Last week ExxonMobil and Qatar Petroleum announced a final investment decision (FID) to build Golden Pass LNG terminal, on the Texas side of the Sabine-Neches Waterway. That’s a stone’s throw from Cheneire Energy’s Sabine Pass LNG terminal on the Louisiana side of the waterway. Marcellus/Utica gas flows to the Cheniere facility. Will it also flow to Exxon’s when it’s built?
We believe the answer to that question is, “Yes!” However, the Exxon Golden Pass LNG terminal won’t be built and operational until 2024 at the earliest. A long way off.
There’s no question much of the gas that will feed the Golden Pass terminal will come from the prolific (and nearby) Haynesville Shale. Enable Midstream is building the Gulf Run Pipeline, a 171-mile pipeline that will (as you will read below) “originate at an interconnect in Westdale, LA (in Red River Parish) with Enable’s existing 1.9-Bcf/d Carthage-to-Perryville line, which traverses west-to-east through the heart of the Haynesville.”
Here’s the tie-in with the Marcellus/Utica. “From there, Gulf Run would move gas south to Starks, LA, in Calcasieu Parish. The Gulf Run project includes modifications to Line CP to make it bi-directional between the Perryville hub — which is a critical Marcellus-to-Gulf Coast gateway hub in northeastern Louisiana — and the Carthage hub in East Texas.” Yes, the very pipeline which will feed the Golden Pass project will connect with Marcellus/Utica supplies too. Meaning our molecules, one day, will flow to this new export facility.
RBN Energy recently published this detailed look at the Golden Pass project:
The dam has broken on the “second wave” of U.S. LNG export projects. ExxonMobil and Qatar Petroleum last week announced a final investment decision on their joint venture liquefaction and export project — called Golden Pass Products — at the brownfield site of the Golden Pass LNG terminal on the Texas side of the Sabine-Neches Waterway. That’s a skipping stone’s throw from Cheniere Energy’s Sabine Pass LNG and Sempra Energy’s Cameron LNG terminals on the Louisiana side of the Gulf of Mexico outlet, as well as a number of other second-wave contenders. With construction slated to begin late next month, the Golden Pass project expects to become operational and begin taking feedgas by 2024. Today, we provide an update on Golden Pass, its potential feedgas needs and how it will be supplied.
2019 is set to be a pivotal year for U.S. LNG exports. Not only is it looking to be a watershed period for liquefaction capacity additions from the first wave of export projects that are already under construction and due online over the next couple of years — as we laid out in our Let Me Move You blog series — but it’s also likely to be a milestone year for the second wave of North American export projects as they race toward FIDs. We are tracking 24 of these mostly pre-FID projects in our LNG Voyager Quarterly, 18 of them along the coastlines of the contiguous U.S.
Not all of these multibillion-dollar projects may get the financial green light needed to advance to the construction phase. As we said last fall in Part 5 of our Coming Up series, if we had to put a win-place-or-show bet on which of these advance, they generally would be ones that are located at sites of existing terminals with robust connectivity to the U.S. pipeline network already in place and abundant supply — also, the backing of a team with deep pockets doesn’t hurt either. One project we said checks all those boxes was Golden Pass Products (GPP); as of last week, that project became the first of the U.S.-based pre-FID projects to score that financial go-ahead. [The first of the second-wave projects to announce FID in North America as a whole was Royal Dutch Shell’s LNG Canada, which in early October 2018 announced funding for its 14-million-metric-tonnes-per-annum (MMtpa) liquefaction/export terminal in Kitimat, BC. The project’s other partners are Petronas, PetroChina, Mitsubishi and Korea Gas.]
The planned GPP LNG export project — which proposes to build three 5.2-MMtpa liquefaction trains for a total of 15.6 MMtpa of LNG export capacity — is backed by ExxonMobil and Qatar Petroleum (QP), two global powerhouses that could easily bankroll the project with little more than their petty cash funds. The state-owned QP develops LNG projects through its Qatargas, the world’s largest LNG producer following its merger last year with QP’s other LNG company, RasGas. Qatargas operates 14 liquefaction trains totaling 77 MMtpa (equivalent to ~10 Bcf/d of natural gas). ExxonMobil, for its part, is one of the largest companies of any kind in the world and the second-largest U.S. gas producer with a strong foothold in the nearby Permian Basin. Just how big a deal Golden Pass is can be seen from the fact that the press conference held for the signing of the FID agreement was attended by U.S. Energy Secretary Rick Perry.
Golden Pass checks the boxes in other big ways too. Besides its deep-pocketed co-owners, it is being developed on the site of the existing Golden Pass LNG import terminal which has the ability to regasify up to 2 Bcf/d and was built at a time when the U.S. and global markets were preparing to ship vast amounts of gas into the U.S from Qatar and elsewhere. The facility — situated in Jefferson County, TX — already comes equipped with two docks and five LNG storage tanks and is well-connected to the Texas-Louisiana gas pipeline network via the 69-mile, 42-inch-diameter Golden Pass Pipeline (GPPL; gold line in the Figure 1 map and inset), which runs from the terminal (yellow pentagon) north and east to a termination point in Calcasieu Parish, LA. The GPP project — which would require as much as 2 Bcf/d of natural gas for LNG production (using a rule-of-thumb ratio of 1 Bcf/d for every 7.6 MMtpa of liquefaction) and the 200-250 MW of onsite gas-fired generation capacity to power the terminal — will include installing a 3-mile, 24-inch-diameter pipeline and additional compression to enable as much as 2.6 Bcf/d to flow south on GPPL for delivery to the terminal.
GPPL has a number of interconnects with a combination of Texas intrastate and interstate long-haul pipes (shown in the Figure 1 inset). Starting from the terminal in Jefferson County, they include Kinder Morgan’s Natural Gas Pipeline Co. of America (NGPL; olive green line in the inset), and Tejas and Texas intrastate systems (purple line and red line, respectively), as well as an interconnect with Southern Co. Gas’s 13-Bcf Golden Triangle Storage, a salt-dome storage facility south of Beaumont. Further north in Orange County, TX, are the interconnects with Texoma Pipeline (indigo line, part of Energy Transfer’s HPL intrastate system in Texas) and Florida Gas Transmission (hot pink line). The remaining four interconnects are located closer to the pipeline’s terminus in Calcasieu Parish: two with Williams’s Transco (blue line) and the other two with Enbridge’s Texas Eastern Transmission (TETCO; cyan blue line) and Kinder’s Tennessee Gas Pipeline (TGP; mint green line).
Along with the FID announced, the Golden Pass team also revealed it is the previously unnamed anchor shipper on Enable Midstream’s Gulf Run Pipeline project, a greenfield line that would move as much as 2.75 Bcf/d from the Haynesville Shale to the Gulf Coast by 2022. GPP has taken 1.1 Bcf/d of that on a 20-year, firm basis, along with an as-yet-unspecified volume on NGPL (also on a 20-year term). The 171-mile Gulf Run Pipeline (dashed teal line in the main map) would originate at an interconnect in Westdale, LA (in Red River Parish) with Enable’s existing 1.9-Bcf/d Carthage-to-Perryville line (Line CP; brown line), which traverses west-to-east through the heart of the Haynesville. From there, Gulf Run would move gas south to Starks, LA, in Calcasieu Parish. The Gulf Run project includes modifications to Line CP to make it bi-directional between the Perryville hub — which is a critical Marcellus-to-Gulf Coast gateway hub in northeastern Louisiana — and the Carthage hub in East Texas (see Turn the World Around for more on Perryville’s role in connecting Northeast production to Gulf Coast demand). Notably, the project also would include building a lateral to Gillis, LA, a growing feedgas supply hub that also serves as a key interconnect for deliveries into Cheniere’s Creole Trail Pipeline, a feeder for the Sabine Pass export facility.
It’s worth mentioning that the Golden Pass terminal eventually may have ready access to another supply option, the fast-growing Permian Basin. ExxonMobil’s XTO Energy has committed to capacity on two greenfield Permian-to-Texas Gulf Coast pipeline projects: Gulf Coast Express, which would move Permian gas to the Agua Dulce hub in South Texas by the fourth quarter of 2019, and Permian Highway Pipeline, which by the fourth quarter of 2020 plans to deliver West Texas gas to Kinder’s Houston Central Complex, the location of a large processing, treatment and NGL fractionation facility in Colorado County, TX (just southwest of the Katy storage hub).
All in all, the GPP liquefaction project has the ingredients to be a highly competitive export facility — two huge integrated global majors as partners, including one (QP) with the largest market share of global LNG exports and a stronghold in growing markets like India; and a brownfield site that’s well-connected to the Gulf Coast pipeline network. With its FID in place and a targeted start-up in 2024, the project gives us an idea of when the next rush of feedgas demand will begin, after what is likely to be a multi-year lull following the last of the first-wave projects (the third train of Cheniere’s Corpus Christi liquefaction project, due in 2021).*
*RBN Energy (Feb 11, 2019) – Time Has Come Today – Golden Pass FID Heats Up Race For U.S. LNG Exports
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