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Chevron, Total sign deals for Sabine Pass LNG Cheniere gets financing for Louisiana terminal as majors sign big capacity deals Allen Baker Petroleum News Contributing Writer
Activity is continuing at a rapid pace in the liquefied natural gas field as companies lock in capacity at terminals that are set for construction. Two majors — ChevronTexaco and Total — signed up on Nov. 9 for major capacity at the Sabine Pass LNG terminal to be built by Cheniere Energy Inc.
Meanwhile, TransCanada and Shell announced plans for an offshore terminal in Long Island Sound to serve the huge Northeast U.S. market. ChevronTexaco ownership option The 20-year supply deal between a subsidiary of ChevronTexaco Global Gas and Sabine Pass LNG L.P., a subsidiary of Cheniere, gives the San Ramon, Calif., super major 700 million cubic feet per day of regasification capacity. ChevronTexaco has an option to increase its capacity to a billion cubic feet per day or reduce it to 500 million cubic feet daily.
ChevronTexaco also has an option to take a 20 percent limited partner interest in Sabine Pass LNG for $200 million.
The same day the ChevronTexaco contract was signed, Cheniere announced that Total LNG had exercised its option for a billion cubic feet of capacity at the terminal. The preliminary agreement had been announced Sept. 2. It also covers 20 years, starting no later than April 2009
Total also has an interest in the Altamira LNG receiving terminal on the eastern coast of Mexico near Tampico, and already has a major stake in LNG export operations, with sales of 7 million metric tons of LNG last year.
Markets looked kindly on Cheniere’s role in the deals, sending its stock up more than 40 percent in just two days after the news was announced. Cheniere has financing Cheniere announced Nov. 8 that two major banks with worldwide operations had agreed to arrange financing of $741 million for the terminal, to be located in Cameron Parish, La. The financing will be led by units of HSBC Holdings and Societe Generale. Construction for the facility, with initial capacity to process 2.6 bcf of natural gas daily, is expected to begin late in the first quarter of next year.
Houston-based Cheniere expects a final permit for Sabine Pass to be issued by the Federal Energy Regulatory Commission before the end of this year. The terminal received a favorable decision in FERC’s Aug. 12 Draft Environmental Impact Statement, which found the facility would have limited adverse environmental impact. Northeast terminal planned With more than 40 LNG terminals in various stages of planning, development or operation in North America, TransCanada and Shell announced a proposal for an offshore facility in Long Island Sound. The terminal, roughly halfway between Connecticut and New York, could handle about a billion cubic feet daily, the companies said Nov. 9.
The Northeast is energy-hungry and far from supplies, but local resistance has already scuttled plans for one terminal in Maine, and others are also facing protests about safety concerns.
The new project will basically have to start from square one in the permitting process, which alone will take two or three years. Still, the companies hope to be operating the terminal by late in 2010. Construction costs are estimated at $700 million.
The Shell-TransCanada venture, called Broadwater Energy, would be nine miles off New York and 11 miles off Connecticut, roughly even with New Haven in the broadest part of the sound. It is about 25 miles from a potential subsea connection with an existing pipeline. Water depth is 70 to 90 feet in the area of the proposed floating terminal.
The companies would build and anchor the terminal, with Broadwater Energy LLC as the operator. Shell would own all the capacity and supply the LNG, while TransCanada would concentrate on the distribution end.
Shell has huge LNG capacity in its worldwide portfolio, including the Sakhalin II project, where Shell is building what is expected to be the largest LNG production facility in the world. Shell also figures in projects in Nigeria, Oman, offshore Australia, Brunei, and Malaysia.
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