Page 12 - NorthAmOil Week 11

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Freeport LNG makes progress towards Train 3 start-up
TEXAS
THE third liquefaction train at the Freeport LNG export project on the Texas coast has reached the final stage of the commissioning process, one of its engineering, procurement and construction (EPC) contractors has announced.
In a March 11 statement, Japan’s Chiyoda – which partners with McDermott International and Zachry Group on the EPC work for Freeport – said this stage included the introduction of feed gas into Train 3. This comes after Trains 1 and 2 came online in quick succession in December 2019 and January 2020 respectively, after initial delays in starting up the terminal.
Production from Train 3 is scheduled for later in the first quarter of 2020 and remains on track, Chiyoda said. Once the third train is online, Freeport LNG will have the capacity to produce roughly 15mn tonnes per year (tpy) of LNG.
Chiyoda’s announcement comes days after Freeport LNG said it was been given the green light by federal regulators to bring the project’s second export dock into service. This dock will allow for more LNG tanker activity at the termi- nal just as the company prepares to put Train 3 into operation.
However, the ramp-up in Freeport’s activity
comes as the coronavirus outbreak – now declared a pandemic – continues to depress LNG demand globally, exacerbating a global glut of the fuel that had already been worsened by a mild winter. The glut has caused spot prices for LNG to collapse in Asia, falling below $4 per 1,000 cubic feet ($113.28 per 1,000 cubic metres). Analysts from Bernstein said recently that this was below the cash cost of supply and was there- fore “not sustainable”.
The analysts warned that unless spot prices rise, some US liquefaction capacity would have to shut down sooner rather than later. If this plays out as Bernstein expects, it will also threaten a number of future capacity expansions, including efforts underway by Freeport to commercially sanction a fourth 5mn tpy train.™
UPSTREAM
Chesapeake Energy
reportedly approaches
restructuring advisers
Chesapeake Energy has reportedly approached debt restructuring advisers after the collapse in oil prices put it in a precarious position. Citing four sources familiar with the matter, Reuters reported that Chesapeake had enlisted restructuring lawyers at Kirkland & Ellis and investment bankers at Rothschild & Co that specialise in reworking debt.
None of the parties have commented on the matter.
Chesapeake had already been struggling with debt of around $9bn before crude prices tumbled, driving the company’s shares down
NEWS IN BRIEF
by more than 50% in the last three weeks. Chesapeake has already been taking
various steps in ongoing attempts to bolster
its finances amid speculation that it could
fall into bankruptcy. It has refinanced debt, exchanged existing liabilities for new ones that mature later, and created new liens within its debt structure.
The company said in January that it
had cut its debt by $900mn. It then said in February that it had enough liquidity, at around $1.4bn, to address upcoming debt maturities. However, the new oil price crash has dramatically altered market conditions for the worse, and Chesapeake was quickly identified as one of the US producers in danger of imminent bankruptcy.
According to Reuters’ sources, Chesapeake is evaluating its options and no debt restructuring move is imminent.
EQT lowers 2020 capital expenditure guidance
by $75mn, executes agreement to permanently release firm transportation and provides update on debt repayment
EQT today announced a further reduction to its 2020 capital expenditure guidance and the execution of an agreement to permanently release certain firm transportation capacity.
To further enhance efficient capital deployment, EQT has reduced development activity in its Ohio Utica operations, lowering
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Week 11 19•March•2020