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New Player In Lake Charles LNG Project: China Gas’ First Long-Term Agreement with Energy Transfer06/08/2022
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.
The crux of the matter is rather simple: productivity gains of local energy operators have been stable not only because they are drilling better acreage, but also because players finally realized capital efficiency gains. And even if some new obstacles impede Appalachia's growth at the same rate as the Permian or Haynesville, it does not detract from the value of the Marcellus and Utica basins. The Appalachians will still be the top producers at a very competitive pace as long as commercial inventory exists. After all, as long as there is commercial inventory, somebody will have to drill.
Cheniere Energy shipped the first LNG Cargo to Korea
On June 16 Targa Resources Corp. decided to acquire Lucid Energy Group, located in the Permian Basin, which is a part of Riverstone Holdings LLC and Goldman Sachs Asset Management. Firstly, Targa enlarged due to the recent “blot-on” acquisition of Southcross Energy in the Eagle Ford for $200 million and it will become bigger thanks to the $3.55 billion cash transaction. Targa’s financial position allowed it to utilize convenient opportunities to extend its company so it bought #Lucid using available cash and debt with an estimated pro forma year-end 2022 leverage around 3.5 times. According to Targa’s estimates, the acquisition of Lucid will increase the number of natural gas pipelines by 1,050 miles and add about 1.4 Bcf/d of cryogenic natural gas processing capacity in service or under construction located mainly in Eddy and Lea counties of New Mexico. The investment-grade producers source approximately 70% of current system volumes. According to the press release, a full-year standalone adjusted EBITDA is expected to be between $2.675 billion and $2.775 billion and reported year-end leverage ratio of about 2.7 times. Targa’s updated financial expectations assume NGL composite prices average $1.05 per gallon, crude oil prices average $100/bbl, and Waha natural gas prices average $6 per MMBtu for the remainder of 2022.
Your team’s ESG performance can be greatly improved applying the asset co-location analysis within upstream or midstream use cases. This has been a topic for a discussion at Rextag’s ‘Is ESG Improvement Next Door?’ webinar. We reviewed some cases like curbing gas flaring or renewable energy sourcing to power the fossil fuel infrastructure. Many combinations are available with access to the data Rextag provides on wells, acreages, power lines, substations, and such renewable infrastructure as wind turbines, methane landfills, etc.
BPPlc agreed on June 13 to exit the Canadian oil sands in an asset swap with Cenovus Energy Inc. potentially worth up to CA$1.2 billion. 50% non-operated interest in the #SunriseOilSands project will be sold by BP in an agreement reached with Cenovus Energy, a company based in Alberta. Two companies agreed on the following conditions: total consideration for the transaction includes CA$600 million in cash, additionally, a contingent payment with a maximum aggregate value of CA$600 million expiring after two years, and concerning Cenovus, it will have a 35% position in the undeveloped Bay du Nord project offshore Newfoundland and Labrador. Current production from the Sunrise Oil Sands asset is about 50,000 bbl/d and the company anticipates achieving a nameplate capacity of 60,000 bbls/d through a multi-year development program.