Sabine Pass gets Energy Department approval for LNG export

The Department of Energy has given Cheniere Energy approval to export liquefied natural gas from its Sabine Pass LNG terminal on the Louisiana side of the waterway.

The project still needs final environmental permits and approval from the Federal Energy Regulatory Commission, but the DOE approval is a key step forward for the project to turn U.S. natural gas into a super-chilled liquid for export.

Sabine Pass opened in 2008 as a terminal to take in shipments from overseas. A surge in natural gas production from U.S. shale gas fields turned the market on its head, however, reducing the need for imports.

Houston-based Cheniere Energy Partners and other LNG terminal owners first sought, and were granted, permits to re-export LNG that was offloaded at their terminals. The permits to turn U.S. natural gas into a liquid for export were first filed last year when it became clearer that U.S. supplies were likely to remain strong.

Cheniere said the DOE approval will allow it to export up to 803 billion cubic feet of gas per year.

The approval is “a significant milestone” for the project, which would be the first bi-directional LNG processing facility capable of importing and exporting LNG, said Cheniere Chairman and CEO Charif Souki.

Cheniere has non-binding agreements with potential customers for up to 9.8 million tons per year of natural gas liquefaction capacity. Based on customer interest the company expects to build one of the four planned liquefaction facilities every six to nine months beginning in the first half of 2015.

Construction of the facilities could mean up to 3,000 temporary jobs in the area and between 150 to 250 full-time positions to operate and maintain the project once completed.

4 Comments

  1. ntangle

    Makes sense for the company. Didn’t realize how much of a differential there currently is between US prices versus EU prices for NG, until looking them up, regarding the Shell FLNG facility planned near Australia. S’pose the EU will be the target market for these exports.

    #1
  2. d

    This development may convince even the most diehard oil supporter that natural gas by vehicles in the U.S.A. will make sense. Afterall why sell LNG at an equivalent price of 60% oil price to Europe while importing oil at 100% oil price to fuel vehicles. Why not sell it for 100% of value to U.S.A consumers and not import the oil in the first place?

    It seems to me that I would not want to be Cheniere stockholder.

    I would also not want to be a stockholder of a company that gave Cheniere 20 year supply contracts. Those contracts will look exceedingly stupid if gas rises due to vehicle LNG usage.

    #2
  3. ntangle

    NG economics were obviously different when the company initially commited to build this terminal as an import facility. But now that they’ve changed, the company is clearly making the most of the new situation and I don’t blame them. They’d need to consider the incremental investment & variable expense for liquifaction. The rest of the terminal and its connections are sunk costs. Presumably, their export contracts have made it viable.

    Oil & CNG for cars aren’t the only choices. EV’s are becoming more viable too. Gas turbines at power plants are much more efficient than internal combustion engines, even discounting for transmission line losses. CNG has limited range in cars, similar to EV’s. In addition, EV’s have regenerative braking, which adds a lot of energy efficiency for city driving.

    #3
  4. realist

    “The project still needs final environmental permits and approval”. that might take years!

    #4