Developers are scrambling to advance the next round of liquefaction/LNG export projects, primarily along the U.S. Gulf Coast. Earlier this month, LNG marketing behemoth Total SA signed initial agreements with Sempra Energy that would support Sempra’s efforts to add more liquefaction capacity at its Cameron LNG project in southwestern Louisiana and to build a liquefaction plant at its Energía Costa Azul LNG import terminal in Mexico’s Baja California state. A few days later, Total, Mitsui & Co., and Tokyo Gas signed heads of agreements for the entire capacity of the Mexican liquefaction project, propelling that project to the fore. Sempra also continues to pursue a third project: Port Arthur LNG. Today, we continue our series on the next round of liquefaction/LNG export terminals “coming up” with a look at Phase 2 of Cameron LNG, as well as Energía Costa Azul and Port Arthur LNG.
By the end of the first quarter of 2019, four large liquefaction trains with a combined capacity of nearly 19 million metric tons per annum (MMtpa) — the equivalent of 2.5 Bcf/d of natural gas — are expected to begin operating along the U.S. Gulf Coast. (The first of them, Train 1 at Cheniere Energy’s Corpus Christi Liquefaction, had its grand opening last Thursday (November 15), but while a vessel is at the dock, feedgas volumes to the facility have remained low so loading is likely not imminent.) In the 12 to 15 months after that, another five big trains are scheduled to start up, adding another 24-plus MMtpa of capacity, or 3.2 Bcf/d of incremental gas demand. But then, there will be a multi-year lull in U.S. liquefaction-capacity growth, aside from a 4.5-MMtpa bump-up sometime in 2022 when Cheniere’s third train at Corpus Christi is likely to come online.
The next round of prospective U.S. liquefaction/LNG export projects is the focus of this blog series. As we said in Part 1, in recent years, there has been a dramatic shift in U.S. expectations regarding LNG. 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 final investment decisions (FIDs) and construction — and five liquefaction trains (four at Cheniere’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 now up and running. [We track the status of LNG projects with FIDs in RBN’s new LNG Voyager Report — click here for more information.]