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US LNG export race heats up

US LNG export race heats up
A third terminal for exports of LNG out of the US Gulf is now closer to reality. The US Department of Energy (DOE) gave an initial okay to gas exports from a terminal to be built in Lake Charles, Louisiana, owned jointly by the energy giant BG Group and Southern Union, a pipeline operator which is part of Energy Transfer Partners.

The terminal and liquefaction plans must still be approved by another agency- the Federal Energy Regulatory Commission (FERC). The Lake Charles facility could handle up to 2 billion cu ft. /day. As reported in Seatrade Global, BG has been linked to four possible orders for LNG carriers, two for Peter Livanos’ GasLog at Samsung Heavy Industries and two for John Angelicoussis’ Maran Gas at Hyundai Heavy Industries.

Earlier this year, exports from a terminal at Freeport, Texas with a capacity up to 1.4 bcft per day was approved, while late 2011 saw the green light given to LNG shipments from a Cheniere Energy’s existing import facility, with liquefaction for export capability now under construction, at Sabine Pass, at Cameron, La., near the Texas border, providing potentially 2.2 bcft per day of exports.

Importantly, the latest group of approvals enables sales to countries lacking a “Free Trade Agreement” with the US. widening the sphere for exports to include China, and potential European customers. An early 2012 approval, to Sempra Energy’s Cameron LNG plant, with up to 1.7 bcft per day, allows exports to a smaller range of countries. These early entrants will see exports come online starting in 2015 – 2016.

At present, US produced LNG is exported from a Conoco Phillips facility at Kenai, Alaska, which had been set for closure prior to the game-changing 2012 nuclear disaster at Fukushima). Data now available for 2012 shows that the US continues on a path towards becoming a net exporter of LNG by 2016. The DOE said: “US exports of LNG from new liquefaction capacity are assumed to start at a level of 0.6 bcft per day in 2016 and increase to 4.5 bn bcft per day in 2027, as peak export volumes are shipped out of facilities in the Gulf Coast and Alaska.”

“Politics” is always mentioned in the same breath as “energy” when LNG exports are discussed. One vocal group of Senators, led by Alaska’s Lisa Murkowski, is pushing the US DOE to pick up its approval pace, fearing coming competition from British Columbia, Canada in the race to export more LNG to Asian receivers. Reports indicate that the pipeline is jammed up with 19 – 20 pending “export” projects awaiting DOE approvals, with a likelihood that many will not get built.

Environmentalists, a big force in the US, are not thrilled with the idea of any LNG exports, since more gas demand begets more “fracking” . Also lurking is a battle between large industrial energy consumers and the exporters. After the recent approval, a group called “America’s Energy Advantage”, spearheaded by Dow Chemical, Nucor, and Alcoa stated: “Each permit approval brings us closer to the point that would begin to harm the manufacturing renaissance…”

In America, you can have your cake and eat it to; it turns out that Dow Chemical is one of several partners in a company operating an existing re-gas (LNG import) terminal in Freeport, Texas. This same company, Freeport LNG Development, is the parent of Freeport LNG Expansion, the company which gained export approvals earlier this year.

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