Matt Zborowski
Staff Writer
In my fervor to report a "first" in something, I erroneously wrote during IHS CERAWeek in February that Cheniere Energy Inc. shipped the first export cargo of LNG from the US via its Sabine Pass, La., terminal. As it was pointed out to me via e-mail by one of our readers, this fact was wrong on many levels.
Firstly, let's examine the most important implication of that statement-that the Sabine Pass cargo was the nation's "first" LNG export. It completely ignores Alaska's Kenai LNG plant, operating since way back in 1969, located in Nikiski on the Kenai Peninsula.
The Kenai project, originally led by ConocoPhillips' predecessor Phillips Petroleum Co., emerged to utilize gas from North Cook Inlet field, discovered in 1962, for supply to the Asia-Pacific market and namely Japan, which has since taken more than 1,300 cargoes from Kenai. ConocoPhillips is currently certified by the US Department of Energy to export 40 bcf of LNG from the facility over the next 2 years.
So the Sabine Pass cargo wasn't the nation's first export of LNG, but it was at least the "first" export from the Lower 48, right? Nope. It was merely the first export from the Lower 48 since 1959, when The Methane Pioneer, a former World War II liberty freighter converted as perhaps the world's first LNG tanker, carried an LNG export cargo from Lake Charles, La., to Canvey Island in the UK. Seven more cargoes were shipped from Lake Charles to Canvey Island over the ensuing 14 months, according to the University of Texas Center for Energy Economics' web site.
The UK became a regular importer of LNG in 1964 following startup of the 260-MMcfd Arzew GL4/Z plant, which has been shuttered since April 2010. Algeria's state-owned Sonatrach currently has three LNG complexes operating in Arzew. The UK stopped importing gas around 1990 as North Sea gas became economical.
It also should be noted that, when it makes economic sense for the companies involved, small amounts of LNG are sometimes shipped from the US after cargoes have been imported and stored at the nation's ports. All things considered, the Sabine Pass LNG shipment would have been more accurately described as the first LNG export cargo of US-produced gas shipped from the US Lower 48 since the 1950s.
Changing regulatory regime
The Sabine Pass cargo does hold the distinction of being the first LNG export from the US to follow separate approvals from the US Federal Energy Regulatory Commission for construction of liquefaction facilities as well as DOE for the export of LNG. The Kenai plant was built before FERC's creation in 1977, and would only need FERC approval today for major expansions or modifications.
Previous DOE approvals for Kenai included evaluation of whether or not exports from the plant would deprive the Lower 48 market, and specifically the southeastern market, of then-much-needed gas supply. As recently as 8 years ago, the southeastern market objected to an export renewal because of uneasiness about local supply.
Speaking of the southeastern market, three LNG export terminals in addition to Sabine Pass are under construction-Cheniere's Corpus Christi LNG in Texas; Freeport LNG, also in Texas; and Sempra Energy's Cameron LNG terminal in Hackberry, La. Boy, how things have changed in only a brief amount of time. Just imagine how many more "firsts" I can try to claim once those become operational.
One thing I was unable to verify is whether or not the Sabine Pass cargo in fact consisted of shale gas, making it the nation's first shale gas cargo exported as LNG. In a somewhat similar scenario, Ineos Group Ltd. this month boasted the first-ever shipment of shale gas to Europe via the Ineos Intrepid LNG multigas carrier, which departed the Markus Hook terminal near Philadelphia bound for Rafnes in Norway carrying 27,500 cu m of ethane.
Regardless of who does what first, one thing is certain: The US has taken-and will continue to take-numerous important initial steps in becoming a shale gas-exporting, LNG-supplying powerhouse on the global market.
