The first U.S. liquefied natural gas (LNG) export cargo from the Lower 48 is now likely within just a week or two of shipping from the Cheniere Sabine Pass, LA terminal. In the meantime, physical flow data is already giving us a first glance at how the terminal will be supplied from U.S. natural gas production. In today’s blog, we begin a look at flows to the terminal, how the gas is getting there and where it’s coming from.
In recent months, there has been a flurry of completion and commissioning activity around Sabine Pass. Filings with the Federal Energy Regulatory Commission (FERC) indicate the terminal has been furiously readying its first two liquefaction trains over the past few months in preparation for loading its first export cargo. As we detailed previously in our blog series Begin the Sabine, Cheniere Energy’s Sabine Pass LNG (SPL) export terminal in Cameron Parish, LA along the Texas-Louisiana border, is one of four such brownfield projects targeting gas exports from the US, and the first to begin operations.
The terminal will ultimately include six liquefaction “trains,” each with the capacity to supercool up to 650 MMcf/d of natural gas into LNG (at -260 oF) for a total capacity to produce 3.8 Bcf/d for loading and shipment overseas. The facility also has 17 Bcf of LNG storage capacity on site. Construction of the first train was completed and commissioning activity began last fall. And just last Friday (February 19, 2016), SPL filed a request for authorization to introduce fuel gas to train 2 “at the earliest date possible, but no later than March 4, 2016” in order to begin commissioning activities for the second train. Additionally, pipeline flow data from our friends at Genscape indicates that more than 3 Bcf of gas has physically flowed to the terminal in just the past two weeks, suggesting the liquefaction process is underway. Reuters is reporting that two LNG tankers in the Gulf of Mexico are at the ready to take the cargo, one having docked at the terminal just this past Sunday (February 21).
The terminal’s activity and the imminent first cargo of physical gas exports from the lower 48 U.S. are historic events in their own right, with long-term implications for both the global and U.S. natural gas supply/demand balances. But on a more granular level within the U.S., the exports also will have more localized impacts on regional flows and pricing based on where the supply is sourced and how that gas will get there. Cheniere has lined up commitments for the vast majority of each train’s liquefaction capacity through Sales and Purchase Agreements, or SPAs, with various counterparties. To fulfill these commitments, Cheniere secured upstream supply and transportation capacity to serve the trains. In a January 2016 company presentation, Cheniere restated that it has entered into 1-7 year term gas supply contracts with producers for an aggregate of approximately 2 Tcf for an average price of Henry Hub minus $0.10/MMBtu. The supply contracts cover ~50% of the required daily load for Trains 1-4. To ensure transportation capacity to bring supply to the terminal, Cheniere also has commitments on existing and planned expansion pipeline capacity (see Part 2 of Begin the Sabine for more on that).Thus, flows around the terminal will continue to evolve based on expected pipeline expansions and related supply contracts kicking in over the next year. Additionally, some of these flows could be seasonal. By looking at initial flows to the terminal, as seen in the daily pipeline flow data, we can provide an early glimpse of this picture. We’ll start today with a quick review of the available pipeline capacity serving the terminal and deliveries to date. Next time we’ll take a detailed look at where the supply is coming from.
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About the song
“Space Oddity” was written by David Bowie and first released as a single in July 1969. It would later appear as the first track on side one of Bowie's second studio album, David Bowie. In 1972, after the success of Bowie's The Rise and Fall of Ziggy Stardust and the Spiders from Mars album, RCA re-titled the album Space Oddity and re-released the song as a single. This time it reached #5 on the UK Singles chart and #15 on the Billboard Hot 100 Singles chart. Over the years the song has been covered by a variety of artists. Perhaps the most interesting rendition is that of Canadian astronaut Chris Hadfield, who performed the song aboard the International Space Station (ISS) in May 2013. Having come full circle, it was the first song to be recorded in space. Personnel on the record were: David Bowie (vocals, 12-string acoustic guitar, Stylophone, handclaps), Mick Wayne (lead guitar), Herbie Flowers (bass), Jerry Cox (drums), Tony Visconti (flues, woodwinds), Rick Wakeman (Mellotron), and Paul Buckmaster (string arrangement).
David Bowie/Space Oddity was recorded between June and October 1969 at Trident Studios in London, with Tony Visconti and Gus Dudgeon producing. Originally released in November 1969, the album would reach #17 on the UK Albums chart and #16 on the Billboard 200 Albums chart after its re-release in 1972. “Space Oddity” is the only single released from the LP.
David Bowie (David Robert Jones) was an English singer, songwriter, musician, and actor. He released 26 studio albums, 21 live albums, 46 compilation albums, 10 EPs, three soundtrack albums, and 128 singles and has sold over 100 million records worldwide. Bowie appeared in 11 television shows and 23 motion pictures, and has won five Brit Awards, one Daytime Emmy Award, six Grammy Awards, four Ivor Novello Awards, and four MTV Video Music Awards. A member of the Rock and Roll Hall of Fame, Bowie left this planet in January 2016.
Comments
There is a lot of good content here. Clearly many details and some analysis of them. Kudos for the work. But it is very hard to understand. If you could work harder on the clear communication, would really be worth it.
The map is very hard to compare to the paragraph that discusses it. \
-where is Gillis?
-Is the Tetco the same as the Kinder Morgan line or is it one of the faint lines? Why not shown explicitly in legend?
Other conceptual questions:
-what is the significance of the two different delivery points to the Sabine facility? You mention them, but then why tell us? Any how about a small graphic to show those two access points, since they must be somehow relevant.
-"Cheniere has contracted for up to 765 MMcf/d of capacity from Creole Trail for Train 1, and another 375 MMcf/d from NGPL. For Train 2, Cheniere has secured the remaining 765 MMcf/d on Creole and another 175 MMcf/d from NGPL." Why are the volume contracts tied to specific trains? If one pipe is short (from mentioned upstream issues), they can't shift the volume over to the active train from the other pipe?
-"The line delivers to the terminal at two points: “Creole Trail-SPLIQ” and a point called “Sabine Pass LNG,” which used to receive gas into Creole but now has turned around and is delivering small volumes to the terminal." What does this even mean? How does a point "turn around" and deliver? If the detail is worth sharing, please communicate it clearly.
In reply to hard to understand by g p
Chemgeek, appreciate the feedback. Our goal is certainly to make the analysis clear enough for those less familiar with the subject matter.
The map in the blog is directly from one of Cheniere's presentations, and you are correct, Texas Eastern (TETCO) line does seem to be missing. I did also add some detail in the text that is not necessarily labeled on the map. Apologies for any confusion. I will address what I can here.
Gillis, LA is the geographic location of the northern end of the Creole Trail Pipeline (bright blue line on the map). This is also generally where the TETCO, Transco and Trunkline pipelines interconnect with Creole Trail (red dots).
TETCO is not the same as Kinder Morgan Louisiana. It follows a similar path to Transco across Louisiana, toward the Mississippi border and the north. You can find a map of it here: https://linkwc.spectraenergy.com/SystemMaps/TESystemMap.pdf.
The relevance of the two delivery routes sending gas to the terminal (NGPL and Creole Trail) is what they tell us about where the gas supply for the terminal is coming from. We will explain this in more detail in Part 2 of this blog series.
The pipeline capacity is tied to specific trains more in the commercial sense rather than physical. The capacity is contracted by specific shippers who are assigned to specific trains. If one pipe is short (that is, if the shippers feeding Sabine through one pipe don’t have enough gas), a shipper can’t simply take gas from other shippers in the other pipe. However, if one of the pipes has a physical problem and there’s spare space in the others, a shipper could choose to release capacity to the affected shippers. One other caveat regarding capacity...pipeline shipper contracts can be "firm" or "interruptible." In the event all shippers want to max out their capacity but the pipe is constrained, the shippers with firm contracts will always get priority.
And finally, on your last question, an interconnect can be a receipt, delivery or both (bidirectional). Creole Trail's “Sabine Pass LNG” point has historically received gas from the terminal (LNG imports). More recently, however, the flow direction has reversed and small amounts of gas have been seen flowing from Creole Trail to the terminal at that point. The second point - "Creole Trail-SPLIQ" - adds significant (1.7 Bcf/d) capacity for Creole Trail to deliver to the liquefaction trains at the terminal.
Thank you again for your feedback and questions. Hope that helps.
thanks