-

By Steve Gelsi, MarketWatch

NEW YORK (MarketWatch) — A decade ago, a global glut of clean, cheap natural gas bred big plans to import liquefied natural gas to the energy-hungry United States.

That’s all changed.

Nowadays, energy companies are is tapping into previously untouched North American gas reserves, prompting them to take a hard look at ways to sell their new-found gas to the rest of the world.

This sudden shift from gas importer to possible exporter is the result of innovative drilling technology that frees gas trapped in vast shale rock formations that until recently had been dismissed as non-commercial.

For the U.S. to become a serious natural gas exporter requires building a costly infrastructure, which will only happen if the right market conditions exist in coming years. Read about the booming U.S. shale gas sector.

Nevertheless, several companies already have plans to build liquefied natural gas, or LNG, export terminals while others are well into the evaluation process, raising the prospects of a billion-dollar construction boom for these highly specialized facilities.

Gas is typically shipped via pipeline, which is impractical for reaching markets outside North America. To overcome the transport obstacle, LNG terminals super-chill gas to its liquid form and load it under extreme pressure into specially designed tankers for shipment overseas.

Once at its destination, LNG must be re-gasified before it can be fed into pipelines for local distribution, another costly facility.

Dominion Resources Inc., and Cheniere Energy Inc. have plans to build LNG export terminals alongside their existing import terminals.

A third terminal, Freeport LNG in Freeport, Texas, which is partly owned by ConocoPhillips, is moving in the same direction, while Sempra Energy has filed for a permit to export LNG from its Cameron LNG facility in Louisiana.

In Canada, Apache Corp., Encana Corp.  and EOG Resources plan to join forces to build an LNG export facility in Kitimat, British Columbia.

Exxon Mobil Corp. /quotes/zigman/203975/quotes/nls/xom XOM -0.03% , which already runs a global LNG business, is weighing the market to see whether initiating LNG exports from North America now makes sense.

“We’re seeing a lot of industry thinking going on about that right now,” Exxon Mobil Senior Vice President Andy Swiger said at a recent energy conference, when asked about LNG exports.

“In terms of exports from North America, whether it’s the Gulf coast, or whether it’s Western Canada, it’s something we’re actively looking at,” he said.

The United States currently has several LNG receiving and storage facilities but none of the liquefaction equipment required to prepare natural gas for export.

With natural gas selling in Europe at more than twice the $3.50 per million British thermal units it fetches in the United States, the payoff could be rich.

Of course, that assumes current prices hold over the time it would take to secure long-term delivery contracts and build export terminals, a process likely to take the better part of a decade.

Seeking outlets for an over-supplied market

Meanwhile, energy companies continue to pump billions of dollars into finding and producing more shale gas.

Rich Gordon of Gordon Energy Solutions, a research firm in Overland Park, Kan., estimated that since 2005, domestic and overseas operators have spent $135 billion securing shale gas acreage in the U.S.

This is quickly boosting output at home. The U.S. Energy Information Administration’s short-term energy outlook sees a 6.1% increase in domestic natural gas production in 2011, rising another 2% in 2012. All of the gains are from onshore drilling operations in the lower 48 states.

“The projected U.S. demand is not sufficient to absorb the supply from these fields,” Gordon said in an interview.

That leaves producers two obvious outlets to absorb future production: transportation fuel and LNG exports, he said.

So far, the EIA has no estimates for U.S. LNG sales overseas.

“It’s something we recognize as a possibility but we’re currently not explicitly modeling the competitiveness of U.S. LNG exports,” said Angelina LaRose, an analyst with the EIA.

The United States currently imports LNG, but doesn’t consume much of it. Instead, it heads out again to other overseas markets, LaRose said, citing a recent Energy Department report.

These so-called LNG re-exports rose sharply to 42.4 billion cubic feet the nine months ended Sept. 30, up from 34.5 billion cubic feet for all of 2010, with Brazil and India most often the final destination.

Original Article

-

(PennEnergy)

Pivotal LNG, a subsidiary of AGL Resources Inc. (NYSE: AGL), has signed an agreement with Encana to supply liquefied natural gas that Encana plans to offer to service providers operating fleet trucks in the Haynesville Shale of Louisiana.

Encana will dispense the LNG through mobile and permanent public fueling stations. Natural gas in a liquid form is easily transported and stored. It is an environmentally responsible fuel ideal for use in large fleet vehicles and heavy-duty engines.

AGL Resources is dedicated to helping “jump start” and expand the use of natural gas for transportation.

Under the terms of the agreement, Pivotal LNG will supply up to 100,000 gallons of liquefied natural gas per day for an initial five-year period to Encana.

“This agreement provides Encana Natural Gas with a secure, long-term supply source of liquefied natural gas for its new LNG fueling stations,” said Eric Marsh, Executive Vice-President, Encana Corporation & Senior Vice-President, USA Division. “Encana is committed to expanding the use of environmentally responsible natural gas, and this is an important step towards building an infrastructure that will enable companies servicing the energy industry to convert their large-freight vehicles.”

Pivotal LNG recently announced it has agreed to purchase an approximately 60,000 gallon-per-day liquefied natural gas facility located in Trussville, Alabama, pending the fulfillment of certain closing conditions, including government approval. The Trussville facility will be AGL Resources’ first LNG facility dedicated solely to the merchant market and will play a role in supplying LNG to Encana.

AGL Resources has been in the business of operating utility LNG facilities for more than 30 years.

Original Article

-

By Associated Press, Published: August 4

NEW ORLEANS — A liquefied natural gas terminal in Louisiana has been approved to export natural gas.

Federal Energy Department records show that Lake Charles Exports LLC was granted authority on July 22 to export domestic natural gas from its Lake Charles terminal to countries that the U.S. has free trade agreements for gas. The Energy Department is still considering whether to allow exports to countries not covered by the pacts.

Lake Charles Exports LLC is a subsidiary of Houston-based Southern Union Co., a natural gas pipeline company, and BG Group, a Great Britain-based natural gas company.

A spokesman for Southern Union did not return a call for comment Thursday.

The Energy Department decision said Lake Charles Exports could export up to 2 billion cubic feet of natural gas a day for 25 years. The terminal was authorized for imported LNG in the late 1970s and construction was completed in 1981. According to the agency document, the company plans to modify the terminal to handle exports.

In May, Cheniere Energy Partners, based in Houston, was given federal approval to export up to 803 billion cubic feet of gas a year from its Sabine Pass LNG terminal in southwestern Louisiana. It was the first such export permit granted for the lower 48 states.

Cheniere has been approved for exports to countries with and without free-trade agreements with the United States.

Exported gas will be carried on tankers after being chilled to super-low temperatures to become liquefied natural gas, which makes it easier to transport by ship. The terminals were originally built to import LNG, but increased attention has recently shifted to exporting part of the huge gas deposits found in U.S. shale formations.

According to the Energy Department, the United States currently has free trade agreements covering natural gas with Australia, Bahrain, Singapore, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, Chile, Morocco, Canada, Mexico, Oman, Peru and Jordan.

Southern Union recently agreed to be acquired by Dallas-based Energy Transfer Equity for $5.7 billion.

Original Article

-

(The Town Talk)

Southwest Louisiana will see an investment of $6.5 billion over six years as Cheniere Energy Inc. of Houston, Texas, builds a natural gas liquefying facility in Cameron Parish.

Cheniere Energy Chairman and CEO Charif Souki and Gov. Bobby Jindal announced today (July 19) that the facility, to be built at the firm’s Sabine Pass terminal, will support 148 new jobs valued at $100,000 a year in salary and benefits. The new jobs will support 589 indirect jobs in the area and 3,000 construction jobs during peak construction at the site near the Louisiana-Texas border.

“This multibillion-dollar investment will be one of the largest capital investments in the history of Louisiana,” Gov. Bobby Jindal said in a news release.

To support the project, Cheniere will use the state’s Quality Jobs and Louisiana FastStart programs, operated by Louisiana Economic Development, and the state’s industrial tax exemption program.

The project “will provide key support to Louisiana’s economy and natural gas industry, which has been transformed by the development of the Haynesville Shale,” Souki said in the release. “In only two years, Louisiana’s natural gas production has doubled as the Haynesville has grown into one of the most prolific shale plays in the world.”

The company said it expects construction to begin in early 2012. Hiring of the new permanent jobs will begin in 2014, and the facility will start operations in 2015, with the final phase coming online in 2018.

Cheniere Energy owns and operates the Sabine Pass natural gas receiving terminal and the Creole Trail Pipeline.

Original Article

-

Water is a coveted resource on drilling rigs.

Competition is fierce among companies that specialize in water pipeline and disposal services. The slightest edge could give companies a huge advantage.

For Heckmann Water Resources, that edge may be liquefied natural gas. The company has purchased 200 LNG trucks with plans of converting at least half its fleet of 550 vehicles from diesel to LNG by 2012.

Steven Kent, president of Heckmann Water Resources, said LNG trucks are 50 percent more expensive, but they cost less to maintain and fuel.

The average life of an LNG vehicle is four to five years compared to two to three for diesel trucks, according to Kent.

“When I pay off all my costs, “» I can pass those savings along to my customers,” which would be a tremendous advantage in a highly competitive market, he added.

Kent along with many other oil and gas industry professionals came together Tuesday morning for the Louisiana Oil and Gas Association’s Northwest Louisiana Natural Gas Vehicle Fleet Seminar. It took place at the Petroleum Club in Shreveport and was sponsored by LOGA, Encana, Petrohawk and Chesapeake.

Several issues were discussed but none more than infrastructure. Before companies spend millions on fleet conversions, they need to be sure there will be a place to fuel them.

Currently, there are three natural gas filling stations open in northwest Louisiana, with eight more planned to be open by 2012.

There are also two NGV conversion centers — Steelweld and Twin State Trucks. Steelweld specializes in conversions for medium and light duty vehicles. Twin State focuses on repowers, or engine swapouts, for heavy duty vehicles like dump trucks and school buses.

Houston Lane, of LEAM Drilling Systems, said the United States will finally be able to control its energy destiny once the infrastructure is in place for natural gas vehicles.

“It’ll be a great day when we can finally drive around the country without a map,” he said of locating CNG filling stations on the road.

Original Article

-

WASHINGTON — The Department of Energy gave Cheniere Energy tentative approval Friday to export liquefied natural gas from its Sabine Pass LNG Terminal in Cameron Parish, a project Louisiana lawmakers say will create thousands of construction and production jobs.

“Cheniere Energy’s plan to transform its existing terminal into a facility that can both import and export liquefied natural gas is a precedent-setting breakthrough that will bring substantial economic benefits to southwest Louisiana,” said Sen. Mary Landrieu, D-La.

After the Energy Department announced its approval, shares of Cheniere, based in Houston, rose 31 percent.

Energy Department officials said the approval is subject to final environmental and regulatory approval, though some industry experts suggest that it is a mere formality.

“Our long-term economic strength depends on safely and responsibility harnessing America’s domestic energy resources while developing new and innovative clean energy technologies,” Energy Secretary Steven Chu said. “This project reflects a broad ‘all of the above’ approach that will put Americans to work producing the energy the world needs.”

Rep. Charles Boustany, R-Lafayette, praised the Obama administration’s approval of the Cheniere project, but continued to criticize its overall energy policies.

“This development is critical for Southwest Louisiana’s economy, and gives the United States a boost on the global energy stage,” Boustany said. “With so much uncertainty from the administration and no clear energy strategy for this country, this approval proves the United States has an abundance of natural resources to be utilized in both foreign and domestic markets.”

Original Article