North American LNG Projects: Political and Economic Factors
LNG is a quickly growing energy commodity. Historically, much of this growth has been attributed to a combination of Middle Eastern and South American LNG exports to European and Asian markets. Recently, North America has witnessed rapid growth in facility construction with projects in Oregon, Texas, Washington, and British Columbia. While the number of LNG projects is surging in order to meet demand, not all of these projects will succeed nor lead to outcomes investors initially predicted.
In the past year alone, North America and Asia have developed an especially close relationship with regards to LNG. Various economic and political factors have spanned the Pacific to tie these continents together in a dynamic energy exchange.
In 2003, the United States alone had 25 LNG export terminals, 91 import terminals, and 360 LNG ships—altogether handling approximately 220 million metric tons of LNG every year. According to the Federal Energy Regulatory Commission (FERC), the United States currently has over 110 LNG facilities operating within its borders with dozens of projects on the horizon. The EIA expects the United States will be a net exporter of LNG by 2015.
As of November 15, 2014, the following US projects have been approved for construction:
- Gulf of Mexico:
- 1.0 Bcf/d (Main Pass McMoRan Exp.)
- 1.4 Bcf/d (TORP Technology-Bienville LNG)
- Offshore Florida
- 1.2 Bcf/d (Hoegh LNG—Port Dolphin Energy)
Export Terminals (Not yet under Construction)
- Sabine, LA:
- 2.76 Bcf/d (Cheniere/Sabine Pass LNG)
- FERC Report #: CP11-72 & CP14-12
Export Terminals (Not yet Under Construction)
- Hackberry, LA:
- 1.7 Bcf/d (Sempra—Cameron LNG)
- FERC Report #: CP13-25
- Freeport, TX:
- 1.8 Bcf/d (Freeport LNG Dev/Freeport LNG Expansion/FLNG Liquefaction)
- FERC Report #: (CP12-509)
- Corpus Christi, TX: 1.0 Bcfd (Occidental Energy Ventures—Ingleside Energy)
- Corpus Christi, TX: 2.6 Bcfd, (Cheniere—Corpus Christi LNG)
- Fall River, MA: 0.8 Bcfd, (Hess LNG/Weaver’s Cove Energy)
- Port Arthur, TX: 3.0 Bcfd (Sempra)
- Logan Township, NJ: 1.2 Bcfd (Hess LNG – Crown Landing LNG)
- Cameron, LA: 3.3 Bcfd (Cheniere—Creole Trail LNG)
- Port Lavaca, TX: 1.0Bcfd (Gulf Coast LNG Partners—Calhoun LNG)
- Bradwood, OR: 1.0 Bcfd (Northern Star Natural Gas LLC—Northern Star LNG)
- Baltimore, MD: 1.5 Bcfd (AES Corporation—AES Sparrows Point)
- Coos Bay, OR: 1.0 Bcfd (Jordan Cove Energy Project)
As of November 2014, there are six export facilities proposed in Canada: three in Kitimat, BC, two in Prince Rupert, BC, and one in Guysborough County, NS. Furthermore, as of September 2014, an additional 10 LNG export facilities have entered the regulatory review process: eight to be constructed in British Columbia and two in Rivière-du-Loup, QC, and Quebec City, QC, respectively.
The following is a snapshot of major Canadian LNG facilities scheduled for construction:
|Name||Start /Finish Date||Partners||Price||Location||Capacity||Source of Natural Gas|
|Pacific North West LNG||2014-2017||Petronas, Japex, Petroleum Brunei, Indian Oil Corp||$11 Billion||Land-based facility on Lelu Island, Prince Rupert||19.6 mt/y||Progress Energy’s holdings in North Montey|
|Woodfibre LNG Export Pte. Ltd.||2014-2017||Pacific Oil & Gas||$1.7 – 2.0 billion||Squamish, BC||2.1 mt/y||Existing Fortis, BC gas pipeline|
|Stewart Energy LNG||2015-2019||Canada Stewart Energy Group Ltd.||Unknown||Floating and land-based facilities, Stewart||5 mt/y||Unknown|
|LNG Canada Gas||2015-2017||Joint venture Shell Canada ltd., Korea Gas corporation||Unknown||Land-based facility: Kitimat, BC||Unknown||TransCanada’s Coastal GasLink Pipeline Ltd.|
|Triton LNG||2016-2021||AltaGas Ltd., Idemitsu Kosan||Unknown||Floating facility, Kitimat or Prince Rupert (both BC)||2.3 mt/y||PNG’s Looping Project|
|Aurora LNG||2014-2017||Nexen (CNOOC), INPEX, JGC Corporation||Unknown||Land-based facility, Grass Point, near Kitimat, BC||24 mt/y||Nexen assets in Horn River and Cordova basins|
|Kitimat LNG||Late 2010’s||Chevron and Apache have 50/50 equity||Unknown||Land-based facility, Bish Cove, Kitimat||Unknown||Chevron/Apache holdings in Horn River, Liard gas basins|
|Prince Rupert LNG||2017-2020||BG Group||$16 billion||Land-based facility, Ridley Island, Prince Rupert||21.6 mt/y||Pipeline running from Cypress to Ridley Island.|
|Unknown||Late 2010’s||Woodside Petroleum Ltd.||Unknown||South site of Grassy Point, Kitimat, BC||Unknown||Unknown|
|Douglas Channel LNG||2014-2016||BC LNG Export Cooperative, Haisla Nation, LNG Partners||$500 million||Floating facility, Kitimat, BC||Unknown||Unknown|
While Qatar remains the largest exporter of LNG in the world, the North American LNG market is quickly growing. However, many challenges lie ahead. With geopolitical tensions on the rise in Ukraine, as well as environmental and First Nations activists pressing for energy reform in Canada, factors that at first seem far removed from LNG facilities in the Asia-Pacific region could have a significant impact on legislation, regulations, and financial matters in the years ahead. Environmental politics and strict regulations have been difficult barriers for LNG markets. The approval of the NEB and FERC are required to permit project capacity, construction sites, and service dates. In the case of Canada, this process is lengthy, at times leading to stand-offs among the government, First Nations groups, and environmental regulators, as in the case of Enbridge’s Northern Gateway project. Equally important are the factors driving the shale gas revolution in the United States and its surplus of natural gas, which appear to be strong influences in shaping the future of natural gas exports in both Canada and the United States.
Capturing a higher-level overview of LNG projects and facilities can enable traders, investors, and analysts to make sound investment decisions and enhance overall market understanding. LNG markets are soon to be the most fruitful in the Asia-Pacific region as North American facilities are constructed, international investments made, and the Tokyo Commodities Exchange is soon to trade the world’s first LNG futures contracts. Whether or not future North American LNG projects will succeed is still too soon to tell. What does seem clear is that the United States and Canada will compete for foreign consumers as each country has excess natural gas to profit from, making the Asia-Pacific region one of the most dynamic and exciting markets in the years to come.
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