LNG business
Issue 2, 2024
Energy world kept moving globally during March though last week a distinguished group of business leaders gathered in Houston for the well known event CERAWeek 2024. On the other hand, there were some announcements and news related to LNG projects.
CERAWeek 2024 edition took place in Houston last week concentrating global attention from keynote speakers and event information that was released through the media.
One significant issue that was in the mind of most attendants was the LNG export "pause".
At this point, US Secretary of Energy - Hon. Jennifer Granholm suggested at her speech during the first day, it should take less than a year, when she meant that by this time next year the issue "will be well in the rearview mirror."
She also said, like in other previous studies before, they are assessing whether things have changed, what is in the public interest and how it should be going forward.
She was clear that the pause does not touch what has already been authorized.
ADNOC signed a 15-year heads of agreement with SEFE Marketing & Trading Singapore Pte Ltd, for the delivery of 1 million tpy of LNG.
The LNG will be sourced from ADNOC’s Ruwais LNG project, currently under development in Al Ruwais Industrial City, Abu Dhabi.
This is the second long-term LNG supply agreement from the Ruwais LNG project, following the 15-year agreement with China’s ENN Natural Gas signed in December 2023. The deliveries are expected to start in 2028, upon commencement of the facility’s commercial operations.
The Ruwais LNG project is set to be the first LNG export facility in the Middle East and North Africa region to run on clean power. When completed, the project, which consists of two 4.8 million tpy LNG liquefaction trains with a total capacity of 9.6 million tpy, will more than double ADNOC’s LNG production capacity to around 15 million tpy.
The LNG agreement is contingent upon a final investment decision (FID) on the project, including regulatory approvals, and the negotiation of a definitive sale and purchase agreement between the two companies.
Despite a US pause on new liquefied natural gas export approvals, Venture Global still plans to spend between $3.5 billion and $4 billion on its Calcasieu Pass 2 (CP2) liquefied natural gas export terminal this year, chief executive Michael Sabel said Monday at the CERAWeek by S&P Global conference in Houston.
Venture Global has not yet reached a final investment decision on CP2 but is preparing to move quickly on sanction once the pause is lifted.
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Sabel said Sunday that more than 1000 engineers are working on the project daily and the company considers itself “well into construction” on the project, which could reach first LNG as soon as 2026.
Freeport LNG decided to launch a debottlenecking project to boost output, together with major maintenance following an unplanned outage at one of its three liquefaction trains early this year , CEO Michael Smith said in a March 19 interview.
The debottlenecking effort stands to increase the capacity of the three-train 15 million mt/year facility in Texas by 1.5 million mt/year. The additional production will bring Freeport's total uncontracted supply to about 3 million mt/year, which the exporter plans to sell on a spot basis.
Train 3, that was knocked offline in January, is already back online after Freeport successfully repaired a problem with an?electrical motor experienced during a winter storm in January, Smith said.
Freeport decided that it would shut down Trains 1 and 2 for inspection and similar work, if needed.
Freeport took Train 2 offline about?a week ago?for this purpose, Smith said. Train 1 will go offline soon. The maintenance work is more extensive than what the operator has previously announced.
"We will not be back up to three-train capacity until the beginning of May," Smith said.
Feedgas flows to Freeport were about 980 MMcf/d on March 19, up from about 760 MMcf/d during the previous seven days but still just around 40% of the maximum observed deliveries to the terminal.
The debottlenecking work by July should push the feedgas requirements of the facility when all three trains are running from about 2.2 Bcf/d closer to 2.5 Bcf/d, Smith said.
As Freeport brings the debottlenecking volumes on stream, it is continuing marketing volumes from a proposed fourth liquefaction train that would add 5.5 million mt/year of capacity. At this point, Freeport LNG has not announced any firm commercial deals tied to Train 4.
The?2022 outage, ending in February 2023, amounted to the most significant ever for a US liquefaction facility.
Freeport's existing long-term offtakers include BP, South Korea's SK Group, Japanese utilities JERA and Osaka Gas, and France's TotalEnergies.
"It was a lot of volume at the worst possible time in the history of the LNG business -- you could not find a worse time for cargoes not to be there for there for them and for their ultimate customers," Smith said. "We had contractual obligations to them. There are certain financial penalties we paid.
Freeport LNG made a number of operational improvements in response to the outage, including a more than 30% increase in LNG plant staffing.
"The only thing we could do for our customers was be completely transparent and get back up as quickly as possible," Smith said. "I believe we were able to do that, and we have maintained excellent relations with all of them, although it was very expensive for them and outrageously expensive for Freeport."