Cheniere Energy's Port of Corpus Christi LNG Plant Will Cost $12 Billion

Cheniere's Corpus Christi Liquefaction Project

Cheniere Energy is closer to making a decision on final investment in its Corpus Christi Liquefaction project.

Cheniere received a turnkey construction commitment priced at $800/tonne of liquefaction. The engineering and construction company Bechtel submitted the contract in September.

Cheniere has plans for up to six trains with 4.5 mtpa capacity each in Corpus Christi, but initial plans call for three trains with capacity of 13.5 mtpa (~1.8 Bcf/d).

At $800/tonne, the construction costs will be $800 x 13,500,000 tonnes = $10.8 billion. Add financing costs and the price tag will easily reach $12 billion.

Read:Port of Corpus Christi Booms on the Back of Eagle Ford Growth

Construction contracts are negotiated early in the process, but a final investment decision will be made by year-end 2014. The decision will come after commercial export contracts are agreed, all regulatory approvals are received, and financing is in order.

Read the company's full third quarter press release at cheniere.com

Cheniere Energy is based in Houston and is further along in buildinga LNG export terminal at Sabine Pass.

Bechtel is a worldwide engineering, construction, and project management firm based in San Francisco. The company has participated in the development of LNG projects in Australia, Equatorial Guinea, Russia, and Trinidad.

Freeport LNG Looking For Financing - Planning Gas Exports

Freeport TX LNG

Freeport LNG is looking to raise more than $7.5 billion to begin construction at its proposed LNG export facility in Freeport, TX.

The Energy Department has approved 1.4 Bcfd in exports at the site and the company is seeking approval for an additional 1.4 Bcfd. The facility still needs FERC approval and expects to know more in 2014. If everything goes as planned, one export train a year will come online starting in 2017.

The Freeport LNG facility has agreements to export gas for Osaka Gas, Chubu Electric Power, and BP.

Cheniere Energy is the only LNG export facility to receive full approval to export US natural gas. The Cheniere facility is located at Sabine Pass and construction started in August of 2012.

Production continues to grow in what are historically consuming areas like the Marcellus Shale. If production continues to grow in the Northeast, exports will be a welcomed market for Eagle Ford gas. Exports might even be needed to support any significant amount of natural gas development.

Eagle Ford Well Completed With LNG Powered Frack Pumps

Onshore LNG Regas and Tanker

LNG powered frack pumps were used to complete an Eagle Ford well in late 2012. We sat down with Ferus' LNG rep Jed Tallman to learn more. This was the first time LNG has ever been used to fuel pumps fracking a well. Field gas has been used by Schlumberger in the Horn River Basin of Canada, but LNG has never been used before.

Ferus is an oilfield service company that supplies cryogenic liquids as part of its offering. The company worked with Baker Hughes to test natural gas conversion technology and yard tested 10 Cummins QSK50 powered pumps. After a successful test, the companies took the pumps into the field to complete an Eagle Ford well south of Pearsall.

Diesel fuel was used as the spark for combustion and LNG was regassed and brought in through the air intake.

Mr. Tallman stated, "This particular technology can achieve diesel substitution rates of 40-65%. An average of 50% substitution is expected.""

Only 6 LNG powered pumps were used on this particular job, but ten will be tested soon. A real determination of savings will be made when the LNG pumps are being fully utilized.

In simple economic terms, vaporized LNG is 20-40% cheaper than diesel fuel. Ifyou can substitute half that cost, you can save 10-20% on fuel costs alone. Build pumps fully powered by LNG and you might save 40%. Consider the average Eagle Ford well can consume as much as 25,000 gallons of diesel and the economics become attractive.

LNG Provides Environmental Benefits

There is also an environmental benefit to using LNG over diesel. Emissions for natural gas vs. diesel can drop as much as 30% for CO2, 75% drop for NOx, 90% drop in particulates, and a 99% drop is SOx emissions.

More LNG Powered Frack Jobs Are Coming

“Ferus is building one 50,000 gallon per day LNG plant in Western Canada and has plans for three more, each of which will have capacity for 87,000 to 100,000 gallons per day, consuming 8.5 mmbtu’s/day.”

Ferus is building one 50,000 gallon per day LNG plant in Western Canada and has plans for three more, each of which will have capacity for 87,000 to 100,000 gallons per day, consuming 8.5 mmbtu’s/day. Ferus is currently looking at areas of high demand and expects the Eagle Ford to top that list. The company committed to develop the plants a couple of years ago, so everything is in place to have a plant up and running in as little as 18 months.

This won't be the last time you hear about LNG being used in frack pumps. Apache will complete a well with 12 LNG powered frack pumps in January of 2013. The effort will be in partnership with Schlumberger and Halliburton. Apache expects fuel cost to fall from a little more than $120,000 to less than $75,000 when utilizing a duel fuel approach similar to that implemented by Baker Hughes and Ferus.

The real hope is to one day fuel the pumps with gas source directly from the field. If field gas were to replace diesel, the industry could save more than $1.5 billion per year. Sounds to me like Ferus should get to work on a new plant in South Texas. 

Eagle Ford Natural Gas is Headed for Mexico - Major Pipeline Expansions Planned

Gas Pipeline Arid

Eagle Ford natural gas pipeline expansions are headed for Mexico. An $8 billion expansion of Mexican natural gas infrastructure is being pushed forward. The early focus is on industrial cities in the northern half of the country where a $3 billion expansion is planned.

"Mexico has a unique opportunity, we have access to the world's cheapest gas," Mexican Energy Minister Jordy Herrera said of the U.S. supply in announcing the new pipeline plans earlier this year. "This is competitiveness for the industry of our country."

U.S. companies are lining up to help supply and construct the proposed Mexican infrastructure. Expect to see companies like Kinder Morgan reverse the direction of some of its current natural gas flows and expand pipelines into Mexico. The Eagle Ford currently produces almost 3 bcf/d, but that number could almost triple over the next five years. That's a lot of natural gas to be absorbed in South Texas. Actually, its much more than the region can absorb. If 5+ bcf/d of additional supply comes online, the natural gas will need a market. That market will either come from Mexico or from across the globe shipped as LNG. Both pipelines and liquefaction facilities come with big price tags, but don't expect PEMEX (Mexico's national oil company) to wait around. The country needs natural gas and the Eagle Ford is positioned well to answer.

Read the full story detailing Mexico's plans at chron.com

Cheniere Energy's Corpus Christi Liquefaction (LNG) to Hold Open House

Cheniere Energy's subsidiary, Corpus Christi Liquefaction, plans to hold an open house in Portland, TX to discuss the proposed LNG facility that would export Eagle Ford natural gas.  The event is scheduled for February 28th, and you can get the full details at our Eagle Ford Shale Events page.   This will be the perfect chance to ask questions about the number of jobs the project might create, exactly how much of the channel it will affect, and general questions about the scope of the project. It will also be important that this facility has access to adequate supply for a very long time, so it will be very interesting to hear what FERC and Cheniere expect from the Eagle Ford.

Read more about the project at cheniere.com