Explaining the U.S. LNG Marketplace – Who Sells It, Who Buys It

While on the surface the liquefied natural gas (LNG) marketplace may seem simple and straightforward, when you dig down you’ll find it is complex. There are different kinds of contracts between those who sell the gas, those who liquefy and ship it, and those who buy it. The LNG marketplace is, with the entrance of the U.S., changing rapidly. Our friends at RBN Energy recently posted an explanation for how it all works.
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U.S. Natural Gas Exports Double Jan-Jun 2019

Quick, when we ask you how natural gas gets exported from the U.S. to other countries, what do you think of? LNG, right? That’s true. Yet while LNG grabs all the headlines, more than twice as much natural gas is exported to Canada and Mexico via pipeline every day than is exported to other countries via LNG ships. LNG is expanding and catching up–but it has a ways to go. According to the U.S. Energy Information Administration, during the first half of 2019 natural gas exports from the U.S. to other countries doubled–largely because of LNG.
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FERC OKs Kinder Morgan Elba Island LNG Train #1 to Begin Service

Elba Island LNG (click for larger version)

Hallelujah! On Monday the Federal Energy Regulatory Commission (FERC) granted permission to Kinder Morgan to *finally* begin full export operations for Train #1 at the Elba Island, Georgia LNG (liquefied natural gas) export facility. It has been a loooooong time coming. FERC first approved KM’s request to build the facility back in 2016 (see KM’s Elba Island LNG Export Plant Approved by FERC). Since that time there have been a number of “we’re almost ready to start” string of broken promises. FERC has just authorized the first of 10 trains at Elba Island. The other trains should now come online in fairly rapid succession.
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DRBC Reconsiders New Fortress LNG/NGL Shipping Dock on Dela. River

There, now that’s the DRBC (Delaware River Basin Commission) we know and expect–obsequiously bowing before the likes of THE Delaware Riverkeeper and her environmental cousin, the Sierra Club. In June the DRBC approved a request by New Fortress Energy to build a $96 million 1,600-foot-long pier on the Delaware River (see DRBC Approves New Fortress LNG/NGL Shipping Dock on Dela. River). After being hounded (and threatened) by Riverkeeper and the Sierra Club for months over that approval, DRBC voted last week to “reconsider” its earlier decision. Their true colors shine through.
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PBS Goes to Scotland, Discovers Shale/Plastics Aren’t Bad After All

PBS reporter Reid Frazier should enjoy what is likely to be his one and only trip to Europe on the StateImpact Pennsylvania company dime. He’s gone there to follow Marcellus molecules exported from Pennsylvania, to see how they’re used. Frazier’s first stop is Scotland where they use our ethane to create plastics. Frazier’s report is actually (shock warning, please sit down) pretty fair and balanced–even complimentary of the Marcellus Shale and the plastics industry! Frazier’s overlords inside the William Penn Foundation (big financial backers of StateImpact) are NOT going to be happy with his reports if they continue like this one.
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KM Evacuates Elba Island LNG Ahead of Dorian, More Delays

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Disappointingly, Kinder Morgan’s Elba Island LNG export facility is still not up and running. According to “frustrated” KM CEO Steve Kean, “We were making very good progress on Elba, and then Hurricane Dorian happened.” Sure, blame it on the hurricane. KM wisely evacuated personnel working on the Elba project to avoid Dorian–we have no issue with that. But let’s be honest, this project is WAY behind schedule, originally supposed to be online last year. And it’s one of the smaller LNG projects!
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Work Continues to Clear Site for NEPA Landlocked LNG Export Plant

New Fortress Energy is in the process of building the first (of two or more) LNG liquefying plants in Wyalusing, PA–nowhere near a shoreline. The company will truck (eventually rail) the LNG to a port located on the Delaware River along the New Jersey shoreline for export to Puerto Rico and other destinations. As we reported in July, work is now underway to clear the site before actual construction of buildings begins (see Work Begins to Clear Site for NEPA Landlocked LNG Export Plant). The site clearing work has progressed, rather nicely…
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Gulf Coast Cameron LNG Exporting Begins Service…with M-U Gas

Cameron LNG Train 1 (click for larger version)

Yesterday Sempra Energy’s Cameron LNG project in Lake Charles, La. began to liquefy and export natural gas–some of it coming from the Marcellus/Utica region. Nearly a month ago the facility asked the Federal Energy Regulatory Commission for permission to begin full-blown operation (see Cameron LNG Export Plant Ready to Begin Operation This Week). FERC issued that permission shortly thereafter. We’re guessing there was some sort of technical issue that caused a delay until now. The good news is that the facility is now up and running…with our gas.
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KM’s Elba Island Train #1 Now Producing LNG for Export?

Kinder Morgan, the largest pipeline company in the U.S., has left a string of broken promises about the date for which the first Elba Island LNG export plant “mini-train” would begin producing and shipping LNG. We’ve chronicled the journey extensively. According to an official update from KM in July, Elba was “in advanced stages of the commissioning and start up process, including LNG production” (see KM Says Elba Island in “Advanced Stage” of Commissioning/Startup). Very quietly, on Friday, Aug. 9, KM sought permission from FERC to begin operations on the first mini-train, asking to start no later than Friday, Aug. 16. Did it happen?
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Gas Flowing to U.S. LNG Export Plants Hits Record High – 6 Bcf/d

Our favorite government agency, the U.S. Energy Information Administration (EIA), published a post yesterday looking at natural gas deliveries to U.S. LNG export facilities. The post finds that in July gas flows to LNG export facilities hit a new record high of 6.0 billion cubic feet per day (Bcf/d). That’s an incredible 7% of all the natural gas produced in the U.S.
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How Marcellus/Utica Gas Feeds Sabine Pass & Cameron LNG in La.

Last week MDN brought you an RBN Energy article that outlines how Marcellus/Utica gas hitches a ride to the Gulf Coast to feed several LNG export facilities–specifically the newly-minted Cameron LNG export facility (see Marcellus/Utica Gas Heads to Gulf Coast to Feed LNG Export Beast). LNG exports along the Gulf Coast are a hugely important current and future market for Marcellus/Utica gas. Today RBN is back with more details on the intricate network of pipelines used to get our gas to both the Sabine Pass and Cameron LNG export facilities located in Louisiana.
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Marcellus/Utica Gas Heads to Gulf Coast to Feed LNG Export Beast

Marcellus/Utica gas hitches a ride to the Gulf Coast to feed several LNG export facilities. We previously outlined how some gas flows to Cheniere’s Sabine Pass LNG plant via Williams’ Transco system (see Williams Confirms Transco Now Ships Gas Directly to Cheniere LNG). We also told you about Utica gas reaching Sabine Pass via a connection from Rover Pipeline (see Some Rover Gas Flows All the Way to Gulf Coast LNG Export Plant). The experts at RBN Energy outline how M-U gas is flowing to the newly-minted Cameron LNG export facility (also in the Lake Charles area, near Sabine Pass) via the recently completed Mountaineer Xpress and Gulf Xpress pipeline expansions.
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Proposed New Federal Law Would Harm U.S. LNG Exports

U.S. Senator from Mississippi John Wicker (Republican), and Congressman John Garimendi from wacko California (Democrat), have re-introduced a really bad bill euphemistically called Energizing American Shipbuilding Act. We’ve extensively covered the 1920 Jones Act that prevents any shipping from one U.S. port to another unless the ship is *built* and *owned* by Americans. The Jones Act prevents us from shipping homegrown LNG to any ports because there are not big LNG carries made here in the U.S. (see The Jones Act Means Puerto Rico Can’t Import Marcellus LNG). The Energizing American Shipbuilding Act would go further than the Jones Act and require 15% of U.S. LNG exported to other countries be required to use American made and flagged LNG carriers.
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McKinsey: Marcellus Production Will Grow 6% per Year Thru 2030

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Powerhouse consulting firm McKinsey & Co. recently released the “North American gas outlook to 2030” report (summary below) with some interesting findings. Among them: Natural gas production in the Marcellus/Utica will rise an average of 6% per year from now until 2030 (next 11 years). And because of the huge supply of gas coming from M-U and the Permian, the price of natural gas will average $2.75 per thousand cubic feet (Mcf) for the long-term, perhaps even a bit lower than $2.75. That’s certainly unwelcome news–but we have to know what we’re dealing with to know how to meet the challenges ahead.
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