An analysis released by the Energy Information Administration (EIA) on November 13, 2023, found that North America’s capacity to ship liquefied natural gas overseas is expected to more than double through 2027.[1] North America’s liquefied natural gas (LNG) export capacity will increase 113% to 24.3 billion cubic feet per day (Bcf/d) from 11.4 Bcf/d today. The EIA attributed this increase to LNG export terminals coming online in Mexico and Canada, as well as LNG projects under construction in the U.S. By the end of 2027, the EIA estimates LNG export capacity will grow by 1.1 Bcf/d in Mexico, 2.1 Bcf/d in Canada, and 9.7 Bcf/d in the United States. Five LNG projects are under construction in Texas and Louisiana, the EIA said. In Mexico, developers are currently constructing three projects—Fast LNG Altamira offshore and onshore and Fast LNG Lakach, both located on Mexico's east coast, and Energia Costa Azul, located on Mexico's west coast. Two LNG export projects with a combined capacity of 2.1 Bcf/d are under construction in British Columbia on Canada’s west coast.
[Japan] Mitsui and Mitsubishi cut value of their Sakhalin-2 LNG stakes by $1.7 billion
On August 2, 2022, major Japanese trade houses Mitsui & Co. and Mitsubishi Corp. said they had cut the value of their stakes in the Sakhalin-2 liquefied natural gas (LNG) project in Russia by a combined ¥217.7 billion ($1.7 billion), citing growing business uncertainty.[1] Mitsui and Mitsubishi cut their investment values by ¥136.6 billion to ¥90.2 billion and ¥81.1 billion to ¥62.3 billion, respectively, after Russian President Vladamir Putin signed a decree on June 30, 2022, to create a company to take over the rights and obligations of the project. Both companies said the move would have very little impact on their profits. Mitsui and Mitsubishi hold stakes of 12.5% and 10%, respectively, in the project.
The Japanese government has said that it will try to stay in the project but will move away from relying on Russian energy. Sakhalin-2 has an annual output capacity of about 10 million tons of LNG, with Japan importing around 6 million tons. Under the presidential decree, all assets rights linked to the project will be transferred to the new Russian company. Currently, state-owned Gazprom has a 50% plus one share stake in the project while Shell owns 27.5% minus one share, though in February 2022, Shell said it would exit the project.
[1] https://www.reuters.com/business/energy/japans-mitsui-mitsubishi-shave-17-bln-off-sakhalin-2-lng-stakes-2022-08-02/
[USA] Texas LNG export processing plant to shut down for at least three weeks following explosion
On June 8, 2022, Freeport LNG, the operator of one of the largest U.S. export plants producing LNG, announced that it will shut down its Texas Gulf Coast facility for at least three weeks following an explosion earlier that day.[1] Representatives of Freeport LNG have said that an investigation into the explosion has begun. A fire in the facility’s delivery system led to emissions of carbon monoxide, nitrous oxides, particulate matter, sulfur dioxide, and volatile organic compounds, according to an incident report filed with the state Commission on Environmental Quality on June 9, 2022. There were no injuries at the terminal, located roughly 70 miles from Houston, Texas. According to a representative for the U.S. Coast Guard, a security zone has been set up two miles east and west of the facility, closing that portion of the waterway to vessel traffic.
Freeport LNG provides about 20% of U.S. LNG processing. The company ships about four cargoes per week, and a three-week shutdown will take at least 1 million tonnes of LNG off the market. The facility processes gas for companies including BP, JERA, Kansai Electric, Osaka Gas, SK E&S, and TotalEnergies. The shutdown has had an impact on both domestic and international natural gas markets. Traders expect lower domestic demand due to more natural gas in the market, resulting in falling prices domestically. European gas prices were up to a fifth higher as traders feared that lower U.S. exports combined with reduced Russian supplies would further stress the market.
[1] https://www.reuters.com/business/energy/explosion-hits-freeport-lng-plant-us-natgas-prices-plunge-2022-06-08/
[USA] Venture Global announces $13.2 billion in financing for first U.S. LNG project in 3 years
On May 25, 2022, Venture Global LNG announced that it had secured $13.2 billion in financing for the initial phase of its Plaquemines LNG facility in Louisiana and the associated Gator Express Pipeline.[1] The transaction is the first financial close[2] of a U.S. LNG export project since Venture Global’s Calcasieu Pass facility in August 2019. It is also the largest project financing in the world closed to date in 2022. The first phase of Plaquemines is expected to export up to 13.33 million metric tons of LNG per year. The LNG facility has received all necessary permits, including authorization from the Federal Energy Regulatory Commission (FERC) and non-free trade agreement export authorization from the Department of Energy (DOE). Additionally, Venture Global has executed 20-year agreements for 80% of the full project. Phase one customers include PGNiG, Sinopec, CNOOC, Shell, and EDF, and phase two customers announced to date include ExxonMobil, PETRONAS, and New Fortress Energy. Lenders included Bank of America, Goldman Sachs Bank, and JPMorgan Chase Bank.
[1] https://venturegloballng.com/press/venture-global-announces-final-investment-decision-and-financial-close-for-plaquemines-lng/
[2] “Financial close” occurs when all the project and financing agreements have been signed, all conditions on those agreements have been met, and work can start on the project.
[USA] DC Circuit orders FERC to redo analysis for Texas LNG projects
On August 3, 2021, a panel of U.S. Court of Appeals for the D.C. Circuit judges unanimously ruled that the Federal Energy Regulatory Commission (FERC) did not go far enough in considering environmental justice and climate impacts in its 2019 approval of the Rio Grande and Texas liquified natural gas (LNG) projects.[1] When the commission did its environmental review of the projects, it found that it could not determine the impacts the projects would have on the climate crisis because there is no universal methodology for calculating the impacts. However, petitioners said that FERC could use the social cost of carbon or another generally accepted metric to evaluate the impacts of the projects. In his dissent of FERC 2019 approval, Chairman Richard Glick, who was a commissioner at the time, argued that under federal law, the commission was not allowed to "assume away" the impacts of these projects and that the commission's assessment was inadequate.
The judges found that FERC's analyses of the projects' impacts on climate change and low-income or minority communities in Cameron County, Texas, were "deficient" under the National Environmental Policy Act, the Natural Gas Act, and the Administrative Procedure Act. The panel did not vacate FERC's approval of the projects, though. Instead, the court's decision remands the decision back to the commission to review again.
[1] https://www.cadc.uscourts.gov/internet/opinions.nsf/1F97B59429C7D4F6852587260052CC71/$file/20-1045-1908759.pdf
[Japan] Japan to bolster transition to LNG in Asian countries
The Ministry of Economy, Trade and Industry (METI) held a meeting of experts on February 19, 2021 and indicated a policy that would support the introduction of liquefied natural gas (LNG) in Asian countries. [1] The Japanese government plans to encourage the introduction of LNG infrastructure not only at LNG thermal power plants but also at LNG receiving bases and liquefaction facilities. Additionally, the Japanese government plans to support the gradual decarbonization efforts of Asian countries.
Coal is a major source of energy for countries such as Indonesia and Vietnam due to its affordability. According to the METI, a shift from coal to LNG in seven Asian countries—India, Indonesia, Vietnam, the Philippines, Malaysia, Thailand, and Myanmar—would reduce carbon emissions by about 864 million tons and increase LNG demand by 16 million tons. According to the minister of METI, increased demand for LNG in other Asian countries will lead to higher levels of production by countries in the region and may lower procurement costs of the energy source. Japan is the world’s largest LNG consumer and relies on LNG for nearly 40% of total power production. The country’s main suppliers are Australia, Qatar and the United States, but Japan is hoping to expand production in Asian countries. The increased effort to reduce purchasing costs and guarantee LNG supply follows an unseasonably cold winter which coincided with depleted LNG stocks.
[1] https://www.japantimes.co.jp/news/2021/02/23/business/lng-coal-energy/
[Japan] JERA Signed Memorandum of Understanding (MOU) with ExxonMobil and the People’s Committee of Hai Phong City to Participate in an Integrated LNG to Power Project in Northern Vietnam
On October 28, 2020, JERA announced that it has signed a Memorandum of Understanding (MOU) with ExxonMobil Hai Phong Energy (EMPHE, Headquarters: Texas, the United States), and the People’s Committee of Hai Phong City, Vietnam to jointly work on an Integrated Liquefied Natural Gas (LNG) to Power Project. The project aims to establish an LNG value chain that consists of an LNG import terminal and an LNG-fired power plant in Hai Phong City, Vietnam. JERA is one of Japan’s major energy companies and was established through a joint venture between Tokyo Electric Power Fuel & Power (Headquarters: Tokyo) and Chubu Electric Power (Headquarters: Nagoya City, Aichi Prefecture).
Hai Phong City is the largest port city in northern Vietnam. The city has seen fast economic growth over the years and its annual power consumption is expected to double over the next decade. EMPHE aims to meet the city’s future electricity demand with cleaner energy. EMPHE has submitted an application to the Vietnamese government for the project to be considered and potentially included in Vietnam’s National Power Development Plan (PDP), which sets out the long-term vision for Vietnam’s energy security and development.
The project is being conducted as part of the Japan US Strategic Energy Partnership (JUSEP), a Japan-US collaborative framework that facilitate economic growth and global security through developing an affordable and reliable energy supply in Southeast Asia, South Asia, and Sub-Saharan Africa. [1] The MOU was signed at the Indo-Pacific Business Forum hosted by the U.S. Trade and Development Agency, with the presence of government officials from Japan, the U.S., and Vietnam.
JERA aims to become a provider of cutting-edge solutions to solve global energy problems. Through this mission, JERA will contribute to addressing energy challenges in Vietnam by leveraging its experience in LNG value chains.[2] [3]
[1] https://www.meti.go.jp/english/press/2017/pdf/1107_001a.pdf
[USA] NRDC Report: LNG as bad for climate as coal over next 20 years
According to a report released on December 8, 2020 by the Natural Resources Defense Council (NRDC), a non-profit environmental advocacy group, projected increases in U.S. exports of liquefied natural gas (LNG) are likely incompatible with holding the rise in global temperature at 1.5° Celsius.[1] [2] The report, titled “Sailing to Nowhere: Liquefied Natural Gas Is Not an Effective Climate Strategy”, found that although greenhouse gas (GHG) emissions from U.S. LNG are lower than coal over a 100-year time span, methane’s more immediate impact compared to CO2 means the "near-term" climate effect of LNG over the next 20 years is similar to coal. The emissions from the LNG industry will generate up to 213 million metric tons of new GHG emissions by 2030, which is equal to the annual emissions of 28 to 45 million fossil fuel-powered cars, according to the report. Much of LNG’s climate impact also comes from the extraction, transport, liquefaction, and re-gasification of LNG. The report also emphasized that the long lifespan of LNG infrastructure “locks in” fossil fuels instead clean energy which prevents of clean energy technologies like wind and solar, which produce significantly lower life-cycle GHG emissions, from expanding. The report concluded that the estimated social cost of U.S. LNG exports was $8.1 billion in 2019 and would be $30.5 billion per year by 2030.
[1] https://www.nrdc.org/resources/sailing-nowhere-liquefied-natural-gas-not-effective-climate-strategy
[2] https://www.nrdc.org/sites/default/files/sailing-nowhere-liquefied-natural-gas-report.pdf
[Japan] Hokkaido Electric Power’s First LNG Cargo from the United States arrived at Ishikari LNG Terminal, Hokkaido Prefecture
On September 21, 2020, Hokkaido Electric Power (HEPCO, Headquarters: Sapporo City, Hokkaido Prefecture[1]) announced that its first Liquefied Natural Gas (LNG) cargo ship, the Shinshu Maru, has arrived at the Ishikari LNG terminal at Ishikari Bay, Hokkaido Prefecture from Freeport City, Texas in the United States.
The newly arrived LNG will fuel HEPCO’s Ishikari Bay New Port Power Plant. The 70,000-ton LNG order is based on an LNG spot sales contract between HEPCO and JERA Global Markets (JERAGM, Headquarters: Singapore[2]), a group company of JERA (Headquarters: Tokyo) that specializes in LNG trades. JERA is a joint venture between Tokyo Electric Power Fuel & Power (headquarters: Tokyo) and Chubu Electric Power (Headquarters: Nagoya City, Aichi Prefecture).
The Ishikari LNG terminal is operated by Hokkaido Gas (Headquarters: Sapporo City, Hokkaido Prefecture) and is shared with HEPCO. At the terminal, HEPCO owns the No. 3 tank, which was completed in July 2018, and the No. 4 tank, which is scheduled to be completed in October 2020. Once the No. 4 tank is completed, HEPCO will be able to accept imported fuel at a wide range of time periods, which will enable more flexible fuel purchases.
HEPCO decided to choose the U.S. as its LNG importer based on their desire to work with an attractive LNG supplier. Their decision took into account factors such as country’s stable political situation and its steady productivity of LNG, according to a Japanese media outlet. HEPCO will continue to combine long-term contracts with spot sales in order to ensure the stability of future fuel supplies.[3]
[1] http://www.hepco.co.jp/english/company/corporateprofile.html
[Japan] Hokkaido Electric Power Enters the City-Gas Retail Business in Hokkaido Prefecture
On August 18, 2018, Hokkaido Electric Power (HEPCO, Headquarters: Sapporo City, Hokkaido Prefecture[1]) announced that it will enter the city-gas retail business[2] in Hokkaido Prefecture. It has registered HEPCO as a Gas Retailer based on the Gas Business Act, along with “Hokuden Gas” as a business trademark. Starting from October 1, 2020, HEPCO will supply gas to its customers in six cities in Hokkaido Prefecture, including Sapporo City, Otaru City, Ishikari City, Kitahiroshima City, Chitose City, and Eniwa City.
HEPCO is working on the creation of a secure system to ensure customer safety with affordable gas rate plans. For business customers, HEPCO will offer value-added energy related services, including energy audit service using the city-gas, in addition to delivering Liquefied Natural Gas (LNG).
HEPCO has become the seventh major utility company to register as a gas retailer after Japan’s deregulation of the city-gas retail business in April 2017, after Tokyo Electric Power (TEPCO, Headquarters: Tokyo), Kansai Electric Power (KEPCO, Headquarters: Osaka City, Osaka Prefecture), Chubu Electric Power (Chuden, Headquarters: Nagoya City, Aichi Prefecture), Kyushu Electric Power (Kyuden, Headquarters: Fukuoka City, Fukuoka Prefecture), Tohoku Electric Power (Tohoku, Headquarters: Sendai City, Miyagi Prefecture), and Shikoku Electric Power (Yonden, Headquarters: Takamatsu City, Kagawa Prefecture).[3]
[1] http://www.hepco.co.jp/english/company/corporateprofile.html
[2] The city-gas retail business is equivalent to the natural gas retail business specializing in selling and supplying the gas to residential and commercial & industrial customers in the U.S.
[Japan] Chugoku Electric Power Received its First Supply of LNG from the U.S. Sabin Pass LNG Project
Chugoku Electric Power (Chugoku EPCo), headquartered in Hiroshima Prefecture, announced on January 7, 2020, that it has purchased and received liquefied natural gas (LNG) from the Sabin Pass LNG Project (SPL Project) at Yanai Power Station in Yamaguchi prefecture.[1] [2] [3] Chugoku EPCo signed a contract to purchase up to 400,000 tons of LNG annually for 17 years from Total Gas and Power Asia Ltd, a French energy company.
The SPL Project, operated by Cheniere, a U.S. LNG company, is located in Cameron Parish, Louisiana.[4] The LNG was loaded onto the carrier BW Tulip on December 9, 2019, in Louisiana. This is the first time that Chugoku EPCo has received LNG produced in the U.S., and the first time that it has received LNG containing shale gas. The LNG price index is based on the U.S. natural gas market price.
Chugoku EpCo is working to diversify its suppliers and procurement methods, alleviate its quality constraints, and reduce procurement prices, in order to improve the stability of its LNG procurement and reduce risks due to fluctuations in fuel prices.
[1] http://www.energia.co.jp/e/corp/pr/pr.html
[2] http://www.energia.co.jp/business/lng/lng1.html
[3] http://www.energia.co.jp/press/2020/12235.html
[4] https://www.cheniere.com/terminals/sabine-pass/
[Japan] JERA and Osaka Gas Began Commercial Operation at the Freeport LNG Train #1 in Texas, USA
On December 10, 2019, JERA (Japan’s Energy for a new eRA)[1] and Osaka Gas, owned by the Daigas Group and headquartered in Osaka[2], announced that the Freeport LNG Project in Texas, U.S., has begun commercial operations for its LNG Train #1 on December 8, 2019.[3] The two companies participate in the project through FLNG Liquefaction, a joint venture of JERA, Osaka Gas and Freeport LNG Development headquartered in Houston, Texas. JERA is a joint venture between Tokyo Electric Power Fuel & Power (headquartered in Tokyo)[4] and Chubu Electric Power (headquartered in Nagoya City, Aichi Prefecture)[5].
The two companies have participated in the project since October 2014. The Freeport LNG Project is operated by Freeport LNG Development, headquartered in Houston, Texas.[6] The LNG Train #1 has a liquefaction capacity of approximately 5 million metric tons per year, and Osaka Gas and JERA will receive about each 2.32 million metric tons of LNG per year under 20-year Liquefaction Tolling Agreements with FLNG Liquefaction.[7]
[1] https://www.jera.co.jp/english/corporate/
[2] https://www.osakagas.co.jp/en/aboutus/corporate_profile/
[3] https://www.jera.co.jp/information/20191210_439
[4] https://www7.tepco.co.jp/fp/about/index-e.html
[5] https://www.chuden.co.jp/english/corporate/ecor_company/ecom_outline/index.html
[6] http://freeportlng.com/about/corporate-history/
[7] https://www.osakagas.co.jp/company/press/pr_2019/1283872_40360.html
[Japan] Osaka Gas Acquires Sabine Oil & Gas in Texas
Osaka Gas announced on July 29, 2019, that it had reached an agreement with Sabine Oil & Gas Holdings to acquire 100% of the shares of Sabine Oil & Gas Corporation, a subsidiary of Sabine Oil & Gas Holdings that is located in Eastern Texas. The transaction is still waiting for the approval of the government permits. Upon the successful completion of the transaction, Osaka Gas will be the first Japanese company to purchase a U.S.-based shale gas developer.
Sabine Oil & Gas has a total of 175,000 net acres, with about 1,200 wells in East Texas, and an average annual LNG production of 1.7 million tons. In July 2018, Osaka Gas acquired 35% of the working interest of the gas field located on the eastern side, about half of the area owned by Sabine Oil & Gas. Since then, the wells on the eastern side have been producing more shale gas than initially expected. The acquisition will allow Osaka Gas to possess the entire gas field and to expand its upstream business in the U.S. Osaka Gas has previously invested in Freeport’s LNG liquefaction project and IPP projects. [1]
[1] https://www.osakagas.co.jp/company/press/pr_2019/1281330_40360.html