Source: Houston Chronicle –
Houston oil & gas company EOG Resources has landed a natural gas supply deal for Cheniere Energy’s Corpus Christi LNG export terminal.
The companies confirmed the 15-year gas supply agreement in a joint statement released on Monday afternoon. Under the deal, EOG Resources will supply 140,000 million British Thermal Units of natural gas per day to the South Texas facility starting in 2020. The delivery amount will be gradually increased to 440,000 MMBTU of natural gas per day.
Financial terms were not disclosed, but the companies confirmed that EOG Resources will receive a price based on the Platts Japan Korea Marker for the 140,000 MMBTU of natural gas while the remaining 300,000 MMBTU will be sold to Cheniere at at a price indexed to the Henry Hub in Louisiana.
“Adding gas sales agreements linked to LNG prices supports EOG’s portfolio approach to marketing our growing production of low-cost natural gas,” EOG Resources Senior Vice President of Marketing D. Lance Terveen said in a statement. “These agreements further diversify our access to customers across multiple end markets in order to maximize our natural gas price realizations.”
The natural gas supply deal comes at a time when Cheniere has two LNG production units, known as trains, in operation at the Port of Corpus Christi site and is in the middle of building a third.
Most of the natural gas from the EOG Resources supply deal will go to support a proposed expansion project at Corpus Christi LNG known as Stage III, which is still pending a permit decision from federal regulators and a final investment decision from Cheniere.
If approved, the proposed Stage III project will add seven mid-sized production units that will make a combined 9.5 million metric tons of LNG per year.
“The integrated production marketing commercial structure leverages our world-scale infrastructure platform and capabilities in Corpus Christi, offering domestic natural gas producers efficient access to global LNG prices and long-term flow assurance, while providing Cheniere with reliable delivery of natural gas and commercial support for growth,” Cheniere Energy Senior Vice President of Gas Supply Corey Grindal said in a statement.
EOG Resources is the second-most active exploration and production company in Texas behind Exxon Mobil.
So far this year, Exxon Mobil’s shale drilling arm XTO Energy has filed for 517 drilling permits for oil and gas projects across the state, while EOG Resources has filed for 368, records from the Railroad Commission of Texas show.
With more than 3,100 leases across Texas, EOG Reources produced more than 107.4 million barrels of crude oil and more than 357.5 billion cubic feet of natural gas in 2018, Railroad Commission records show.
