Page 15 - NorthAmOil Week 34
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NorthAmOil PIPELINES & TRANSPORT NorthAmOil
Midship requests extension to finish pipeline
OKLAHOMA MIDSHIP Pipeline, a subsidiary of US LNG estimated to have a total cost of around $1bn.
exporter Cheniere Energy, has asked the Federal The pipeline’s start-up came at a particularly
Energy Regulatory Commission (FERC) for an challenging time for the LNG market, when
extension until December 2022 to complete its lockdowns related to COVID-19 were hitting
natural gas pipeline. global energy demand particularly hard. Given
The request comes as a result of three com- that cancellations of contracted US LNG car-
pressor stations that were originally sched- goes typically require 45-60 days’ notice, the
uled to be in service by August 13, but have impact on US LNG exporters became increas-
experienced delays. According to Midship, ingly pronounced over the subsequent months.
all the other components of the project except They are now thought to have peaked in June
for the three compressor stations have been and July, with the rate of cancellations starting
completed. to slow in August.
The 200-mile (322-km) pipeline has a Deliveries of feed gas to US LNG terminals
capacity of roughly 1.1bn cubic feet (31.2mn via pipeline also fell, making it easier for pro-
cubic metres) per day, carrying gas from Okla- jects such as Midship to operate below their full
homa’s Anadarko Basin to interconnections capacity. These deliveries are also picking up
with existing pipelines near Bennington, also now, and are estimated to have reached almost
in Oklahoma. From there, the gas can be sent 5 bcf (141.6 mcm) per day on August 20 – the
to the Gulf Coast, where Cheniere operates two highest levels in over two months.
liquefaction terminals. Indeed, 75mn cubic feet Cheniere, as the largest US LNG exporter
(2.1 mcm) per day of capacity on the pipeline with a current liquefaction capacity of around
is booked by Cheniere’s Corpus Christi LNG 35mn tonnes per year (tpy) and more under
export terminal in Texas. construction, stands to be particularly affected
Midship entered service in April 2020. It is by US LNG export trends.
INVESTMENT
Petronet reportedly considering
scaling back Tellurian investment
US-INDIA INDIA’S Petronet LNG is reportedly considering in an 18% equity stake in the project. The MoU
scaling back a proposed investment in US-based expired in June, with the two companies failing
Tellurian’s Driftwood LNG project, which had to finalise a definitive agreement in the wake of
previously been pegged at around $2.5bn. This a major market downturn caused in part by the
comes after Tellurian redesigned the first phase coronavirus (COVID-19) pandemic. However,
of its Driftwood plan, reducing its cost by around talks between the two companies were subse-
30% from $28bn by deferring three planned gas quently renewed in July.
pipelines to serve the terminal, among other On August 18, comments from Petronet’s
steps. (See NorthAmOil Week 33) managing director and CEO, Prabhat Singh,
On August 16, India’s Economic Times cited reported by the Hindu Business Line, appeared
sources familiar with the matter as saying the to back up the reports in the Economic Times.
reduced scope of Driftwood’s first phase had “We are exploring the market. But one thing
prompted Petronet to re-evaluate its investment is sure: that investments as such are not look-
plan. The company will reportedly make a deci- ing lucrative at this point of time,” Singh was
sion on this soon, ahead of a December deadline quoted as telling journalists. He went on to note
for finalising an agreement with Tellurian. that spot LNG prices had fallen close to $3 per
It has not been smooth sailing for Petronet million British thermal units ($82.98 per 1,000
and Tellurian since they first signed a memo- cubic metres), while under long-term contracts
randum of understanding (MoU) in Septem- prices remain at around $4.50-5.50 per mmBtu
ber 2019. The initial terms of the MoU called ($124.47-152.13 per 1,000 cubic metres). This
for Petronet to negotiate the purchase of up to makes it more challenging for sellers to negoti-
5mn tonnes per year (tpy) of LNG from the ate offtake deals with buyers that have a range of
Driftwood terminal, as well as investing $2.5bn sources to choose from.
Week 34 27•August•2020 www. NEWSBASE .com P15
