Cheniere Gets OK to Ship [LNG] Overseas

Upstream Online, May 20, 2011
Cheniere Energy received approval from the Department of Energy to export US natural gas overseas, the first such authorization in over forty years, the company said today.

Assuming Cheniere is granted a subsequent license from US power regulators to build its liquefaction plant in Louisiana, it may become the first company to begin shipping LNG abroad since the discovery of vast shale reserves in recent years upended the US market, flooding it with decades' worth of supply.

Cheniere has the authorization to export up to 803 billion cubic feet of natural gas per year to major LNG importers across the globe [...] in the form of liquefied natural gas [...] [Actually, Cheniere now has authorization to export domestically produced natural gas from the Sabine Pass LNG terminal as LNG to any country that has, or in the future develops, the capacity to import LNG and with which trade is permissible -- D.R.]

The Houston-based company already had approval [as of Sept 2010] to export natural gas [as LNG] to countries with which the United States had a free-trade agreement [such as Mexico, Canada, Chile and Singapore ...].

Friday's [May 20] move opens up the export to all major [and minor] LNG importers.

"With the unprecedented growth in unconventional reserves, supply of natural gas (in the United States) continues to outpace demand dramatically," said Cheniere chief executive Charif Souki.

 "The US has an opportunity to become a significant supplier in the global energy markets," he added.

The first and only US LNG export plant was built in Alaska 40 years ago [the Kenai LNG export plant began operating in 1969 -- D.R.], but is now in the process of shutting down because it is no longer competitive with newer suppliers in Asia.

Cheniere announced plans last year to build a natural gas liquefaction plant at Sabine Pass in Louisiana, which it expects will come online in 2015 on the site of its existing LNG import terminal.

The approval is subject to the Federal Energy Regulatory Commission giving approval to build the export plant. [Read full]

(Following the conditional authorization of LNG exports from the Sabine Pass terminal, Lithuania's Deputy Foreign Minister Egidijus Meilūnas discussed the implications of the export project with the U.S. State Department. Meilūnas observed that U.S. LNG exports could help lower Lithuanian natural gas prices---please see The Baltic Course, May 24, 2011. "Exporting LNG to Lithuania will allow one of our allies to diversify its natural gas supply, increase its energy security and strengthen its economy. Cheniere is happy to fill this important role in the global energy markets," said Charif Souki, Chairman, President and CEO of Cheniere Energy, Inc.---please see here. For Lithuania's natural gas consumption in 2010, please see my post "Eurogas: EU 27 Gas Consumption Rises 7.2% in 2010," including remarks, here. Separately, for the U.S. shale gas production and reserves, please see my post "[United States:] Natural Gas Production/Consumption Retrospective 2010," including remarks, here. -- D.R.)