US Plans for Gas Exports

Cheniere Energy Inc. has received US Department of Energy approval to export domestic liquefied natural gas through the Gulf of Mexico to an expanded marketplace.

The company plans to refit its existing Sabine Pass gas import terminal in Louisiana to be able condense to and ship over 800 billion cubic feet of gas per year of domestically produced supply.  The project would be the first bi-directional LNG processing facility capable of importing and exporting LNG, said Cheniere Chairman and CEO Charif Souki.

Cheniere’s move comes as a result of the shale gas revolution, which has led to a remarkable shift in the natural gas marketplace in the US.  Sabine Pass opened in 2008 as a terminal to take in natural gas shipments from overseas. Fearing a shortage, Cheniere and other companies had built gas-import terminals during the past decade.

However, a surge in natural gas production from shale gas fields changed market dynamic, reducing the need for imports.

“With the unprecedented growth in unconventional reserves, supply of natural gas continues to outpace demand dramatically,” said Souki.

In September 2010, Cheniere received permission to ship gas to 15 countries with which the US had free trade agreements. The new authorization extends to all US trading partners.

Cheniere plans to begin construction next year and exporting gas as soon as 2015.  The project still needs final environmental permits and approval from the Federal Energy Regulatory Commission.

Cheniere is the first of three groups to seek permission to export gas from the lower 48 states. Macquarie has joined with US company Freeport LNG in a plan to export as much as 1.4bn cu ft a day via Texas. A joint venture of BG Group and Southern Union has requested to ship up to 2bn cu ft a day from Louisiana.