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Another U.S. Liquefaction Plant Breaks Ground, Lithuania Says ‘Goodbye Gazprom’

Construction is Underway on Cameron LNG’s U.S. Liquefaction/Export Facility

Last week Cameron LNG broke ground on its $10 billion export plant in Hackberry, Louisiana. This sets the company off on a four-year project to build a liquefaction and export facility that will convert U.S. natural gas to liquefied natural gas (LNG) for delivery to global customers.

Cameron LNG LogoThe Cameron liquefaction plant is comprised of three-train natural gas liquefaction facilities with an export capability of 12 million tonnes per annum of liquefied natural gas (LNG), or approximately 1.7 Bcf per day.  All three trains are expected to commence operations in 2018.

The project is being developed by a joint venture consisting of Sempra Energy’s (ticker: SRE) Sempra LNG unit, GDF SUEZ S.A. (ticker: GSZ.PA), Mitsui & Co., Ltd. (ticker: TYO 8031) and Mitsubishi Corporation (ticker: TYO 8058), through a related company jointly established with Nippon Yusen Kabushiki Kaisha (ticker: TYO 9101).

The project received the U.S. Department of Energy’s final authorization to export LNG to non-free-trade-agreement countries in September. The Cameron plant will create 3,000 construction jobs over the next four years and 200 full-time jobs in Texas and Louisiana, the company said in a news release.

Reversal of the Tide

Before the shale revolution kicked into high gear and bumped U.S. natural gas production toward export levels, Cameron LNG had begun construction of its LNG receipt terminal along the Calcasieu Channel in Hackberry, Louisiana. At that time the U.S. demand for natural gas was outpacing supply, leading companies to construct import terminals in the U.S. Construction on the Cameron LNG regasification terminal started in August 2005 and commercial operations began in July 2009. Cameron’s LNG receipt terminal has vaporization capability for regasification services of 1.5 Bcf per day.

TX-LA-LNG-plantsCameron’s LNG plant is located 18 miles from the Gulf of Mexico and within 35 miles of five major interstate pipelines and is connected via the 36-mile Cameron Interstate Pipeline. Upon completion of the LNG liquefaction plant, Cameron will have bi-directional capabilities to export or import LNG based on changing market conditions.

The Cameron LNG export facility is the second U.S. LNG export plant to enter the construction phase and one of a dozen proposed LNG export plants in the works which will transport U.S. natural gas abroad. Cheniere’s (ticker: LNG) Sabine Pass facility is on track to be the first completed LNG export plant in the U.S., with exports from that facility scheduled to begin in 2015.

 

Goodbye Gazprom: Lithuania to Begin Importing LNG from Norway this Week

Meanwhile, over at the LNG import side of the equation, Lithuania is loudly declaring its independence from Russian natural gas this week as it begins to import LNG from Norway. The country has entered into a 10-year lease for the Independence, a South Korean-built LNG vessel with 170,000-cubic-meter LNG capacity, from Norway’s Hoegh LNG Holdings (ticker: HLNG). The ship will anchor off the port of Klaipeda today and is scheduled to begin delivering gas tomorrow.

NORWEGIAN LNG TERMINAL INDEPENDENCE

From her berth in Klaipeda, the Norwegian liquefied gas terminal Independence will produce enough gas to cover the whole of Lithuania’s gas needs. Photo: Höegh LNG

Lithuania had previously completed construction of an LNG terminal and pipelines enabling it to deliver imported natural gas to its mainland, Bloomberg reported. The country believes it could now replace all of the annual 2.7 billion cubic meters of natural gas it now buys from Gazprom, its sole source of natural gas until this week.

Lithuania says it pays the highest price for Russian gas in the 28-member European Union, 36 percent more than the German border price in the first four months of 2014, according to an EU quarterly report. Its contract with Gazprom ends next year. Norway’s Statoil ASA (ticker: STO) has a contract to supply the terminal with LNG for at least five years, Bloomberg reported.

If running at full-capacity of almost 4 billion cubic meters, the terminal could cover 80 percent of demand of the entire Baltic region, according to reports. Once the LNG terminal is up and running, “the supply for the protected customers would be ensured in the three Baltic States in all scenarios.” … Lithuania “will become an energy-security guarantor for the whole Baltic region,” said Karen Sund, the founder of Sund Energy AS in Oslo.

Klaipedos Nafta AB, Lithuania’s state-owned energy terminal operator, has an option to buy the regasification unit after 10 years.

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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.