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Golden Pass LNG files for capacity expansion

as cargo cancellations bite US exporters

TEXAS QATAR Petroleum (QP) and ExxonMobil have infrastructure is already in place.
requested permission from US regulators to QP owns a 70% stake in Golden Pass LNG,
increase the capacity of their Golden Pass LNG with ExxonMobil holding the remaining 30%.
terminal, which is currently under construction The Qatari company is embarking on a major
on the Texas Gulf Coast. Last week’s filing seeks push to increase its share of the LNG market
to raise the capacity of the facility from 15.6mn both at home and overseas even as other devel-
tonnes per year to 18.1mn tpy. opers are delaying final investment decisions
According to Reuters, Golden Pass said this (FIDs) owing to an oversupplied market that is
week that the capacity of the plant would be being exacerbated by the coronavirus (COVID-
increased via “production efficiencies” and that 19) pandemic. QP appears to be among those
no changes to equipment or environmental per- betting that demand for LNG will be growing
mits would be required. again in the second half of the 2020s – though
“Because the capacity increase does not some are now warning that a recovery could take
involve additions or adjustments to the permit- even longer.
ted facilities, it would not result in any construc- In the short term, the impact of COVID-19
tion or environmental impacts beyond those on demand on Gulf Coast LNG terminals is Golden Pass LNG
previously identified” by the US Federal Energy starting to show as previously reported cargo
Regulatory Commission (FERC), Golden Pass cancellations for June begin to take effect. is one of the
was quoted as saying. Separately from the news about Golden Pass’
The Golden Pass LNG project consists of capacity expansion plans, Reuters reported this few remaining
three liquefaction trains. If the FERC approves week that the amount of gas flowing to US LNG
the request to expand capacity, each train will be terminals fell to a 13-month low of 3.8bn cubic brownfield LNG
able to produce just over 6mn tpy of LNG, equiv- feet (108 mcm) per day in the first two days of opportunities on
alent to roughly 790mn cubic feet (22mn cubic June.
metres) per day of gas. “We’ve been bearish on US LNG feed gas the Gulf Coast.
Construction on Golden Pass has been demand, but yesterday’s level still caught us by
under way since mid-2019, and the first train surprise,” Tudor, Pickering, Holt & Co., a finan-
is reported to be on schedule to enter service in cial services firm, commented in a note.
2024. Around 6-8 months later, Train 2 is also However, futures prices at the Title Transfer
due to start up, followed by Train 3 a further 6-8 Facility (TFF) in the Netherlands have risen in
months down the line. The consortium building the past few days and are trading at a premium
the plant at the site of an existing regasification to the US Henry Hub benchmark for the first
terminal consists of McDermott International, time since late April. There are hopes that this
Chiyoda and Zachry Group. Indeed, Golden could help boost spot shipments from the US to
Pass LNG is one of the few remaining brown- Europe, and indeed Reuters reported that pipe-
field LNG opportunities on the Gulf Coast, line gas flows to US LNG plants were on track
making its capital costs significantly lower to reach 4.5bn cubic feet (127 mcm) per day on
than some rival proposals because much of its June 3.™

Week 22 04•June•2020 www. NEWSBASE .com P15