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New Player In Lake Charles LNG Project: China Gas’ First Long-Term Agreement with Energy Transfer
06/08/2022
According to a June 5 press release, China Gas Hongda Energy Trading Co. Ltd., a subsidiary of China Gas Holdings Ltd., has made an LNG sale and purchase agreement (SPA) with Energy Transfer LNG Export, LLC, a subsidiary of Energy Transfer LP, concerning its Lake Charles LNG project.
In the course of the 25-year contract, Energy Transfer LNG will provide 0.7 million tonnes per annum (mtpa) of LNG to China Gas on a free-on-board basis. The purchase price is indexed to the Henry Hub benchmark plus a fixed liquefaction charge, with first deliveries expected as early as 2026.
Being a premier natural Chinese gas distribution company, China Gas enchants Energy Transfer LNG to sign the 25-year LNG offtake agreement.
As Tom Mason, the president of Energy Transfer admitted, SPA would bring the total amount of LNG contracted from Lake Charles LNG export facility to approximately 6.0 mtpa and it would be an important step towards the goal of reaching FID [final investment decision] later this year.
To become fully effective, the agreement will go upon the satisfaction of the conditions precedent, including Energy Transfer LNG reaching FID.
From the direction of China Gas, it will be a significant step along the way to realizing China’s carbon peaking and carbon neutrality goals as it is their first long-term agreement.
This company is based in Hong Kong and owns a total of 652 city and township gas projects with concession rights, 32 natural gas long-distance pipeline transmission projects, 113 LPG distribution projects, and 554 CNG/LNG refilling stations for vehicles, also it has the license to import and export LNG and other fuel products in China.
Concerning Energy Transfer, it is a publicly-traded limited partnership based in Dallas with core operations that include complementary natural gas midstream, intrastate, and interstate transportation, and storage assets: crude oil, NGL, refined product transportation, and terminalling assets; and NGL fractionation, with assets in every major U.S. basin.
Their Lake Charles Project is fully permitted for three 5.5 mpta liquefaction trains that will utilize existing infrastructure. It will also benefit from abundant natural gas supply and proximity to major pipeline infrastructure, including Energy Transfer’s vast pipeline network. The project is estimated to create up to 5,000 jobs during construction and 200 full-time positions when fully operational.
This permit-ready project will add 240 acres to Lake Charles LNG’s overall footprint which will allow for the development of a liquefaction and export facility. It is the only brownfield project among those in the pre-FID process.
Moreover, the technology proposed for the project is designed to make it one of the most efficient and cleanest operating LNG facilities in the United States with air emissions expected to be well below both U.S. and Louisiana state limits.
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13 years is not long enough: Glencore and Cheniere Sign Long-Term LNG Deal
Texas Cheniere and Swiss Glencore had entered into a free-on-board agreement for approximately 0.8 million tonnes of LNG per annum, starting in April 2023 for 13 consecutive years. This SPA demonstrates the commercial momentum Cheniere has been enjoying and marks an important milestone, as the company lays the groundwork for a final investment decision on Corpus Christi Stage 3, which is expected to occur next year.
Tokyo Gas Is Set to Buy Rockcliff Energy: One of the Top Haynesville's Producers
On January 3, U.S. natural gas producer Rockcliff Energy from private equity firm Quantum Energy Partners was set to be sold to a unit of Tokyo Gas Co. Ltd. for roughly $4.6 billion, including debt. The all-cash agreement with Houston-based TG Natural Resources, which is 70% possessed by the Japanese energy firm, is decided to be claimed this month, according to anonymous resources, as the discussions were requested to be confidential. Castleton Commodities International (CCI) owns the rest of TG Natural Resources.
The Williston Basin is a big area filled with layers of rock that sits next to the Rocky Mountains in western North Dakota, eastern Montana, and the southern part of Saskatchewan in Canada. This area covers roughly 110,000 square miles. Geologically, it's very similar to the Alberta Basin in Canada. People started drilling for oil in the Williston Basin back in 1936, and by 1954, most of the land where oil could likely be found was already claimed for drilling. The Bakken Formation with parts of Montana, North Dakota, Saskatchewan, and Manitoba has become one of only ten oil fields globally to yield over 1 million barrels per day (bpd) since the late 2000s. It is currently the third-largest U.S. shale oilfield, behind the Permian and Eagle Ford. The boom in the Bakken started around September 2008, coinciding with the U.S. housing market crash. The application of new technologies, such as swell packers enabling multiple-stage fracturing, significantly enhanced oil recovery, making the Bakken Formation a key player in the U.S. In 2022, the Bakken oil field saw big improvements in how much oil and gas it could produce. At the start of the year, 27 drilling rigs were working there, more than double the 11 rigs from the start of 2021. Important upgrades included making the Tioga Gas Plant able to process 150 million cubic feet more gas each day, and making the Dakota Access Pipeline bigger, increasing its oil transport capacity from 570,000 to 750,000 barrels every day.
Continental Resources is expanding its operations in the Midland Basin, including taking over some assets that used to belong to Occidental Petroleum. The company plans to use its expertise in exploration in this area.
Equinor and EQT Corporation have agreed that Equinor will exchange its operated assets in the Marcellus and Utica shale formations in Ohio for a stake in EQT’s non-operated interests in the Northern Marcellus formation.