The U.S. shale revolution has spurred construction of many types—remote-site roads, natural-gas processing plants, pipelines, storage-tank farms and petrochemical projects, among them—but few, if any, projects are as challenging to develop, permit, finance and build as the multibillion-dollar plans to liquefy natural gas and load the resulting LNG for shipment overseas.
Construction began on the second of more than a dozen proposed liquefied-natural-gas export terminals. When its three gas-liquefaction “trains” are completed and begin commercial operation in 2018, the $10-billion Cameron LNG facility in Hackberry, La., will be capable of super-cooling about 1.7 billion cu ft of natural gas a day into LNG, a dense, energy-packed liquid that—after shipment to Japanese and other buyers—will be re-gasified for use by electric utilities and other natural-gas consumers.
Most of the projects awaiting final federal approvals are located along the U.S. Gulf Coast, but a handful would be built along the West Coast or East Coast.
This “second pack” of LNG export projects faces increasing pressure from U.S. utilities, petrochemical companies and others that argue that exporting too much natural gas overseas will force domestic gas prices higher and undermine the potential for an industrial resurgence here at home.
“I expect seven or eight projects to be built,” says Javier Diaz, a senior energy analyst at Bentek Energy who tracks the LNG market.
- “Our base-case scenario includes Sabine Pass, Cameron, Freeport, Cove Point” and three other projects: the Lake Charles LNG project in Louisiana, the Elba Island LNG project in Georgia and the Corpus Christi LNG project in Texas, according to Diaz.
- “The first four have been able to secure both DOE and FERC approvals.” Lake Charles and Elba Island have off-take agreements for most of their output “and also are existing LNG import facilities.”
- The Corpus Christi project, meanwhile, “is well advanced with its FERC application” and has off-take deals in hand for 100% of its first two trains, Diaz says.
- “We may soon add Jordan Cove LNG [in Oregon], which has approvals from FERC and Canada’s National Energy Board to export both U.S. and Canadian gas and is also well advanced in the FERC process.”
The facilities needed to liquefy natural gas, store the resulting LNG and load it onto ships are complex, expensive and challenging to build. The process begins by treating the pipeline-delivered natural gas, which involves removing natural-gas liquids, water and other impurities that could freeze during the subsequent compressing and refrigeration stages.
Work on the liquefaction trains and export terminals is proving to be a bonanza worth well over $25 billion for contractors with experience in large-scale industrial engineering-procurement-construction projects. Cheniere tapped Bechtel as the EPC contractor for both Sabine Pass and Corpus Christi.
An LNG Terminal is a facility at which liquefied natural gas is “regasified” (turned back into a gaseous state) after shipment by sea from the area of production.
LNG terminals have four main functions:
- Receiving LNG tankers and unloading their cargo
- Storing LNG in cryogenic tanks able to withstand temperatures below -160°C
- Regasifying LNG to meet demand
- Feeding gas into the national transmission network.