Speed to market was key as Texas terminal opens Several brownfield liquefaction projects have faced delays Gregory, Texas — Cheniere Energy's LNG export terminal near Corpus Christi, Texas, rose from grass, mud and palm trees, opening this week ahead of several brownfield projects that began construction around the same time or earlier with some infrastructure already in place, completing its bid to stay ahead of the market and the competition. Receive daily email alerts, subscriber notes & personalize your experience. Speed to market was Cheniere's goal, as well as contractor Bechtel's, amid a flurry of existing and proposed terminal projects that are poised to make the US a much bigger player in the global supply of LNG . As an unladen tanker sat moored to a jetty at the facility on Thursday, executives made the case for Cheniere's future growth plans, even as domestic feedgas prices have risen sharply in recent weeks and uncertainty remains about the trajectory of market fundamentals heading into the next decade. Workers joined Texas Governor Greg Abbott and US Commerce Secretary Wilbur Ross at the site to mark the startup of LNG production the day before. "Demand is off the charts," CEO Jack Fusco told reporters during a question-and-answer session before the event. The terminal is the third major export facility in the US to enter service that produces LNG from shale gas. Cheniere's Sabine Pass terminal in Louisiana was the first, in 2016, followed by Dominion Energy's Cove Point terminal in Maryland in March of this year. Fusco said the first cargo from Corpus Christi would likely go to the Far East, given current netback opportunities. The Golar Tundra tanker, which is leased to Cheniere under a long-term charter, has been at the terminal since November 11, and it had been initially expected to carry the first cargo. "This tanker will be sold to whoever pays us the highest price," Fusco said. "I'm not saying that flippantly. When it is full, it would go to whoever is paying us the highest price. Right now, the highest price is looking like in the Far East. So if you were to ask me, I would bet it ends up somewhere in the Far East. So Japan, South Korea or China." With initial production from the facility being used to cool down the terminal's storage tanks, and flows of feedgas still too low for significant liquefaction, it could be days or longer before the first cargo is ready to be shipped, though Fusco said the first export would be "soon." Either the Golar Tundra or another tanker would carry it, officials said. "We're going to take it very slow and very safe," Fusco said. "When we all feel comfortable, especially our team at Bechtel and our commissioning team there, we will start loading the ship." Fusco said the Golar Tundra was brought in "in the event we progressed faster than we thought we would, we wanted to have the ship here to take the LNG. It's our ship. It's under lease. It could be here as long as I want it to be." Atlantic Basin LNG vessel charter rates jumped to $175,000/day on Thursday, the highest daily rate since 2012. This suggests that vessel charter costs in November have risen to roughly $2.38/MMBtu for deliveries to the Platts JKM market, a 173% jump compared with last November, and fully loaded shipping costs are now nearly $3.50/MMBtu. But with Platts JKM, the benchmark price for spot LNG in Northeast Asia, still trending above $10/MMBtu, a US Gulf Coast LNG exporter is still capturing an estimated $1.900/MMBtu netback to Asia, with roughly $1-$2/MMBtu of upside if it has secured its own shipping capacity, S&P Global Platts Analytics data shows. Currently, Cheniere has five liquefaction trains in operation at Sabine Pass. A final investment decision is expected by early 2019 on whether to build a sixth train there. At Corpus Christi, three trains are under construction. Train 1 will produce the first commissioning cargo. In its annual World Energy Outlook, released November 13, the International Energy Agency said the recent pickup in approvals of new liquefaction capacity in the US, Canada and Qatar after a relative lull had boosted hopes that a feared global supply shortage in the 2020s will be averted. But, the agency said, LNG market uncertainty remains heading into a pivotal time for project decisions. Several of the other US export terminals currently under construction have faced startup delays, including brownfield projects such as Freeport LNG in Texas, Cameron LNG in Louisiana and Kinder Morgan's Elba Island project near Savannah, Georgia. Those snags should not be emblematic of the of the future of industry, especially if the US wants to move ahead of Qatar and Australia in LNG export volumes, Bechtel CEO Brendan Bechtel told reporters. "It feels like the market is shifting back to a time to market environment," Bechtel said. "As people are looking out at the supply-demand picture ... we see activity picking up." -- Harry Weber, Harry.Weber@spglobal.com -- Edited by Gail Roberts, newsdesk@spglobal.com
Cheniere Energy CEO Jack Fusco has said the first shipment from the company's Corpus Christi liquified natural gas plant will be in late July.