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US Magnolia LNG export project in Louisiana supplying Vietnam to get expansion permit

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The US Magnolia LNG export project in Louisiana, which recently agreed to supply cargoes to a new terminal in Vietnam planned for the Mekong Delta, has received authorization from the regulators to expand production from 8 million tonnes per annum to 8.8 MTPA.

The Federal Energy Regulatory Commission issued the draft supplemental environmental impact statement concluding that the modifications for the capacity increase, with the additional mitigation measures recommended, would continue to avoid or reduce impacts to less than significant levels.

“There would be no substantive change in construction noise or air emissions from that previously analyzed in the Commission’s EIS for the Magnolia LNG project and modeling demonstrates there would be no exceedances of the National Ambient Air Quality Standards,” said the FERC report.

The FERC set 18 November 2019 as the deadline for receipt of public comments on the capacity increase.

The supplemental final environmental impact statement is then expected to be issued by the FERC on or before 24 January 2020.

The Magnolia LNG project developer is the Australian-listed company LNG Ltd, which in September 2019 signed an agreement to supply the Bac Lieu Province import terminal.

LNG Ltd said it Mangolia LNG, would supply 2 MTPA to Vietnam from its revised 8.8 MTPA of output.

The Louisiana shipments would be on a free-on-board (FOB) basis for a 20-year term with options to extend the term.

The Vietnamese project includes the construction of the import terminal, a 3,200-megawatt combined-cycle power plant and delivery of power generation to Bac Lieu Province.

That venture is expected to commence operations in 2023 pending finalization of anticipated government approvals.

“We thank FERC for their expeditious diligence and review of Magnolia LNG’s production capacity amendment, and we are pleased with the findings,” said LNG Ltd Chief Executive Greg Vesey.

“The increased LNG production would be achieved by an increase in the capacity and pressures of the ammonia refrigerant cycle and the mixed refrigerant cycle,” said the FERC.

“The auxiliary boiler stream production would also be increased to provide more power to the ammonia compressor steam turbine driver. In addition to the liquefaction uprate changes, the gas pre-treatment process would change from a single heavy hydrocarbon removal column to separate de-ethanizer and debutanizer columns,” explained the report.

“An electrically driven overhead booster compressor is proposed as part of the heavy hydrocarbon removal changes,” it added.

“Furthermore, the flare stack would be relocated on the project site, and a separate marine flare added,” stated the regulator.

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Kitimat LNG open house

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Sept 27 (LNGJ) – The Kitimat LNG export project in the Canadian province of British Columbia, led by US major Chevron Corp., will be the subject of Open House meetings soon  and a period of public comment on amendments to the venture. The meetings are being organized by the BC Environmental Assessment Office and will take place in the towns of Kitimat and Terrace. “A 30-day public comment period on the amendments will start on October 7, 2019 and end on November 6, 2019,” said the regulator.

   The Kitimat LNG project is being developed at Bish Cove by Chevron and Woodside of Australia and each has a 50 percent stake as well as the support of the Haisla First Nation. Chevron in July 2019 had a project amendment request accepted by the regulators for a redesigned project and an increase in export capacity to 18 million tonnes per annum and an initial three processing Trains instead of two. Feed-gas for the Kitimat liquefaction plant will come from the large upstream shale-gas resources in 322,000 net acres owned by the project in the Horn River and Liard Basins of northeast BC.

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Expected Cargo This week

We expect the end of this week to have seen 73 – 75 cargo liftings amounting to c. 5.29mmt, representing roughly one cargo less week-on-week.

Pacific Basin 

The Pacific Basin is expected to account for 35 of this week’s liftings, meaning that roughly 2.27mmt will be exported throughout the Basin by Sunday.

In Australia, Gorgon LNG is expected to lead the continent’s export terminals, with 4 cargoes (c. 0.29mmt) likely to be lifted, followed by Wheatstone LNG (3 cargoes, 0.21mmt) and NWS LNG (3 cargoes, 0.19mmt). Meanwhile, Ichthys LNG, Australia Pacific LNG, Queensland Curtis LNG, Pluto LNG and Gladstone LNG are expected to ship a total of 9 cargoes amounting to 0.64mmt by Sunday. Shell’s Prelude FLNG barge and Darwin LNG, meanwhile, are not currently expected to ship LNG this week.

In Southeast Asia, Malaysia LNG is scheduled to export up to 9 cargoes amounting to 0.47mmt. Across the border, Indonesia is looking to export 2 cargoes amounting to 0.13mmt from Tangguh LNG. However, the LNG Maleo and the Tangguh Batur are currently waiting off Bitung and may be called to Donggi-Senoro at a later stage.

Other LNG export plants within the Basin, namely Russia’s Sakhalin-2 LNG at Prigorodnoye on Sakhalin Island and PNG LNG in Papua New Guinea are expected to export 2 cargoes each, totalling 0.28mmt. 

Atlantic Basin

The Atlantic Basin is expected to see 20 cargo liftings, so that up to 1.42mmt will be exported throughout the Basin by Sunday night. 

A significant share of those liftings is going to materialise in the United States, where Sabine Pass LNG, Corpus Christi LNG and Cameron LNG are preparing for a total of 8 cargoes (1.32mmt) to be lifted aboard, inter alia, the SM Seahawk (Sabine Pass) and the Oak Spirit (Corpus Christi LNG). At the time of writing – Freeport LNG and Cove Point LNG – however were not scheduled to load cargoes this week. The two terminals’ current liftings horizon lies between 9 October and 3 November.

In South America and the Caribbean, the Kinisis and the British Achiever are currently circling in the Point Fortin waiting area off Atlantic LNG in Trinidad & Tobago. Nevertheless, it is currently unclear whether these vessels will lift cargoes from Atlantic LNG this week or next. 

On the other side of the Atlantic, we expect up to 14 cargoes (0.92mmt) to be lifted during this week. Nigeria’s Bonny Island facility is currently scheduled to export 5 cargoes, amounting to 0.33mmt, whilst Algeria is expected to load 2 cargos from Arzew. Market visibility also suggests Angola is going to export a cargo this week.

In Europe, Snøhvit LNG is expected to ship 1 cargo (0.07mmt) via the Arctic Lady whilst Yamal LNG is going to load 3 cargoes amounting to 0.22mmt by Sunday.

Middle East

Middle Eastern cargo liftings this week are likely to amount to 18 (1.45mmt) by Sunday, most of which (1.14mmt) are going to take place at Qatar’s Ras Laffan LNG complex, inter alia aboard the Hanjin Ras Laffan and the Milaha Ras Laffan.

Oman is currently looking to load 3 cargoes (0.19mmt) aboard the Hyundai Technopia and the Hyundai Aquapia by Sunday.

The plant on Das Island in the, meanwhile, is currently expected to load one cargo aboard the Ghasha this week. 

Current visibility therefore suggests peak loading activity of 17 cargoes on Tuesday, followed by 13 on Wednesday, whilst Sunday is looking to be least active with 5 liftings.

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PNG expansion deals

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Sept 26 (LNGJ) – Papua New Guinea said at the annual LNG Producer-Consumer Conference in Tokyo that the nation was hoping for a good deal from ExxonMobil for the P’nyang Gas Agreement, one of the two feed-gas ventures that will underpin the PNG LNG expansion to take output to almost 20 million tonnes per annum from around 9 MTPA currently.

   A consortium led by French major Total and called Papua LNG, holders of the Elk-Antelope gas field licence, have already agreed to improved terms for the government. The P’nyang field licence, controlled by PNG LNG plant opertor ExxonMobil, also includes Australian-listed companies Oil Search and Santos and has yet to agree terms. PNG Petroleum Minister Kerenga Kua said in Tokyo that formal talks on the P’nyang Gas Agreement have yet to begin and the government was waiting for Exxon to put forward firm proposals for the $13 billion expansion.

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Expected LNG Deliveries this Week

Japan tops list with 1.58mmt

Pacific Basin

We are currently expecting 4.87mmt to be delivered within the Pacific Basin by the end of this week, constituting a decrease of 10% over our expectation at this point last week. At least 72% are destined for Japan (1.58mmt), China (1.16mmt) and South Korea (0.72mmt) whilst 0.23mmt are still without a confirmed destination within the Basin.

Current market visibility suggests the largest share of LNG scheduled to arrive in Japan within this week is coming from Australia (0.65mmt, 41%), inter alia under contracts with Gorgon LNG (0.20mmt) and NWS LNG (0.16mmt). Among LNGCs currently under way, the Asia Endeavourand the Energy Frontier are scheduled to dock at Yokkaichi by Sunday. Japan’s current import schedule thus suggests offtakes are likely to increase by 0.09mmt (6%) week-on-week but decrease by 0.25mmt (-13%) compared to the week year-on-year. 

The largest single source of LNG destined to arrive in China within this week is Australia’s Queensland Curtis LNG (0.23mmt, 20%), closely followed by Australia Pacific LNG (0.22mmt, 19%). Of those LNGCs currently en route, the Spirit of Helawill dock at Caofeidian LNG on Friday whilst the Prism Agility is arriving at Zhejiang LNG on Sunday. China’s expected imports are likely to decrease by 0.16mmt (-12%) week-on-week but increase by 0.29mmt (34%) compared to the week year-on-year. 

Meanwhile, expected deliveries to South Korea this weekare mainly coming from Qatar’s Ras Laffan (0.24mmt, 34%). As such the Umm Slal, the SK Stellar and the SK Sunrisewill dock at Incheon by Friday. The country’s imports are thus set to increase by 0.07mmt (11%) week-on-week but decrease by 0.13mmt (-15%) year-on-year.

Atlantic Basin

The Atlantic Basin is currently expected to receive 2.09mmt by the end of this week, constituting an increase of 2% week-on-week. Roughly 0.31mmt are still without a clear destination within the Basin, whilst 46% are destined for the United Kingdom (0.38mmt), Spain (0.36mmt) and France (0.22mmt).

The United Kingdom’s currently expected LNG deliveries within the week are also mainly coming from Qatar’s Ras Laffan (0.24mmt, 62%) aboard the Rasheeda and the Mekaines, bothcurrently headed for South Hook LNG to respectively arrive by Wednesday and Saturday. Meanwhile, the Velikiy Novgorod is expected at the Isle of Grain terminal carrying a Sabine Pass cargo on Tuesday. The UK is also anticipating 0.07mmt to arrive aboard the Lena River from Yamal LNG by Monday morning.

The country’s imports are thus set to spike by 0.31mmt (453%) week-on-week and by 0.30mmt (393%) on a year-on-year basis. 

Concurrently, market visibility indicates Spain’s imminent LNG deliveries consist of one cargo each from Qatar, Algeria, Russia, the United States and Trinidad & Tobago.  The largest contingent aboard the Torben Spirit (0.08mmt)en route from Qataris headed for the Bahia de Bizkaia LNG terminal by Thursday. Algeria is scheduled to be Spain’s second largest supplier this week, with 0.08mmt en route from Arzew to Barcelona via the Ougarta by Tuesday.

The country’s imports, therefore, are likely to decrease by 0.14mmt (-29%) week-on-week but increase significantly by 0.11mmt (43%) year-on-year.

The Atlantic’s third largest importer this week – France – is anticipating the bulk of its imminent LNG deliveries amounting to 0.15mmt to derive from Russia. The Vladimir Voronin and the Vladimir Vize are respectively scheduled to deliver 0.08mmt to the Montoir-de-Bretagne terminal by Thursday whilst the LNG Ondo will arrive at Fos-sur-Mer with 0.07mmt on Tuesday. 

Based on the current delivery horizon, France is likely to see its imports increase by 0.06mmt (37%) week-on-week and by marginal 0.004mmt (2%)  year-on-year.

Middle East

In the Middle East, Pakistan’s Port Qasim terminal is expecting the majority of the 0.25mmt due this week to derive from Qatar. Accordingly, the Q-Max Al Gattara (0.10mmt) will arrive at Port Qasim on Tuesday whilst the Q-Flex Al Sheehaniya (0.09mmt) is due on Saturday. Pakistan’s second supplier this week is going to be Nigeria LNG via a cargo aboard the Methane Nile Eagle (0.06mmt) due on Wednesday.

Pakistan’s LNG imports, therefore, are likely to increase by 0.12mmt (83%) week-on-week and by 0.19mmt (277%) year-on-year.

Concurrently, Israel’s FSRU off Hadera is expecting one delivery amounting to 0.07mmt aboard the British Sapphire sailing from Trinidad’s Atlantic LNG on Sunday morning. The vessel has just passed Madeira in approach to the Gibraltar Strait and thus seems to run on schedule. 

A delay notwithstanding, Israel is thus set to raise its LNG imports by 0.07mmt both week-on-week and year-on-year, as it has not imported LNG around this time before.

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American Gas Association praises new natural gas pipeline rules for domestic gas and LNG

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The American Gas Association has welcomed the new natural gas transmission pipeline safety rules from the Pipeline and Hazardous Materials Safety Administration (PHMSA)  as representing a consensus approach to enhancing the safe transportation of America’s abundance of natural gas to domestic customers and LNG plants.

The PHMSA released three rules intended to continue to improve the safety and resilience of the vast US energy delivery infrastructure to keep pace with increased supply and demand.

“This significant update to pipeline safety regulations is the culmination of years of work by government, industry and pipeline safety advocates,” said AGA President and Chief Executive Karen Harbert.

“We applaud PHMSA and everyone who participated in the process for a final rule that brings certainty to our industry and everyone that works to deliver natural gas to customers throughout the country that want it,” stated Harbert.

The AGA pointed out that the Gas Pipeline Advisory Committee provided PHMSA with recommendations on the technical feasibility, reasonableness, cost-effectiveness and practicability of the proposed rule and recommendations to support finalizing the rule.

The PHMSA said the three significant final rules published in the Federal Register will strengthen the safety of more than 500,000 miles of onshore gas transmission and hazardous liquid pipelines throughout the US.

The rules will also enhance the PHMSA’s authority to issue an emergency order to address unsafe safety conditions or hazards that pose an imminent threat to pipeline safety.

“These are significant revisions to federal pipeline safety laws and will improve the safety of our nation’s energy infrastructure,” said US Transportation Secretary Elaine L. Chao.

The US pipelines deliver trillions of cubic feet of natural gas and hundreds of billions of ton-miles of liquid petroleum products each year.

The pipeline regulator said the gas transmission and hazardous liquid pipeline safety rules would modernize federal pipeline safety standards by expanding risk-based integrity management requirements, enhancing procedures to protect infrastructure from extreme weather events, and requiring greater oversight of pipelines beyond current safety requirements.

The regulator said that final rules address significant Congressional mandates from the Pipeline Safety Act of 2011 and recommendations from the National Transportation Safety Board.

“The tremendous growth in US energy production will require greater anticipation and preparation for emerging risks to public safety,” said PHMSA Administrator Skip Elliott.

“These forward-looking rules will help ensure pipeline operators invest in continuous improvements to pipeline safety and integrity management,” Elliot added.

The gas transmission rule requires operators of gas transmission pipelines constructed before 1970 to determine the material strength of their lines by reconfirming the Maximum Allowable Operating Pressure (MAOP).

In addition, the rule updates reporting and records retention standards for gas transmission pipelines.

The hazardous liquid rule encourages operators to make better use of all available data to understand pipeline safety threats and extends leak detection requirements to all non-gathering hazardous liquid pipelines.

In addition, the rule requires operators to inspect affected pipelines following an extreme weather event or natural disaster so they may address any resulting damage.

All three final rules were transmitted to the Federal Register for publication.

The mission of the PHMSA is to protect people and the environment by advancing the safe transportation of energy and other hazardous materials that are essential to the daily lives of citizens.

The PHMSA develops and enforces regulations for the safe operation of the nation’s 2.8 million-mile pipeline transportation system and the nearly one million daily shipments of hazardous materials by land, sea, and air.

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Newbuild for Yamal LNG

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Sept 25 (LNGJ) – Japanese shipping company Mitsui OSK Lines said it attended a naming ceremony at Hudong-Zhonghua Shipbuilding in China for a newbuild liquefied natural gas carrier jointly ordered with China Cosco Shipping Corp. to serve the Yamal LNG plant in Russia. MOL said that the 174,000 cubic metres capacity vessel was named “LNG Dubhe” after a star in the constellation Ursa Major and is the first of four newbuilds ordered in 2017 for the Yamal LNG project.

   MOL and its partners also delivered three ice-breaking LNG carriers to the Russian project between 2018 and early 2019, which are currently engaged in cargo transportation in the Northern Sea Route. “For the time being, ‘LNG Dubue’ will be engaged in the transport of the LNG from trans-shipment terminals in Europe or a location where ship-to-ship transfer operations are carried out,” added MOL.

 

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US International Energy Outlook 2019 gives very positive forecasts for LNG and pipeline gas

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The United States will remain the world’s largest natural gas producer throughout the period through 2050, reaching 43 trillion cubic feet per annum, a nearly 50 percent increase from now with US shale-gas resources continuing to expand in the Appalachian region and in formations in and around Texas.

According to the International Energy Outlook 2019 just released by the US government, Middle East natural gas production increases 15 Tcf from 2018 to 2050, reaching 37 Tcf per annum in 2050, an increase of around 70 percent.

After 2030, countries in the Middle East increase production of low-cost, abundant hydrocarbon resources to meet growing demand worldwide.

“Natural gas production in Russia is forecast to increases about 40 percent during the projection period, reaching 34 Tcf in 2050 and most of the increase is exported to Asia and Europe,” said the US Outlook.

Canada also continues to produce relatively large amounts of natural gas per annum, reaching 6.8 Tcf in 2050, a nearly 20 percent increase from 2018.

World natural gas consumption increases more than 40 percent from 2018 to 2050, with growth in non-Organization for Economic Co-operation and Development countries outpacing growth in the OECD, which groups the 36 wealthiest countries.

The US report said that global natural gas consumption increases by 2050 to a total of nearly 200 quadrillion British thermal units (Btu).

“Natural gas use accelerates the most in countries outside of the OECD to meet demand from increased industrial activity, natural gas-fired electricity generation and transportation fueled by LNG,” said the report.

“Natural gas consumption in non-OECD countries grows from about 70 quadrillion Btu in 2018 to 120 quadrillion Btu in 2050, a 70 percent increase,” stated the Outlook.

Despite strong growth in LNG trade, natural gas pipeline flows continue to account for most of the inter-regional natural gas trade during the projection period as pipeline infrastructure is further developed around the world.

“Non-OECD Europe and Eurasia (primarily Russia) remains the largest net exporter of natural gas in 2050, followed by the Middle East. During this time, OECD Europe increases its dependence on Russian pipeline natural gas, and non-OECD Asia imports a growing amount of LNG,” the Outlook explained.

“The Americas grow as a net exporter of natural gas, driven mostly by LNG shipments from the US to countries outside the region” stated the report.

“During this time, the non-OECD share of global natural gas consumption increases from about 51 percent to 61 percent,” it added.

“In OECD countries, natural gas consumption increases 17 percent between 2018 and 2050, reaching 78 quadrillion Btu,” said the report.

Most of this growth is forecast in the non-OECD industrial sector.

“In non-OECD countries, industrial sector natural gas consumption increases nearly 50 percent, from 32 quadrillion Btu in 2018 to 46 quadrillion Btu in 2050,” said the report.

“Chemical and primary metals manufacturing, as well as oil and natural gas extraction, account for most of the growing demand,” it added.

Natural gas consumption for electricity generation in non-OECD countries increases more than 60 percent, at 1.5 percent per year, accounting for part of the 2.2 percent per year growth in electricity demand in those countries.

Consumption of natural gas in the transportation sector remains the smallest of the end-use sectors throughout the projection period, and yet this sector shows relatively strong growth in non-OECD countries. Increases in demand are driven mostly by LNG use to move freight by truck and rail.

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Japan LNG investments

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Sept 24 (LNGJ) – Japan’s Economy, Trade and Industry Minister Isshu Sugawara will announce at the annual LNG Producer-Consumer Conference that the nation’s leading companies and agencies plan to invest $10 billion to encourage broader use of LNG around the world.

   The Japanese government’s eighth conference in the series will be held on September 26 in Tokyo, jointly hosted by the Asia Pacific Energy Research Centre. The conference was first held in 2012 and the 2019 event will be attended by more than 1,000 representatives of governments, international energy organizations and companies involved in the LNG industry. It will be held at the Convention Center of the Grand Prince Hotel New Takanawa at Minato-ku in Tokyo.

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Freeport plant in Texas reveals it will launch its own trading window with platform provider

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Freeport LNG, the latest US export plant to come on stream at Quintana Island on the US Gulf coast of Texas, said it planned to launch its own LNG cargo sales windows with trading platform provider, Redwood Marketplace.

The Redwood Marketplace is an online commodity trading platform that enables buyers and sellers of physical LNG to negotiate and confirm commercial terms while offering efficiency, standardization and price discovery.

The first Freeport cargo was lifted in September 4 from the first of the planned four-Train plant and is currently being ramped up to produce 5 million tonnes per annum.

The current Freeport engineering contract includes three liquefaction Trains with a total of 15 MTPA of capacity, a second loading berth and a 165,000 cubic metres full containment LNG storage tank.

The original Freeport terminal was completed in 2008 as an import facility with one berth and two storage tanks, each of 160,000 cubic metres capacity.

The Freeport project is led by US oil and gas entrepreneur Michael Smith, who is Chairman and Chief Executive of the development company.

Freeport received regulatory approval in 2019 to build an additional Train 4 and permits from the US Department of Energy for the export of Train 4 volumes to Non-Free Trade Agreement countries, opening the way for marketing.

Redwood Marketplace explained that Freeport LNG, as a host on the platform would be able to negotiate and match physical, bilateral LNG transactions with potential off-takers in a variety of online formats with multiple options for transparency.

“The advantage of the private storefront is to bring efficiency of online trading to the buyer or seller LNG requirements without losing the direct, private connection between the respective parties,” said Redwood.

“The existing market for LNG is evolving and growing. The trading platform that supports it must leave room for the market to breathe, ensuring that buyers and sellers are provided with choices,” the firm explained.

“The challenges of LNG trading do not stop at the execution of the trade, nor should the trading platform. It is necessary to incorporate a communication channel between the buyer and seller through the loading, delivery and unloading of each cargo,” stated Redwood.

Hugh Urbantke, Executive Vice President and Chief Commercial Officer at Freeport LNG, said the number of participants in the global LNG market place has increased substantially over the past decade.

“The Freeport LNG storefront will streamline interactions. It will also allow us to efficiently and transparently provide counterparties direct access to Freeport LNG’s spot cargoes,” added Urbantke.

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