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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.
According to CheniereEnergy’s board of directors announcement on June 22, the company declared the further expansion of its CorpusChristi, Texas. Moreover, the LNG plant could come sooner than expected due to the announcement of a final investments decision (FID) related to Stage 3 Liquefaction Project work at the export facility. It will ensure the capacity to ship 10-plus million tonnes per annum (mtpa) from 7 midscale trains. Furthermore, TudorPickering, Holt & Co. (#TPH) declared on June 23, that the possible ultimate capacity of the facility could be in the 11-12 mtpa range given 10.7 mtpa of long-term contracts have been signed with companies such as CPC, PGNiG, Sinochem, Foran, ENGIE, Apache, EOG and ARX CN. Additionally, Cheniere announced two sale and purchase agreements (SPAs) with #ChevronCorp.: Firstly, Chevron will obtain 1 mtpa of LNG from Sabine Pass Liquefaction LLC with deliveries considered to start in 2026. Deliveries will reach full capacity in 2027 and expire in mid-2042. Secondly, Chevron will obtain 1 mtpa of LNG from Cheniere Marketing LLC with deliveries considered to start in 2027 and continue for about 15 years. The purchase price for the LNG under both SPAs will be indexed to the Henry Hub price, plus a fixed liquefaction fee as Cheniere claimed. Since the expansion will have been completed, Cheniere’s aggregate nominal production capacity will be increased to more than 55 mtpa by the end of 2025 compared to 45 mtpa now. It will become a part of the industry-wide decarbonization movement away from coal and oil as this allows Cheniere to provide the global market with additional low-carbon fuels. First exports from the facility are anticipated in 2025.
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.
Northern Oil and Gas Inc. (NOG) made a $330 million purchase in the Permian Basin, according to the release on October 19. NOG revealed an agreement to purchase a 36.7% working interest in the Mascot Project from Midland-Petro D.C. Partners LLC (MDPC). The acquisition will be funded with cash on hand, operating free cash flow, and borrowings. The Mascot Project is operated by Permian Deep Rock Oil Co., an affiliate of MPDC, which is a David H. Arrington-owned business based in Midland, Texas. NOG anticipates that the production from the acquired properties to average almost 4,400 boe/d in the first quarter of 2023 and 6,450 boe/d for the full-year 2023 (2-stream, about 80% oil).
On November 2, Cardinal Midstream Partners, an independent Dallas-based midstream energy company, concluded definitive agreements with Medallion Midstream Services to purchase Medallion’s natural gas gathering and processing business in the Delaware Basin in West Texas. The transaction is subject to customary closing conditions and is expected to close in early 2023.
On October 19, Shell USA completed the almost $1.96 billion acquisition of the master limited partnership. The company paid $15.85 in cash for every common unit representing limited partner interests in SHLX not held by Shell USA or its affiliates. A subsidiary of Shell USA has 269,457,304 SHLX common units or roughly 68.5% of SHLX common units.