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    US LNG exports to surge in 2017

    By: Hellenic Shipping News

    The US LNG industry expects another landmark year in 2017, with export volumes set to more than double to a gas equivalent of at least 3 Bcf/d (85mn m³/d).

    The US likely would be the fifth- or sixth-largest exporter in the world in 2017 by volume, depending on how quickly some new liquefaction trains reach full output. The US would have 30.8mn t/yr of export capacity by the end of 2017, but it is unclear if would surpass Indonesia, which was the fifth-largest exporter in 2015 with 21.5mn t. Nigeria was the fourth-largest exporter last year with 27.5mn t.

    But oil price levels, stagnant global demand and an oversupplied market likely will continue to make it difficult for additional North American LNG export projects to reach final investment decisions next year. The economics of US LNG exports are based on a wide differential between domestic gas prices and global oil prices.

    Sabine Pass started exporting from its first liquefaction train in February, the first LNG exports from the contiguous US in more than 50 years. Exports from the second train started in August and gas intake at Sabine Pass has averaged about 1.4 Bcf/d (40mn m³/d) since 29 October, after a one-month maintenance shutdown.

    The terminal is exporting about two cargoes a week, each equivalent to about 3 Bcf of gas.

    Cheniere is already among the largest US gas consumers and its intake is scheduled to double next year. The third liquefaction train at Sabine Pass likely will start exporting test cargoes in early 2017 and be placed into long-term service in June 2017, while the fourth train likely will start exporting test cargoes in the first or second quarter and begin long-term operations in August.

    Cheniere is building five liquefaction trains at the $20bn terminal, each with peak capacity of 5mn t/yr, equivalent to about 694mn cf/d of gas, and baseload capacity of 4.5mn t/yr. Train 5 is scheduled to come on line in 2019.

    Six US LNG export terminals are being built, with four along the Gulf coast and two along the Atlantic seaboard. If they are completed as planned, the six facilities would have combined peak capacity of 75mn t/yr, nearing Qatari output of 77mn t/yr.

    The $3.8bn, 5.75mn t/yr Cove Point project is on schedule to come on line late 2017 and the remaining four projects are on track to start operating in 2018-19.

    At the beginning of 2016, at least 16 North American LNG export projects were targeting final investment decisions this year, with ten in the US and six in Canada. Of those, only Georgia’s $2.3bn, 2.5mn t/yr Elba Island terminal and the $1.6bn, 2.1mn t/yr Woodfibre LNG project in the western Canadian province of British Columbia (BC) reached that milestone.

    Those two projects are relatively small and cheap, potentially indicating that in the current tight market such projects have a better chance to come to fruition than larger projects typically costing at least $10bn.

    One large project that may make a final investment decision next year is the planned $36bn, 13mn t/yr Pacific NorthWest terminal on Lelu Island, BC. Malaysian state-owned Petronas, which is spearheading the project, likely will complete in the summer of 2017 a total review of the project.

    Louisiana’s $4.4bn, 8mn t/yr Magnolia LNG project in December said it is targeting a 2017 investment decision.

    In July, the Shell-led, C$25bn-$40bn ($19bn-$30bn), 27.6mn t/yr LNG Canada project in BC indefinitely postponed an investment decision.

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