Anticipated LNG terminals edge toward reality
Date: 11-Nov-04
Country: USA
Author: Mark Babineck
Three of 33 proposed marine terminals expected to serve the U.S. market - one in the United States, one in Canada and one in Mexico - have taken major steps toward fruition in the past two months.
The latest development came this week, when Cheniere Energy Inc. (LNG.A: Quote, Profile, Research) revealed it had secured financing and customers for an LNG terminal and regasification facility on the Texas-Louisiana border.
In September, Irving Oil and and Repsol (REP.MC: Quote, Profile, Research) of Spain partnered on a proposed LNG terminal in Saint John, New Brunswick, Canada, 65 miles from the Maine border. Irving won regulatory approval for the project in August.
Last month, a group led by Royal Dutch/Shell (RD.AS: Quote, Profile, Research) (SHEL.L: Quote, Profile, Research) closed a 20-year deal for Russian LNG supply to a massive Sempra Energy (SRE.N: Quote, Profile, Research) terminal on Mexico's Baja Peninsula, with easy access to California.
Irving expects its facility to open in 2007, Sempra/Shell in 2008 and Cheniere by early 2009. Demand is not expected to exceed the capacity of the current four LNG terminals until 2007 at the earliest.
Cheniere's strategy has been to pursue facilities on the Gulf Coast, where it expects regulatory approval soon on another facility at Corpus Christ and is a partner in a third terminal south of Houston near Freeport, Texas.
The region, accustomed to refineries, chemical plants and large tankers, is considered a much friendlier environment for LNG than the U.S. East and West Coasts.
Edward Kelly, an analyst for Wood Mackenzie, said there was plenty of room in the market for the three terminals.
"You can't overbuild the capacity of the U.S. market to receive LNG," Kelly said, noting that increased demand coupled with looming decline in North American production will make the United States reliant on some LNG by decade's end.
Some projections have the United States importing some 4 billion cubic feet of LNG annually by 2010
Investors were ebullient Tuesday about the latest LNG news, sending Cheniere's stock price up $9.19 to $35.40 on the American Stock Exchange.
