Cove Point LNG Ships First Marcellus Cargo to Japan

LNG Sakura

Last week MDN reported that a ship called Adam had departed the Cove Point LNG facility in Maryland with the very first shipment of Marcellus molecules (see First-Ever Shipment of Marcellus LNG Leaves Cove Point, Maryland). Although the first shipment of Marcellus LNG was/is owned by Japan, the destination for the cargo was/is still unknown. The second shipment, ever, of Marcellus LNG from Cove Point left port yesterday–also owned by Japan. However, the ship’s manifest indicates this second shipment IS heading to Japan…
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Half of India’s Contracted US LNG Won’t End Up in India

MDN brought you the great news earlier this week that late Sunday night the very first shipment of Marcellus LNG had left the dock at Cove Point, Maryland (see First-Ever Shipment of Marcellus LNG Leaves Cove Point, Maryland). We still don’t know where the first shipment will end up. In the world of Big Energy and LNG, sometimes the destination isn’t known until the ship is under way! The first shipment is owned by Japan. Between Japan and India, all of the Marcellus LNG produced at Cove Point is spoken for (i.e. contracted) for the next 20 years. However, that does not mean all of that LNG will end up in Japan or India. Far from it. Both countries are wheeler dealers, swapping LNG cargoes from around the world. Japan decided it could get LNG from a closer-to-home source and so has swapped/sold the first Marcellus Cove Point shipment to someone else (we’ll tell you who when we find out). It’s likely going to be the same for the first shipment owned by India. We recently spotted the following article from India which says HALF of India’s U.S. contracted LNG–from both Cheniere Energy along the Louisiana Gulf Coast, and from Dominion’s Cove Point facility–will NOT end up going to India but instead has already been swapped or sold, at least for the first year…
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First-Ever Shipment of Marcellus LNG Leaves Cove Point, Maryland

Finally. Finally! Finally!!! The very first cargo of Marcellus Shale gas has been liquefied, loaded and as of Sunday night, set sail from Dominion’s Cove Point LNG plant–heading for we’re not sure where yet. We’ve waited YEARS for this day! Let’s pop the cork on a bottle of the bubbly and celebrate. Last week MDN told you that a ship called the Patris was due to dock at Cove Point and load the first shipment of Marcellus molecules (see Dominion Announces Cove Point LNG Open for Business). It appears that information was incorrect. It was correct at the time! Either the Patris was redirected somewhere else, or we’re not sure what happened. But news has just broken that late Sunday night, close to midnight, a ship by the name of Adam departed Cove Point loaded with the very first Marcellus shipment. Several more ships are said to be headed for Cove Point now. International shipping isn’t our specialty, so we won’t quote chapter and verse for which ships and when. This first shipment that left Sunday belongs to Japan, but there’s no indication it will actually go to Japan. As we’ve noticed and have been reporting, both Japan and India (which will take all of the LNG Cove Point can produce) are in the game of swapping cargoes they own, sending Cove Point cargoes to customers closer to the point of origin in return for receiving cargoes that originate closer to their own shores. When we hear where the first Marcellus cargo lands, we’ll let you know. In the meantime, here’s the information we can find about the very first load of Marcellus Shale gas to get exported from Cove Point…
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Dominion Announces Cove Point LNG Open for Business

Dominion Cove Point LNG is open for business–so says Dominion in a press release issued yesterday. As MDN reported late last week, the Gemmata LNG carrier had returned to Cove Point to load a second commissioning cargo of LNG (see 2nd Commissioning Cargo Now Being Loaded at Cove Point LNG). The commissioning cargo was not Marcellus/Utica gas but gas brought to the facility to be used in working out all the kinks–to be sure the facility operates as advertised. That’s now done. The LNG carrier Patris was due to dock at Cove Point Monday morning. As far as we can tell, that did happen. According to Dominion’s statement, the facility entered commercial service as of yesterday, which we take to mean the Patris is getting loaded as you read this. One article about the opening of Cove Point seems to imply the natural gas feeding it may not all come from the Marcellus/Utica. That’s bunk. We have information showing 100% of the gas will come from Marcellus/Utica drillers…
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2nd Commissioning Cargo Now Being Loaded at Cove Point LNG

Gemmata returns to Cove Point

Yesterday our favorite government agency, the U.S. Energy Information Administration, issued its weekly Natural Gas Update report. In one of the short bullet point notes we learned important new information about the Cove Point LNG export facility. We learned that the next ship to arrive and load up at the facility will NOT be the Patris, as we were led to believe (see Cove Point LNG Gets Ready to Ship First Marcellus Molecules in Apr). Instead, the first ship that loaded molecules at the facility, the Gemmata, has returned and is (as you read this) loading a “second commissioning cargo.” Which takes some explanation. The first commissioning cargo was gas brought to the facility by an LNG tanker and unloaded, regasified, and then put through liquefaction again–in order to test the facility. That first cargo was natural gas from Nigeria, brought in by Shell. And Shell shipped out the first commissioning cargo on the Gemmata on March 1 (see Cove Point Ships First LNG Cargo – But Not M-U Gas). This is the second commissioning cargo–so apparently the ship that brought in the original Nigerian gas was bigger than the Gemmata. The Gemmata unloaded its shipment of Nigerian gas in the UK, turned around and came back, docking at the facility on Tuesday of this week. Yes, the Patris is still on the way to Cove Point and will dock on April 9, next Monday, and will begin loading the first batch of Marcellus molecules…
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Cove Point LNG Gets Ready to Ship First Marcellus Molecules in Apr

Patris LNG tanker

In early March Dominion Energy’s Cove Point LNG plant shipped its first-ever load of LNG (liquefied natural gas), although the gas itself was imported from Nigeria, used in testing the plant (see Cove Point Ships First LNG Cargo – But Not M-U Gas). Last week MDN told you that a BP-contracted LNG tanker, Patris, is on the way to Cove Point but will not dock until April 9th (see Cove Point LNG: BP Ship Coming for 1st M-U Pickup; India Wants Swap). The Patris will be the first ship to carry Marcellus molecules from the facility to distant shores. It now looks like we have confirmation, of a sort, that indeed the Patris will dock and load Marcellus LNG on April 9. That confirmation comes from Platts, which reports that on Monday feed gas (from the Marcellus) spiked up to 640 million cubic feet per day (MMcf/d), which is “the highest level in more than three weeks” of gas flowing into the facility. Here’s the latest on our continuing watch of Cove Point, a true game-changer for the Marcellus, and for companies like Cabot Oil & Gas that will send gas to the facility…
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Cove Point LNG: BP Ship Coming for 1st M-U Pickup; India Wants Swap

“Hey Jim, what’s happening with Cove Point LNG? Didn’t you say a ship was on the way to pick up the very first cargo of Marcellus molecules?” Great question. Cove Point did see its first cargo set sail in early March (see Cove Point Ships First LNG Cargo – But Not M-U Gas). However, that first cargo was imported gas (from Nigeria) used to test the facility as part of the commissioning process. The plant chilled the Nigerian gas and loaded it onto a waiting LNG tanker and the tanker left. So yes, the plant works, but the first batch wasn’t M-U molecules, so in our book it doesn’t really count. We also told you that a second LNG tanker, called Methane Spirit, was on the way to Cove Point and would be the first ship to load and distribute M-U molecules to distant shores. Orders have changed. Methane Spirit is no longer en route to Cove Point. However, a BP-chartered ship by the name of Patris is on the way to Cove Point. Meanwhile, those who keep an eye on these things say there is currently very little feed gas (i.e. Marcellus gas) flowing into the Cove Point facility. Meaning what? Meaning it looks like the original rumor from January that Cove Point won’t be up and running, shipping Marcellus gas until April, was correct (see Uh-Oh: Cove Point LNG Exports Possibly Delayed Until April). The Patris is not due to dock at Cove Point until April 9th. Meanwhile, as India gets ready for its first contracted shipment of LNG from Cove Point, the country no longer wants it! They want to swap their Cove Point shipments with someone else. We explain it below…
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FERC Grants Cove Point LNG Permission to Begin Commercial Ops

As MDN reported last Friday, the very first cargo of LNG (liquefied natural gas) left the Cove Point LNG export facility in Lusby, Maryland (see Cove Point Ships First LNG Cargo – But Not M-U Gas). However, as we accurately surmised, that first shipment did not contain Marcellus/Utica gas molecules, but instead the gas aboard was previously shipped in from Nigeria by Shell, used in the commissioning process to test the facility. Now that the commissioning process is complete, Dominion Energy, operator of the plant, requested (on Friday) a full-blown kiss of approval from FERC to begin real, commercial operations–chilling and liquefying Marcellus gas for export. On Monday, FERC granted its big, sloppy, wet kiss of approval. Cove Point is now up and running “for real”…
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Cove Point Ships First LNG Cargo – But Not M-U Gas

Earlier this week MDN told you the ship that would carry the very first cargo of LNG from Cove Point LNG had docked (see Ships Line Up for Cove Point LNG – 1st Ship Docked). LNG tanker Gemmata, as we reported, docked earlier this week at the Cove Point terminal. We assumed (incorrectly) that it would carry Marcellus/Utica gas when it left…
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US LNG Exports Report 2016 to 2017 – Where is Our Gas Going?

The U.S. Department of Energy’s Office of Fossil Energy has just released an interesting report that shows the number and volume of LNG (liquefied natural gas) exports from Feb. 2016 (when U.S. LNG exports began) to Dec. 2017. It’s really quite fascinating. For example, which country do you think we have (so far) shipped more LNG to than any other country? Someplace in Europe? Maybe Japan or China? Nope. The #1 one trading partner that received our LNG for 2016-2017 was…Mexico! That’s right, Mexico. Even though we have all sorts of natural gas pipelines crossing the border into Mexico. Apparently those pipelines don’t connect with large parts of the country, so LNG tankers meet the need instead. Number two on the list of countries receiving our LNG exports: South Korea. Followed by China (#3), Japan (#4) and Chile (#5). The report also breaks down deliveries by other criteria. For example, even though Mexico was #1 on the list for our exports, if you break our exports down regionally, Asia/Pacific received most of our exports, while Latin America (including Mexico) was the #2 region. Or how about this: Free Trade Agreement (FTA) countries vs. non-FTA countries. Would it surprise you to learn that non-FTA countries got more of our exported LNG (52.7%) than FTA countries (43.3%)? The reason MDN readers should be interested in LNG exports is because exports are a huge future market for Marcellus/Utica gas. Be sure to spend some time with this important report…
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Dominion Cove Point Begins Producing LNG – for Shell

On Monday, Dominion Energy CEO Tom Farrell reported that the company’s Lusby, Maryland Cove Point LNG export facility will become operational and begin to export LNG in “early March” (see Dominion CEO Says Cove Point LNG Operational in “Early March”). Then yesterday, Dominion issued a press release to say Cove Point has now (as of this week) begun producing LNG! What gives? This “we’re now producing LNG” is part of the commissioning process which began back in December (see Dominion Cove Point LNG Export – Dress Rehearsal Begins). Feed gas is imported and used for testing purposes, and is the final step before the plant goes online into full production. The feed gas came from Shell (sourced from Nigeria), and Shell will take delivery of the LNG that results. When the initial commissioning is done, Marcellus/Utica gas will then begin flowing to the plant and the LNG produced will begin shipping (by “early March”) to Japan and India…
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Dominion CEO Says Cove Point LNG Operational in “Early March”

Earlier this month MDN brought you news that Dominion’s Cove Point LNG export facility along the shore of Maryland has delayed its official start-up until perhaps as late as April (see Uh-Oh: Cove Point LNG Exports Possibly Delayed Until April). An expert analyst theorized the reason for the delay is to install two flaring systems at the plant (a safety precaution). We still don’t know the exact reason for the delay, but we now have confirmation direct from the top at Dominion, from CEO Tom Farrell, that Cove Point will become operational and begin to export in “early March.” On an analyst phone call yesterday to discuss Dominion’s fourth quarter and full year 2017 results, Farrell had this to say about Cove Point…
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Canada Rejects Discounted Rates for U.S. Shale Gas to New Brunswick

Maritimes and Northeast Pipeline map – click for larger version

The Maritimes and Northeast Pipeline (M&NP) runs from Goldboro, Nova Scotia through Nova Scotia and New Brunswick to the Canadian – U.S. border near Baileyville, Maine. The pipeline continues through Maine and New Hampshire into Massachusetts where it connects with the existing North American pipeline grid at Dracut, Massachusetts. It used to be that offshore natural gas from Nova Scotia fed the pipeline, which ran from north to south. But those offshore fields are running low, and the Marcellus/Utica appeared. These days the M&NP runs from south to north–at least part of the system does. One of M&NP’s big customers is Irving Oil, with a refinery and cogeneration (natgas-fired) power plant in Saint John, New Brunswick. Irving is an M&NP customer. However, another pipeline company offered to build a new pipeline to feed Irving Oil’s operations with natural gas, at discount. M&NP said that’s crazy. They want to keep Irving as a customer, so they cut a deal with Irving to import natural gas from the U.S. (in all likelihood, Marcellus/Utica gas), flowing the gas from the Maine border to St. John and Irving’s operation there. The only thing standing in the way is the Canadian National Energy Board (NEB)–which is kind of like our own Federal Energy Regulatory Commission (FERC). The deal offered by M&NP requires NEB approval because it lowers the toll (fee charged) and changes directions to import/flow U.S. gas to Irving. Last week the NEB rejected M&NP’s plan, saying the plan is “premature” because the Maritimes region is facing a period of uncertainty. It is not clear (to the NEB) where natural gas will ultimately come from, and what the market actually needs. Offshore? Canadian fields? Import from U.S.? It’s not yet clear how it will all shake out. So the NEB turned down M&NP’s request. What happens now?…
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Tellurian Founder Says U.S. Needs $150B in Gas Infrastructure

Charif Souki

In December 2015, evil corporate raider Carl Icahn (invests in companies so he can fire a bunch of people, boost the stock and pocket the profit) fired Cheniere Energy CEO Charif Souki (see Evil Corporate Raider Carl Icahn Claims Another CEO Scalp). Souki didn’t let it slow him down. He started a new LNG export company, Tellurian, to compete with his old company (see Revenge: Fired Cheniere CEO Starts Competing LNG Company). We kind of had (past tense) a soft spot for Souki, getting tossed from the company he started. But then we read comments he made about Donald Trump in the run-up to the 2016 election. Souki thought (like many) that Trump had no chance of winning, but if he did, Souki said he would “reconsider my nationality.” Souki was born in Egypt but is an American citizen now. After Trump’s victory, Souki forgot about his threat to leave the country and change his citizenship. We didn’t. We’re still waiting. Souki turned up on CNBC again yesterday, this time with faint praise for Trump (but also words of praise for the abysmal failure Obama). Souki had a chat with Jimmy Cramer, telling Cramer the U.S. urgently needs $150 billion worth of infrastructure investment (i.e. pipelines) in order to get our prodigious amounts of natural gas from inland places where’s extracted to the shoreline–so it can be exported…
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