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Sempra Energy posts boosted third-quarter earnings

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Image courtesy of Sempra Energy: San Diego-based energy company and LNG operator Sempra Energy reported a jump in earnings for the third quarter of 2019. The company said on Friday its third-quarter earnings reached $813 million, up from $274 million in the corresponding quarter last year.

Sempra added that it is continuing to advance its liquefied natural gas development projects.

In October the company has entered a memorandum of understanding (MoU) with Mitsui & Co. reflecting the parties’ preliminary agreement for Mitsui’s participation in the Cameron LNG Phase 2 project, and future expansion of the Energía Costa Azul (ECA) LNG project in Baja California, Mexico. The MOU is non-binding and contemplates the continued mutual support for the development of Cameron LNG Phase 2, including Mitsui’s potential purchase of up to one-third of the available capacity of the project, as well as the potential offtake of approximately 1 million tonnes per annum of LNG and equity participation in a future expansion of ECA LNG.

In September, Sempra LNG also entered into an MOU with China Three Gorges Corporation regarding potential cooperation in supplying LNG to support demand growth in China, including the growth of natural gas power generation.

In August, the Cameron LNG liquefaction-export project in Hackberry, Louisiana, began commercial operations at Train 1 of the facility. The project, including Trains 2 and 3, is over 96 percent complete. Commissioning of Train 2 is underway, and the previously disclosed project timeline remains unchanged.

 

Sempra Energy’s earnings for the first nine months of 2019 were $1.61 billion, compared with earnings of $60 million in the first nine months of 2018.

Modi visit to Houston backdrop for one of the largest LNG deals in U.S. history

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A visit to Houston by Indian Prime Minister Narendra Modi has become the backdrop for one of the largest liquefied natural gas supply deals in U.S. history.

Executives with Houston liquefied natural gas company Tellurian and India’s Petronet LNG signed a $2.5 billion deal in Modi’s presence during a private Saturday evening ceremony at the Post Oak Hotel at Uptown in Houston's Galleria district.

Under the deal, Petronet pledged to invest $2.5 billion in Tellurian’s proposed Driftwood LNG export terminal in Lake Charles, La., in exchange for the rights to 5 million metric tons of LNG per year over the lifespan of the project.

In an exclusive interview with the Houston Chronicle, Tellurian board Chairman Charif Souki called the deal a “win-win-win” for the United States, India and the company.

“It’s a win for the United States because it creates an outlet for our surplus gas,” Souki said. “It’s a win for India because they have secured cheap gas for a long period of time. And it’s a win for Tellurian because we have provided a bridge between a nation with too much gas and a nation that needs as much gas as it can get as an affordable price.”

Tellurian CEO shares vision for its $30B LNG bet in Louisiana, need for more pipelines

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The top executive leading the largest liquefied natural gas project planned in Louisiana shared her vision for the $30 billion Driftwood LNG export terminal during the Louisiana International Trade week in Baton Rouge. 

Meg Gentle, the CEO of Houston-based Tellurian Inc., described how Louisiana and her company fits into the global LNG export market. 

"If Louisiana were its own country, we would be the fourth largest LNG producer in the world, roughly the same size as Qatar today," Gentle said Tuesday. "I really view Louisiana as such an important LNG hub."

Tellurian expects to make a final investment decision on the project by the end of the year and begin construction soon thereafter. The company estimates that it will begin export operations by 2023. Once fully operational, the export terminal is expected to ship 27.6 million tons of LNG around the world. 

While Louisiana already has a plethora of natural gas pipelines that criss-cross the state, one key to making Driftwood LNG a reality will be to construct more pipelines that connect north to south rather than just east to west. 

"We need to a lot of work to reoptimize the state and connect north Louisiana to south Louisiana," Gentle said. 

Driftwood LNG expects to construct a 96-mile pipeline carrying 4 billion cubic feet per day of natural gas down from the major pipeline hubs at Gillis and Eunice northeast of the project to the proposed gas liquefaction and export facilities on the west bank of the Calcasieu River, south of Lake Charles. Tellurian inked a deal several years ago with Rockcliff Energy Operating LLC to purchase natural gas producing assets. The company has more than 10,000 acres and 20 wells in the Haynesville Shale play. Tellurian will also draw on natural gas supply from a new 625-mile pipeline from the Permian Basin in west Texas for its Louisiana LNG terminal. 

 

Tellurian estimates it will create about 6,700 construction jobs and 300 projected permanent jobs. 

 

Companies in the LNG sector are expected to spend billions for the infrastructure in Louisiana and Texas. 

 

"The industry still has a lot of investments to make in order to double our (U.S.) export capability, we're going to have to spend roughly $150 billion dollars on export facilities and pipelines," Gentle said. 

 

In late September, Tellurian signed a memorandum of understanding with Petronet LNG Ltd. in India for the company to buy 5 million tons of LNG from Driftwood LNG, a final agreement is expected by March. Petronet is also chipping in $2.5 billion for an 18% equity stake in the Louisiana terminal as part of the proposed deal. 

 

Tellurian was granted approval by the U.S. Department of Energy to export natural gas long-term with any country without a free trade agreement with the U.S. earlier this year and has approval from the Federal Energy Regulatory Commission as well. 

 

Tellurian expects to raise $7 billion for its project from partners in addition to $1 billion from private equity investors and $20 billion in debt financing from banks. France's Total and Switzerland-based commodities trader Vitol have invested in the project as partners.

Much of the growth in LNG exports over the past year was in Europe, which is significant as a geopolitical play since U.S. LNG is considered an alternative to natural gas from Russia, she said. 

 

"We provide a very important geopolitical balance," Gentle said. 

 

In France, exporters fetched on average $7 per thousand cubic foot of natural gas in 2018, according to the U.S. Energy Information Administration. In the United Kingdom, it was closer to $3.46 per thousand cubic feet of natural gas. 

In Japan, the average was $6.86 per thousand cubic foot of natural gas, in Taiwan it's $6.51, and in China the average was $4.41 in 2018.  

 

Most of the natural gas in the U.S. can be produced for as low as $2 per thousand cubic foot. 

"In our production in the Haynesville and associated gas in the Permian we can do it cheaper than that," Gentle said. "Less than $1. For the first time, we have become competitive with every other supplier of gas in the world." 

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A Bahamas-flagged tanker named LNG Jurojin carried the first shipment of liquefied natural gas from the Freeport LNG export terminal near the Brazoria County town of Quintana on Tuesday, September 3, 2019. The first production unit has been completed but construction continues for two more. Once all three are in operation, the liquefied Photo: Courtesy Photo / Freeport LNG

2of13Aerial view of the Freeport LNG export terminal near the Brazoria County town of Quintana. The first production unit has been completed but construction continues for two more. Once all three are in operation, the liquefied natural gas facility will be able to produce up to 15 million metric tons of LNG per year.Photo: Courtesy Photo / Freeport LNG

3of13A Liberian-flagged tanker named the Maria Energy left Cheniere Energy's recently completed Port of Corpus Christi facility with the first shipment of liquefied natural gas on the morning of Thursday, December 11, 2018. The shipment marked the first LNG export from Texas.Photo: Courtesy Photo / Cheniere Energy

A pit stop at Buc-ee’s, a tug boat ride and a Cajun lunch put LNG Limited one step closer to making a final investment decision on its proposed Magnolia LNG export terminal in Lakes Charles, La

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Sergio Chapa Sep. 20, 2019

Tellurian inks Driftwood LNG MoU with India’s Petronet

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US LNG export project developer, Tellurian signed a memorandum of understanding with India’s Petronet LNG for a potential purchase of up to 5 mtpa from the Driftwood export project near Lake Charles, Louisiana.

According to a statement by Tellurrian, the two companies intend to negotiate the supply deal, concurrent with Petronet’s equity investment, which remains subject to further due diligence and approval of its board of directors.

Tellurian and Petronet aim to finalize the transaction agreements by March 31, 2020.

President and CEO Meg Gentle said, “Increasing natural gas use will enable India to fuel its impressive economic growth to achieve Prime Minister Modi’s goal of a $5 trillion economy while contributing to a cleaner environment.”

The Driftwood project includes natural gas production, gathering, processing, and transportation facilities, along with Driftwood LNG, a proposed 27.6 mtpa liquefaction export facility on the U.S. Gulf Coast.

In April, the U.S. Federal Energy Regulatory Commission (FERC) issued the order granting authorization for Driftwood LNG and the 96-mile Driftwood Pipeline, which will inter-connect the LNG terminal to the U.S. natural gas market.

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