ARC Resources signs natural gas supply agreement with Cheniere

Nov. 29, 2023
ARC Resources agreed to supply natural gas for Cheniere's SPL Expansion Project.

ARC Resources Ltd., Calgary, through its subsidiary ARC Resources US Corp. has agreed to a long-term natural gas supply agreement with Sabine Pass Liquefaction Stage V LLC, a subsidiary of Cheniere Energy Inc.

The agreement, the second long-term deal with Cheniere, “further progresses the commercialization of the SPL Expansion Project,” and enables Cheniere to deliver increased quantities of Canadian natural gas to Europe, said Jack Fusco, Cheniere's president and chief executive officer.

Under the agreement, ARC will supply 140,000 MMbtu/d of natural gas for a term of 15 years beginning with commercial operations of the first train (Train 7) of the Sabine Pass Stage 5 Expansion Project (SPL Expansion Project) in Cameron Parish, La., anticipated by 2029.

The SPL Expansion Project is being developed with a production capacity of up to 20 million tonnes/year (tpy) of total LNG capacity. In May 2023, certain Cheniere Partners subsidiaries entered the pre-filing review process with respect to the project with the Federal Energy Regulatory Commission.

ARC will utilize its existing contracted pipeline capacity to the US Gulf Coast to supply the natural gas volumes to Cheniere, it said in a release Nov. 29. Under the agreement, ARC will receive an LNG price based on the Dutch Title Transfer Facility (TTF) price, after fixed deductions for liquefaction, shipping, and regasification fees.

The agreement is subject to, among other things, a positive final investment decision on Train 7. The LNG associated with this gas supply, about 0.85 million tpy, will be marketed by Cheniere Marketing International LLP.

ARC currently has an agreement to supply 140,000 MMbtu/d to Cheniere's Corpus Christi Stage III expansion, and a non-binding memorandum of understanding to supply and liquefy 200 MMcfd of natural gas to Cedar LNG on Canada's West Coast.

ARC's first agreement with Cheniere, announced in 2022, provides exposure to LNG-pricing based on Platts Japan Korea Marker. Together with the supply to Cheniere's SPL Expansion Project, ARC will supply about 20% of its current natural gas production to global markets with overseas pricing upon commencement of the contracts.