Dominion’s Cove Point in Maryland) with a combined capacity of more than 23 MMtpa are up and running. (We track the status of LNG projects with FIDs in RBN’s newly launched LNG Voyager Report — click here for more information.)

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