Page 8 - GLNG Week 13
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Cheniere seeks regulatory approval to start Midship pipeline
PIPELINES & TRANSPORT
US LNG producer Cheniere Energy has filed a request with federal regulators to begin service on its newly completed Midship pipeline from Oklahoma’s Anadarko Basin.
According to the filing, Cheniere is asking the US Federal Energy Regulatory Commission (FERC) for permission to bring the pipeline into service “at the earliest time possible, but no later than April 17, 2020, in order to meet the needs of its shippers”. The move comes amid expec- tations that shale drillers in regions such as the Anadarko will scale back drilling owing to the collapse in oil prices. Meanwhile, Cheniere itself is thought to be considering cutting output at its two LNG terminals.
However, when the Midship pipeline was first proposed, producers in the Anadarko Basin were calling for new takeaway capacity to accommo- date growth from the South-Central Oklahoma Oil Province (SCOOP) and the Sooner Trend Anadarko Basin Canadian and Kingfisher (STACK) Counties plays.
The $1bn Midship pipeline is designed to carry around 1.44bn cubic feet (40.8mn cubic metres) per day of gas from the Anadarko Basin
to existing pipelines near Bennington, Okla- homa. From there, the gas will be transported on to markets on the Gulf Coast and the Southeast, boosting Cheniere’s feed gas supply at its termi- nals in Louisiana and Texas. About 925mn cubic feet (26 mcm) per day of the pipeline’s capacity has been contracted for firm service, according to filings with the FERC.
Cheniere started construction on the pipe- line in February 2019. The project faced some delays during construction, including because of weather, and began commissioning in Febru- ary this year.
As well as being the US’ leading LNG exporter, Cheniere has also become the coun- try’s largest consumer of natural gas. It now has five liquefaction trains in operation at its Sabine Pass LNG terminal in Louisiana, as well as a sixth under development. At Corpus Christi LNG in Texas, the company has two trains in service and a third under construction, as well as a plan for an additional expansion phase. However, the market downturn and global glut of LNG may slow development of further lique- faction capacity.
Shell quits Lake Charles LNG project
PROJECTS & COMPANIES
The Lake Charles LNG project envisions converting Energy Transfer’s existing regasification terminal in Louisiana to liquefaction.
ROYAL Dutch Shell has announced that it is pulling out of the proposed Lake Charles LNG project in Louisiana, in which it partners Energy Transfer on a 50:50 basis. The super-major cited “current market conditions” as oil prices sink to 18-year lows and the coronavirus (COVID-19) pandemic exacerbates a global glut of LNG by weighing on demand.
Energy Transfer will carry on developing the project on its own, and Shell said in a March 30 statement that it would continue to support the midstream player with the ongoing bidding pro- cess for the engineering, procurement and con- struction (EPC) contract. After this, Shell will plan a phased handover of the project’s remain- ing activities.
“This decision is consistent with the initia- tives we announced last week to preserve cash and reinforce the resilience of our business,” said Shell’s director of integrated gas and new energies, Maarten Wetselaar, in the statement. “Whilst we continue to believe in the long-term viability and advantages of the project, the time is not right for Shell to invest.”
The measures announced last week that Wetselaar referred to include reducing capital
expenditure for 2020 from a planned $25bn to $20bn or less. It comes as no surprise that Shell is re-evaluating the projects it partici- pates in as it adapts to a new collapse in crude prices.
Shell inherited the stake in Lake Charles LNG when it took over BG Group in 2016. The project seeks to convert Energy Transfer’s exist- ing import terminal in Lake Charles to a lique- faction and export facility. The terminal would have a liquefaction capacity of 16.45mn tonnes per year (tpy).
The project had already been encountering challenges before the COVID-19 pandemic rocked the already glutted LNG market. In November 2019, Shell asked US regulators to extend the time to complete the project to 2025 owing to a weaker outlook for LNG prices.
Other LNG projects that have yet to reach the final investment decision (FID) stage are antici- pated to face delays as a result of current market conditions and social distancing measures being implemented globally to combat COVID-19. In mid-March, the workforce at the site for the Shell-led LNG Canada project was temporarily reduced by 50%.
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w w w . N E W S B A S E . c o m Week 13 02•April•2020
