US LNG exports may rise to 6-10 Bcf/day and plans to export US LNG advanced this week, with Freeport LNG signing two binding liquefaction tolling agreement and the Department of Energy approving a fourth application to export US LNG to non-FTA countries.SK E&S LNG and Toshiba Corporation have agreed to buy 2.2 mtpa each (approximately 600 MMcf/d combined) from Freeport LNG’s proposed third liquefaction train. Freeport LNG had already signed similar agreements with Osaka Gas, Chubu Electric and BP for a combined 8.8 mtpa (approximately 1.2 Bcf/d) and secured an approval from the DOE to export up to 1.4 Bcf/d to all countries.
The company expects to receive FERC approval to commence construction of the first threeliquefaction trains in the first quarter of 2014, with the first train commencing operations 42-48 months from start of construction and the second six to nine months after the first train. Construction of the third train is expected to begin in late 2014, and operations should start six to nine months after the second train. The third train would require an additional permit for non-FTA exports from the DOE.
This approval may now come shortly, as Freeport LNG’s expansion is next in the order of applications filed with the DOE. Earlier this week, the agency granted a conditional non-FTA approval to Dominion Cove Point LNG for the export of approximately 0.77 Bcf/d of domestically produced LNG. It already holds an approval to export up to 1 Bcf/d to FTA nations. This marks the fourth approval for nonFTA exports and brings the total capacity holding US DOE export permits to 6.6 Bcf/d.
Second in line is now Sempra’s Cameron LNG project, which has announced off take agreements for a combined 12.6 mtpa (approximately 1.6 Bcf/d). With the next two applications backed by off-take contracts, we believe the DOE is likely to issue further approvals this year and expect US LNG exports to rise to 6-10 Bcf/d by 2020, with a base case forecast of 8 Bcf/d.
Source: Barclays