An LNG JOURNAL PUBLICATION 11 June 2013

LNG Unlimited
Cheniere Energy and other devel-
opers of US LNG exports along the
Gulf Coast are slowly putting to-
gether their own marketing port-
folios for monetizing the nations
natural gas surplus caused by the
shale boom.
In addition to selling liquefac-
tion services to third parties from
Europe and Asia at their new
plants at the Henry Hub price plus
a premium, companies such as
Cheniere are securing their own
shipping and investing in the South
American regasification business.
Template
Cheniere is building the template
for other companies to follow with
a balance of customers in Asia,
the Americas and even Europe,
analysts said.
Cheniere Marketing will be sell-
ing cargoes into Asia and its two
five-year time charters signed last
week with Teekay LNG for two
173,400 cubic metres capacity
LNG newbuilds will provide the
optimum size of vessels for the
expanded Panama Canal.
This will enable the US LNG
plant developer to be able to
supply its own cargoes through its
marketing unit to Japan and Korea
during the North Hemisphere
winter, and to Southern Hemi-
sphere nations such as Chile and
Argentina during the summer.
US LNG plants will be playing a
key role in balance natural gas
demand in the Americas and the
Caribbean with LNG supply.
Cheniere has taken a stake in
the newest South American regasi-
fication project, Octopus LNG
project in Chile.
The US company and its
Chilean partners plan to locate a
Floating Storage and Regasifica-
tion Unit on an island in the Bay of
Concepcin with a 2.5 kilometres
pipeline to shore.
The Chilean project also
includes the construction of a
combined cycle gas-fired power
plant with two units, each of 570
megawatts.
This is what LNG players
are targeting in the Americas,
guaranteed demand in Free Trade
Agreement nations.
Mexico
Mexicos growing natural gas
demand will also have to be satis-
fied with a combination of
pipeline exports and LNG.
A recent report estimated that
LNG volumes for Mexico could
average 3.9 Billion cubic feet per
day of LNG exports compared with
4.7 Bcf/d of pipeline export. Some
of these US LNG exports could be
delivered to the Gulf of Mexico
terminal at Altamira.
US LNG developers build shipping
and marketing for Asia-Americas
The full global LNG demand and supply picture through to 2025
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The largest Indian
LNG buyer initials
shipping agreement
with SCI for cargoes
3
SHIPPING
IMPORTS
TENDERS
Singapore in LNG
consulting process
ahead of next step
in Hub development
4
Petronet LNG sets
June 28 deadline for
east coast of India
import facility tender
5
Three of Australias
CSG-to-LNG plants
make move to share
some feed-gas stock
6
Canadian LNG
projects deal with
Germanys E.ON
stirs Atlantic basin
2
LIQUEFACTION
CONTRACTS
REGULATION
BP and Shell seek
FERC ruling in
disputes with
Dominion's Cove
Point LNG project
8
Cheniere Energy is
building a portfolio
of LNG marketing for
other players to follow
Our North American editor
Meeting challenges
you havent even thought of yet.
New ofshore LNG loading technology:
made to handle the toughest conditions.
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The Canadian Goldboro LNG
export project in the east coast
province of Nova Scotia has con-
firmed the signing of a supply
agreement with German utility
E.ON to ship cargoes from Canada
to Europe.
The developer of the project is
Pieridae Energy and the feed-gas
supply for its liquefaction plant
would be delivered via the exist-
ing Maritimes & Northeast
Pipeline, located directly adjacent
to the project.
Boost
The transaction is a shot in the
arm for the Canadian LNG export
industry, especially on the east
coast, as no such deal has yet
been sealed by any of the half-
a-dozen projects on the Pacific
coast.
The Goldboro project consists
of an LNG processing facility for
10 million tonnes per annum of
exports, storage tanks for 690,000
cubic metres of LNG and a marine
terminal. The facility will be lo-
cated at Goldboro in Guysborough
County, Nova Scotia.
The target markets for the LNG
produced at the Goldboro LNG
project are Europe, South America
and Asia, but E.ON is the first con-
tracted buyer.
Calgary-based Pieridae's long-
term sales agreement is with E.ON
Global Commodities, a subsidiary
of E.ON.
Under the agreement, Pieridae
will deliver about 5 million tonnes
per annum of LNG to E.ON for 20
years into a number of locations in
Western Europe.
"We are pleased to have
reached a long-term agreement
with E.ON, which will provide the
European gas market and Germany
particularly with a new secure
source of natural gas supply," said
Alfred Sorensen, President and
Chief Executive of Pieridae.
The agreement was signed by
Sorensen and Gareth Griffiths ,
Chief Commercial Officer Mer-
chant Trading of E.ON Global Com-
modities at a signing ceremony at
the Canadian Embassy in Berlin.
Pieridae CEO Sorensen added:
"Our agreement with E.ON pro-
vides the economic security
needed to complete the develop-
ment of the first process Train of
the Goldboro LNG terminal."
The companies said LNG pricing
in the agreement is based on mar-
ket prices of natural gas in the
Western European market.
Other deals
Pieridae said that in collaboration
with Canada's Contact Exploration
it was having advanced discussions
with North American natural gas
suppliers and pipelines, "which are
expected to be concluded within
the terms of the sales and pur-
chase agreement."
When starting commercial
operations by the first quarter of
2020, natural gas will be trans-
ported to Goldboro, Nova Scotia,
using the existing pipeline
systems, liquefied and exported
by ship.
Pieridae's project is currently
preparing for the provincial envi-
ronmental assessment. "An
approved environmental assess-
ment would be the next major
milestone towards a final invest-
ment decision expected in 2015.
If the decision is made to proceed
with developing Goldboro LNG,
construction could begin in late
2015," said Sorensen.
The Pieridae-E.ON transaction
follows a recently announcement
by H-Energy, an Indian company
operated by businessman Darshan
Hiranandani, that it was also plan-
ning an export project in Nova
Scotia.
The Indian company plans to
build its liquefaction plant in the
town of Melford at a cost of $3 bil-
lion. Hiranandani said that his
venture would be similar in size to
the LNG project that Pieridae is
planning.
The Hiranandani Group is one
of India's largest real estate devel-
opers. It also has real estate oper-
ations in Dubai in the United Arab
Emirates and energy operations
in India.
An existing LNG import facility
on the Atlantic coast of New
Brunswick, Canaport LNG, is also
planning to add liquefaction facili-
ties to its regasification equip-
ment. The terminal is owned by
Spain's Repsol and Irving Oil of
Canada.
The bottom line for the Cal-
gary-based developer's LNG deal
with German utility E.ON is that
the project has sold Canadian LNG
at European prices before Pacific
coast projects have sealed any
Asian deals.
Germany doesn't have any LNG
import facilities but they could be
set up by then. It's more likely,
however, that the cargoes will be
sold into the UK, French, Belgian
or Dutch markets.
The German utility thus also
gains alternative natural gas sup-
plies to the dominant European
supplier, Russia's Gazprom.
While Germany's pipeline natu-
ral gas deals with the then Soviet
company Gazprom in the past
were used as symbols of East-West
detente, there was irony in the
fact that the Canadian LNG deal
with E.ON was signed at the
Canadian Embassy in Berlin.
With the value of Canadian
natural gas at less than the $4.00
per million British thermal units of
the US Henry Hub benchmark,
E.ON can import cargoes to
Europe, including all costs, at
around $8 per MMBtu.
That compares with current
early summer prices in Europe
right now of $9.90 per MMBtu.
As European natural gas sup-
plies are expected to be more con-
strained by 2020 when the contract
starts, the E.ON transaction may
look even more attractive then.
Quiet front
While Pieridae has closed an east
coast LNG supply deal, things are
quieter among the half-dozen
projects on the West Coast.
Even the Canadian National
Energy Board commented recently
that natural gas drilling in Western
Canada for feed-gas for the LNG
export projects was being post-
poned since the ventures them-
selves were taking longer than
anticipated to obtain sales com-
mitments from Asian buyers.
Canadian LNG projects deal with German
utility E.ON stirs market in Atlantic Basin
Pieridae Energy of Calgary pushes Goldboro LNG export project in Nove Scotia to the forefront
Our North American editor
NEWS LNG Unlimited 11 June 2013
2
Alfred Sorensen, President and Chief Executive of Pieridae, explaining
his Nova Scotia project and Germany utility contract at a press conference
in the city of Halifax. Sorensens energy company is based in Calgary
Gas Authority of India, the nation's
biggest LNG buyer, has signed a
memorandum of understanding
with Shipping Corp. of India (SCI)
for the long-term organization of
the transportation of LNG cargoes
from the United States to Indian
import terminals.
GAIL has agreed to have
SCI organize the shipping of
5.8 million tonnes per annum of
LNG back to India - even though
it doesn't currently have any
LNG carriers of its own or ships
on order.
Organizer
GAIL, the Indian natural gas net-
work company and growing energy
supplier, has booked millions of
tonnes of LNG shipments from
the US export plants at Cheniere
Energy's Sabine Pass in Louisiana
and Dominion's Cove Point plant in
Maryland.
The Indian energy company has
signed long-term agreements for
3.5 MTPA with Sabine at a price
benchmarked to the Henry Hub.
That supply is expected to start
from 2017 or 2018.
GAIL also has a 20-year lique-
faction service agreement with
Dominion of the US, which is
transforming its Cove Point LNG
import terminal into a liquefaction
plant to export gas from areas
such as the Marcellus shale.
The Indian company will have
the rights to liquefy and export
2.3 MTPA from Cove Point, located
near the shore of Chesapeake
Bay. GAIL also has LNG supply
agreements with Qatargas and
Russia's Gazprom.
The GAIL co-operation agree-
ment with SCI would include the
shipping company assisting the
LNG importer in the charter
hiring of LNG carriers and GAIL
assigning rights to SCI in the
ownership of LNG vessels, a
statement said. SCI could now
soon order at least six LNG
carriers.
The shipping agreement with
SCI was signed by B.C. Tripathi,
Chairman and Managing Director
of GAIL and B.K. Mandal, SCI
Chairman and Managing Director.
GAIL has regasification capacity
at the Dahej and Dabhol terminal
on the west coast of India near
Mumbai and at the Kochi import
terminal in the southwest state
of Kerala.
India's current imports are
under 14 MTPA and the nation
plans an increase its capacity to
47.50 MTPA by 2016 as it expands
existing terminals and builds more
facilities on its east coast.
The country presently has 10
MTPA of regas capacity at the
Petronet LNG's terminal at Dahej
and 3.6 MTPA at Royal Dutch
Shell's terminal at Hazira. GAIL is
a shareholder in Petronet.
Regas surge
An additional capacity of 1.2 MTPA
may be added shortly post-com-
missioning at the Dhabol terminal.
Capacity at Dahej is expected
to increase to 12.5 MTPA by 2013-
14 and 15 MTPA by 2015-16 after
expansion.
11 June 2013 LNG Unlimited NEWS
3
Largest Indian LNG buyer initials shipping
agreement with SCI for US cargo imports
Our Asia editor
Japan gives
Mozambique
favoured nation
status ahead of
LNG project
Japan and Mozambique have
signed a new trade and invest-
ment agreement that gives the
Mozambicans most-favoured
nation treatment as the south-
east African nation develops one
of the largest LNG projects.
The Anadarko Petroleum and
Italy's Eni are planning to pro-
duce up to 50 million tonnes per
annum of LNG from feed-gas es-
timates of around 200 trillion
cubic feet in the Rovuma Basin
offshore Mozambique.
The Anadarko and Eni natural
gas exploration licences are sep-
arate but agreement was
reached last year to build just
one liquefaction plant with up
to 10 Trains that the two com-
panies and their array of part-
ners could share.
There is only one Japanese
participant in the LNG project
and that is Mitsui & Co., the
Japanese trading company that
holds 20 percent of the
Anadarko licence.
However, buyers from Japan,
the biggest LNG importer, should
be prominent in signing long-
term supply agreements before
LNG comes on stream after 2018.
The Japan-Mozambique
agreement should also clear the
way for Japanese banks to par-
ticipate in the infrastructure in-
vestment linked to the LNG
project, including the liquefac-
tion plant and the shipping.
"Mozambique has abundant
natural resources, including coal
and natural gas, and recently it
has been maintaining a high
economic growth of average 7
percent per year," said the
Japanese Ministry of the Econ-
omy, Trade and Industry.
"Japanese enterprises have
been expanding their businesses
in Mozambique, and also Japan
and Mozambique have been
maintaining a good relationship,"
the METI statement said.
Alaskas new state tax reforms
have spurred on LNG plans by the
energy majors, including an in-
crease in preliminary work on
what will be called the South Cen-
tral Alaska LNG project.
Given the massive size of the
North Slope conventional gas re-
source of 35 trillion cubic feet of
reserves and more than 200 Tcf of
undiscovered, technically recover-
able resources, the scope of the
project could turn out to be the
largest in the world.
BP, ExxonMobil, ConocoPhillips
and TransCanada are working to-
gether on the project in coopera-
tion with the state of Alaska.
"We believe it is the right time
to focus on how we move this
project forward," said BP Alaska
Region President Janet Weiss.
Weiss made her comment as BP
itself announced $1 billion in new
investment including drilling rigs
for the Alaska North Slope fields
from where feed-gas will come for
the LNG project.
"Now that an improved tax
structure is in place, oil and gas
projects can once again move for-
ward, keeping Alaska competitive
in the midst of America's recent
energy renaissance," Weiss said.
BP, ExxonMobil, ConocoPhillips
and TransCanada have already sig-
nalled progress in their studies for
the LNG project and are acceler-
ating field work.
The four companies have a
combined 300 people working on
the project, including on field
work and pre-design. The compa-
nies have just provided more de-
tails to Governor Parnell on the
teams they have assembled and
the team's activities in developing
the project.
The preliminary work on the
LNG project will include filling in
knowledge gaps along the 800-
mile pipeline route to bring feed-
gas from the North Slope to the
liquefaction plant.
The LNG plant is expected to be
sited at a location currently being
finalized on the Southcentral Alaska
coast. Workers from BP, ExxonMobil,
ConocoPhillips and TransCanada plan
to survey up to 40 streams, 17 lakes
and 20 fishing sites in the coming
weeks and months to provide a
fuller picture, executives said.
Tax breaks give momentum to the majors
planning South Central Alaska LNG project
Singapore plans to award its next
LNG import licence through a
competitive bidding process
organised by the island state's
Energy Market Authority after a
consultation with market players
currently taking place.
The EMA has already awarded
BG Group of the UK a contract for
the supply of 3 million tonnes per
annum as "aggregator", of which
2.7 million tons have found buyers
in Singapore.
New era
Singapore received its first com-
mercial LNG cargo on May 7 this
year as it begins an era as an LNG
regional trading hub, while boost-
ing energy security with stable
supplies of natural gas for its
power system.
BG is the aggregator of LNG
for the Singapore market and is
responsible for supplying up to 3
MTPA for a period of 20 years as
the facilities are expanded in line
with the LNG hub trading plan.
However, another importer
for the next round of supply will
be appointed through the bidding
process, after which more
importers may be appointed
depending on demand for the new
Asian LNG hub.
The Singapore regulator has
issued its latest consultation docu-
ment called: "The Post-3 MTPA
LNG Import Framework" as part of
the process. The closing date for
submissions is July 31.
The first round of consultations
led to feedback from over 30 com-
panies, the EMA said.
"The global gas market is also
expected to evolve, with the
emergence of new supplies and
new forms of contracts. EMA will
monitor these developments and
trends and regularly evaluate if
the proposed LNG import frame-
work remains most optimal to
meet Singapore's longer-term
needs," the EMA said.
The EMA believes the LNG
terminal can accommodate up to
four importers when it reaches full
capacity.
"Industry players recognised
that the global gas landscape has
changed and will continue to
evolve over the next decade," the
regulator added.
Based on the feedback already
received, the EMA is considering
the following issues:
"Future LNG imports should
enhance the price competitiveness
of our gas supply and minimize
volatility. This should be achieved
through an import framework
which allows for a diversified port-
folio from multiple supply sources,
and where possible, a blend of
contract durations and indexation.
"We should put in place a com-
petitive process to ensure that
Singapore gas buyers are able to
access the most competitive deal
each time we enter the global
market to procure LNG
"It is risky, especially for a
small economy like Singapore's,
to try and time the market by
taking big bets with large volume
purchases.
Singapore added that it wants
options to allow domestic buyers
to benefit from changes in global
market conditions or movements
in prices.
The EMA listed two other im-
ports issues. Firstly, the import
framework should take into consid-
eration the available capacity and
operational efficiency of the LNG
terminal and the number of users it
can effectively accommodate.
The incremental gas demand
up to 2018 is estimated at 1 MTPA
to 1.5 MTPA.
"While it is possible to contract
LNG in smaller quantities, the
typical size for contracting LNG
would mean that this next tranche
of imports would likely be met by
one importer," the EMA said.
Expansion
The Singapore terminal has an
initial throughput capacity of
3.5 MTPA with two storage tanks.
This capacity will increase to
6 MTPA by the end of 2013 when
the third tank, additional jetties
and regasification facilities, are
completed.
There are also plans for a
fourth tank and associated regasi-
fication facilities to be added to
the terminal, to raise its through-
put capacity to 9 MTPA.
NEWS LNG Unlimited 11 June 2013
4
Singapore in LNG consulting process with
the market players ahead of supply bidding
The island state's Energy Market Authority has obtained feedback from over 30 companies
Our Asia-Pacific editor
Singapores LNG terminal received its first commercial LNG cargo
a month ago. There are already development plans for the hub
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The Golden Pass US LNG export
project involving ExxonMobil and
Qatar Petroleum that intends to
point cargoes at the UK will only
move forward in June 2014 in the
formal regulatory construction
permit process, making cargoes
available by about 2018.
The US Federal Energy Regula-
tory Commission (FERC) has issued
an order approving the project's
request to initiate pre-filing envi-
ronmental review procedures and
acknowledged that a formal appli-
cation will be made in a year's time.
Plan
ExxonMobil and QP signed a com-
mercial agreement last month on
the export plant venture to be
built at their existing Golden Pass
import facility on the Sabine-
Neches Waterway that separates
Texas and Louisiana.
That agreement will see up to
15.2 million tonnes of LNG sold
worldwide by the liquefaction
plant's marketing joint venture
called Golden Pass Products.
The Golden Pass partners will
take advantage of higher European
natural gas prices compared with
the US market by delivering some
cargoes into the South Hook ter-
minal in the UK, which they own.
The FERC application will be
for the liquefaction project and
the interconnected pipeline lo-
cated in Jefferson and Orange
Counties, Texas and Calcasieu
Parish, Louisiana.
"When Golden Pass files its
application with the commission,
we will evaluate the progress
made during the pre-filing
process, based in part on our
success in resolving the issues
raised during scoping.
"Once we determine that your
application is ready for process-
ing, we will establish a schedule
for completion of the environmen-
tal document and for the issuance
of all other federal authoriza-
tions," the FERC told Golden Pass.
The Golden Pass said they
would invest around $10 billion to
transform Golden Pass into a liq-
uefaction plant, creating about
45,000 direct and indirect jobs
across the US during the construc-
tion phase.
The Golden Pass facility is not
far from Cheniere Energy's Sabine
Pass liquefaction project that is
constructing up to six Trains with
output of over 20 MTPA.
Permits
The Cheniere project, which will
be the first large-scale US LNG ex-
port plant to come on stream in
2015, is one of only two facilities,
with Freeport LNG of Texas, to so
far have Department of Energy
permits to export cargoes to Free
Trade Agreement nations and Non-
FTA countries such as Japan, China
and India.
Golden Pass has received DoE
authorization for exports to FTA
countries, and is awaiting DoE
approval to export to non-FTA
nations.
11 June 2013 LNG Unlimited NEWS
5
Golden Pass US LNG exports targeting
UK will only be available by about 2018
Our North America editor
Jordan Cove
files with
FERC for
first Pacific
US LNG plant
Jordan Cove Energy has filed
with the Federal Energy Regu-
latory Commission to build a
US export plant in the US Pa-
cific Northwest with its
shorter sea route to East Asia.
The company will con-
struct liquefaction Trains
at Coos Bay in the state of
Oregon where it had originally
proposed to build a regasifi-
cation terminal and had
received previous FERC
authorization.
Jordan Cove will be capa-
ble of obtaining ample feed-
gas from the US Rockies and
Canada and sending it directly
to Asian buyers.
The developers will con-
struct liquefaction facilities
capable of sending 0.9 billion
cubic feet per day of natural
gas to Asia.
The project design
includes the 230-mile Pacific
Connector Gas Pipeline to
deliver feed-gas to the export
plant, with start-up planned
for the third-quarter 2018.
Jordan Cove has asked the
FERC to approve the applica-
tion by May 2014 under its
detailed environmental and
design review process.
The Oregon project is one
of more than 20 that has also
filed with the Department of
Energy for export licences for
Free Trade Agreement and
non-FTA nations.
Only two US Gulf of Mexico
projects, Sabine Pass in
Louisiana and Freeport LNG
in Texas, have so far received
FTA and non-FTA permits that
allow LNG cargo deliveries
to US neighbours in Latin
America, but also to trade
competitors such as Japan
and China.
Petronet LNG, the largest Indian importer, plans to
hold an international competitive bidding process
for tender qualification for a lump-sum engineer-
ing, procurement and construction contract to set
up an LNG terminal at Gangavaram in the state of
Andhra Pradesh in eastern India
The 5 million tonnes per annum facility will
be expanded to 10 MTPA. The following packages
are being offered in the tender: 1. Storage;
2. Regasification facilities; and 3. Other facilities.
"The detailed requirements and eligibility crite-
ria for short-listing of bidders for the above pack-
ages are provided separately in Request for
Qualification (RFQ) documents for each of the
aforesaid packages," Petronet said in referring in-
terested parties the company Web site.
Details of the tender can also be viewed in a paid
advertisement on the LNG Journal Web site.
The last date for submission of qualification bids is
June 28, 2013, the company said.
The Petronet facility at Gangavaram is the fourth
planned for the east coast. Currently, all of India's
import capacity is on the west coast.
The government of India also recently granted
Indian Oil Corp. a lease on 520,000 square metres
of land at Ennore Port, north of Chennai, for the
construction of an LNG terminal.
Also on the east coast, Gas Authority of India is
developing a facility at Kakinada where Royal
Dutch Shell is also planning a floating LNG import
terminal.
India's last year received 13.6 MTPA of LNG,
with 10 MTPA delivered to Petronet's terminal at
Dahej and 3.6 MTPA to Shell's facility at Hazira.
Capacity at Dahej is expected to increase to
12.5 MTPA by 2013-14 and 15 MTPA by 2015-16
after expansion.
The capacity of Shell's Hazira terminal is also
likely to be expanded to 5 MTPA by 2013-14 and
10 MTPA by 2016-17.
India has ambitious plans to boost its regasifica-
tion capacity to handle over 470 MTPA by 2016
and expand gas transmission, though because of
the nation's high economic growth natural gas de-
mand is expected to outstrip supply for many
years to come, analysts say.
Petronet LNG sets June 28 tender deadline for
east coast of India import facility development
Our Asia editor
NEWS LNG Unlimited 11 June 2013
6
Australia's three coal-seam-gas-to-
LNG projects being built together
on Curtis Island on the Queensland
coast are completly separate ven-
tures, but they have decided to
cooperate occasionally and as a
last resort on feed-gas supply.
The Gladstone LNG venture led
by Australia's Santos revealed that
the three LNG projects, also in-
cluding the BG Group's Queens-
land Curtis LNG (QCLNG) project
and the ConocoPhillips Australia
Pacific LNG, are building gas
pipelines to connect their Curtis
Island plants together, with a view
to entering into gas-sharing agree-
ments in the future.
Executive
The Vice President of the GLNG
project, Rod Duke, said during a
tour of the project that the three
parties would share gas to ensure
cargo delivery contracts were met.
The supply of CSG relies heav-
ily on multiple wells linked to the
plant, with each project expecting
to have several thousand wells
each during the life spans of the
ventures.
"It shows how we can work with
each other from time to time,"
Duke said.
BG Group Senior Vice President
Betsy Spomer told a recent confer-
ence in Texas that it was regretted
by executives at BG, and probably
by the other CSG-to-LNG project
developers in Australia, that there
had not been more cooperation
during the planning phases.
The QCLNG venture, also in-
volving China National Offshore Oil
Corp., will come on stream in
2014 at a total cost of US$25Bln
and will deliver LNG cargoes to
Asian buyers.
The other two ventures will
start up in 2015. The GLNG proj-
ect groups Santos with Malaysia's
Petronas, France's Total and Korea
Gas Corp.
The APLNG project brings
ConocoPhillips together with
China's Sinopec and Origin Energy
of Australia.
The costs of the CSG-to-LNG
projects were underestimated by
all three projects and they had to
increase their spending.
Concerns eased
With the feed-gas arrangement
now in place the companies can
look forward to starting up with
fewer concerns over supplying the
liquefaction plants.
Of course the main link be-
tween all three plants is that US
LNG plant builder Bechtel Oil, Gas
and Chemicals Inc. of San Fran-
cisco, is working, with many other
companies, on the engineering and
construction on Curtis Island.
Three Australian CSG-to-LNG projects to
cooperate as last resort through feed-gas
Our Asia-Pacific editor
Canadian firm
wins Australian
LNG contract
with Chevrons
Wheatstone
Atco Structures & Logistics of
Canada has secured a sub-con-
tract worth $100 million to pro-
vide modular units for Chevron
Corp.'s Wheatstone LNG project
in Australia.
Calgary-based Atco said it
has signed an agreement with
US engineering firm Bechtel to
design, manufacture, transport
and install 357 modular units
for the venture.
The liquefaction plant will
be located at Ashburton North,
near the town of Onslow, and
will have an initial capacity of
just short of 9 tonnes per
annum from two first phase
LNG Trains.
The feed-gas will be sup-
plied from the Wheatstone,
Iago, Julimar, and Brunello off-
shore gas fields and Chevron
partners in the venture include
Apache Corp. and Kuwait For-
eign Petroleum Exploration Co.
Atco's units will be used to
form a variety of office com-
plexes and free-standing modular
buildings on site, including train-
ing centres, IT buildings, guard-
houses and medical centres.
The company is expected to
begin work in July 2013 and
complete the manufacturing in
the second quarter of 2014.
"Our proven track record
providing large scale turnkey
projects in Australia was a key
element in winning this con-
tract," said Adam Beattie,
Managing Director.
"We are very pleased to have
the opportunity to work with
Bechtel and Chevron and will
ensure our component of the
project is executed to the high
standards of quality and safety
already evident across the
Wheatstone project," Beattie
added.
The units will be built at
Atco's manufacturing facilities
in Brisbane and Perth.
Chevron Corp. said construction of
the $50 billion Gorgon LNG project
on Barrow Island in Western Aus-
tralia was 60 percent complete
and start-up would probably be
late next year, with 65 percent of
future production having been
pre-sold.
George Kirkland, Chevron Vice
Chairman and Executive Vice Pres-
ident for Upstream and Gas, dis-
cussed Chevron's strong queue of
projects and gave an overview of
some LNG activities at the oil
major's annual meeting of stock
holders in San Ramon, California.
Chevron plans to invest
$36.7Bln in 2013, with 90 percent
of that amount expected to fund
upstream activities, including LNG
feed-gas.
"The company has invested
nearly $11Bln over the past five
years to develop crude oil and
natural gas resources around the
world," Kirkland said.
"Over the next five years, 50
projects with a Chevron investment
of more than $250 million each are
scheduled to start production, 16
of which have a net Chevron
investment exceeding $1 billion.
"Construction on the Gorgon
LNG project in Western Australia is
over 60 percent complete, with
start-up expected in late 2014.
Start-up of the Wheatstone LNG
project, also in Western Australia,
is planned for 2016," he added.
The Gorgon LNG project is one
of the world's most expensive
resource ventures because of
rising Australian costs. Just six
months ago, Chevron announced
a costs blowout of $15Bln on
Gorgon. It had previously set early
2015 as the completion date but
that has now been brought for-
ward by several months.
Gorgon will have a capacity of
more than 15 million tonnes of LNG
per annum. An expansion is likely
to see the construction of a fourth
Train with 5.2 MTPA capacity.
Main shareholders in Gorgon
LNG in addition to Chevron are
ExxonMobil and Shell.
The main LNG buyers are
Osaka Gas, Tokyo Gas and Chubu
Electric. More long-term Gorgon
contracts may be signed or the
cargoes could be marketed as
short-term incremental volumes.
Chevron is building a second
plant, the Wheatstone venture,
onshore Western Australia, with a
capacity of 8.9 million tonnes.
Wheatstone also has permits to
expand.
In March, Chevron signed bind-
ing long-term Sales and Purchase
Agreements with Japanese utility
Chubu Electric for LNG from
Wheatstone.
Under that agreement Chevron,
together with project partners
Royal Dutch Shell, Apache Corp.
and Kuwait Foreign Petroleum
Exploration Co., will supply Chubu
with 1 million tonnes per annum
of LNG for up to 20 years.
Gorgon LNG project in Western Australian
is now expected to be on stream next year
11 June 2013 LNG Unlimited NEWS
7
Sunrise LNG project with Timor-Leste put in
doubt by Woodside commitments elsewhere
Timor-Leste, the tiny former
Portuguese colony that fought off
dominance by Indonesia over more
than 20 years, has politicized the
proposed Sunrise LNG project so
much that operator Woodside
Petroleum of Australia prefers to
invest in another project offshore
Israel.
The map shows the Sunrise and
Troubadour natural gas fields in
what is known as the Joint Petro-
leum Development Area.
Accords
According to the current Interna-
tional Unitisation Agreement
signed by Australia and Timor-
Leste, about 20 percent of the
Greater Sunrise field is attributed
to JPDA, which is jointly adminis-
tered by the governments of
Australia and Timor-Leste, with
the remaining 80 percent attrib-
uted to Australia.
Timor-Leste, also known as
East Timor, is in dispute with
Woodside and its partners Cono-
coPhillips, Royal Dutch Shell and
Osaka Gas over development of
the LNG project. Regular talks
with the Timorese have taken
place over several years.
At stake is the Greater Sunrise
field and its 9 trillion cubic feet of
natural gas. The field has been the
focus of exploration, controversy
and international negotiations
between the various authorities
in Timor-Leste and Australia since
the fields were discovered in
1974.
The post-independence
Timorese want an onshore lique-
faction plant on their territory
and Woodside and its partners
prefer a Floating LNG option in
the Timor Sea.
It is believed that Woodside
wish to shelf the stalled Sunrise
LNG project for now as part of a
restructuring of its global portfolio.
While Woodside has declined to
comment on industry speculation
that the Sunrise LNG project
wont be moving forward anytime
soon, the Australian company is
reassessing its option.
Another Woodside-led LNG
venture, the Browse project in
Western Australia, has already
been the subject of an onshore-
FLNG debate and the FLNG propo-
nents seem to have won the day,
against an Australian government-
led campaign to have an onshore
LNG Precinct in the Kimberley
area.
With the Australian LNG indus-
try catching its breath after
several years of soaring costs,
over-eager government regulation
and taxation, the Timor-Leste
Sunrise LNG project is the least
likely to move forward in the next
few years, analysts said. Woodside
has more enthusiasm to invest in a
project offshore Israel through the
Leviathan farm-in in the East
Mediterranean with partners such
as Noble Energy and others.
The Leviathan Phase 1 develop-
ment concept includes offshore
processing at an FPSO, with a pro-
duction capacity of 1.6 Bcf/d and
a capability to serve both domes-
tic and export markets.
A second FPSO is expected to
have a similar production capacity
and capability. Production could
begin as early as 2016. Sites in
Israel are being evaluated for a
land-based liquefaction project.
The pre-FEED study for a land-
based LNG project is expected to
be completed soon. After that,
FEED an engineering, procurement
and construction contract will be
put out to competitive bids.
A pre-FEED for a Leviathan
floating liquefaction unit is also
underway as a possible alternative
to an Israeli onshore plant.
Noble and its partners con-
cluded that development of
Leviathan would benefit from the
addition of a strategic partner to
provide additional resources and
LNG expertise.
Stake
They have agreed in principle on a
proposal to sell a 30 percent work-
ing interest in the Leviathan li-
cences to Woodside.
It looks like Woodside will go
for East Med LNG, whether float-
ing or onshore, before a Sunrise
LNG project of any sort with
Timor-Leste.
Our Asia-Pacific editor
Queensland Curtis LNG project in Australia awards
latest contract for grading and building work for wells
The BG-led Queensland Curtis LNG project
in Australia awarded a contract for the
grading and building of natural gas well
sites and roads for up to three years in the
Surat Basin where most of the feed-gas will
come from.
BG subsidiary QGC awarded the contract
to T&W Earthworks located in the town of
Condamine in the state of Queensland.
The QCLNG project will bring coal-seam
gas from the Surat Basin gas fields through
a 540 kilometres, 42-inch diameter pipeline
to the liquefaction plant being built on
Curtis Island, near Gladstone.
The earth works contract is valued at
around $25 million, QGC said. The QCLNG
project will come on stream in 2014.
QGC Managing Director Derek Fisher
said the contract demonstrated QGC's
commitment to employing local people
and to using local goods and services
where possible.
"Across our project area, local communi-
ties are benefitting from QGC's investment
in home-grown suppliers of goods and serv-
ices," Fisher said.
"We will be operating in the Surat Basin
for decades and we want local businesses
to thrive and develop through our pres-
ence," he added.
The contract brings QGC's investment on
earthmoving with Surat Basin suppliers to
more than $300M after the award of work
to five local businesses in 2012.
More than 11,600 people are currently
working with QGC and its QCLNG project.
The company has invested more than $15
billion since 2010.
QGC's major tender documents and con-
tracts require Australian suppliers to be
given full, fair and reasonable opportunity
to participate in the QCLNG project.
The Sunrise and Troubadour natural gas fields in Joint Petroleum
Development Area for Australia and its small island neighbour
NEWS LNG Unlimited 11 June 2013
Westport Innovations Inc. will sup-
ply four LNG fuel tenders, special
rail vehicles containing the loco-
motive's fuel, to the Canadian Na-
tional Railway, one of the world's
great rail companies with
transcontinental services from the
Pacific to the Atlantic and exten-
sive rail holdings in the US.
The latest deal is part of a push
by companies such as Royal Dutch
Shell and others to substitute LNG
for diesel in a number of Canadian
industrial sectors, including rail, ma-
rine, mining and oil and gas drilling.
Demand
The cumulative LNG demand from
such ventures could be huge, ana-
lysts said. As a first step, Shell is
pursuing engineering and regulatory
permits to produce LNG by 2013 for
trucking and other uses at its Jump-
ing Pound gas processing facility in
the foothills of Alberta, Canada.
Under the Westport agreement,
the first rail tender to supply LNG
to a natural-gas powered locomo-
tive will be delivered in the fourth
quarter of 2013, Westport said.
"There is growing consensus
around the enormous potential of
using LNG as a fuel for locomo-
tives and there is a clear path for
the industry to achieve this shift
to a cleaner, cheaper and domesti-
cally available fuel," said Nicholas
Sonntag, Executive Vice-President
at Westport.
"The Westport LNG tender
leverages our substantial expertise
in LNG storage, cryogenic systems,
and natural gas fuel delivery for
mobile applications to create a
product that will immediately help
railroads to validate the value of
LNG in their operations today,
with a built-in upgrade pathway to
the next-generation locomotives
coming over the next few years."
Putting the LNG on a Westport
LNG Tender, rather than simply re-
placing the diesel fuel tanks on
existing locomotives, offers a
number of advantages:
1. More than 10,000 gallons LNG
capacity - provides longer range
than a diesel locomotive, reduc-
ing the need for LNG refuelling in-
frastructure and refuelling stops.
2. Intelligent fueling controls will
allow tenders to supply fuel to
natural gas locomotives from vir-
tually any manufacturer, reduc-
ing operational complexity and
investment in different propri-
etary fuel supply solutions.
3. Each tender can support two lo-
comotives, reducing the capital
investment required to move to
LNG.
4. Westport uses an industry stan-
dard vehicle design with a 40-
inch LNG ISO tank, which mini-
mizes cost and will allow produc-
tion volumes to be rapidly in-
creased as the industry migrates
to LNG.
"CN is testing natural gas locomo-
tives and Westport's experience in
providing LNG solutions for trans-
portation makes it the natural
partner for us," said Gerry Weber,
CN Vice-President Supply, Fleet
and Fuel Management.
"These tenders will be used im-
mediately with our dual-fuel loco-
motives in mainline service,
allowing CN to continue to explore
this technology as a means to ad-
vance the company's sustainability
agenda and improve environmen-
tal emissions," Weber said.
Westport is collaborating with
INOXCVA, a leading manufacturer
of cryogenic transportation equip-
ment, on these tenders. Westport
and INOXCVA have entered into
an agreement for cryogenic sys-
tems to be able to rapidly meet
the near-term demand in the rail
industry.
Westport has also been collabo-
rating with Caterpillar Inc. since
June 2012 to co-develop natural
gas technology for Caterpillar
products, including the next gen-
eration of locomotives.
Injection
The first high-pressure direct in-
jection (HPDI) locomotive will be
demonstrated in 2014 through a
consortium program funded by
Sustainable Technology Develop-
ment Canada in partnership with
Canadian National Railway, Elec-
tro-Motive Diesel (EMD, a sub-
sidiary of Progress Rail Services, a
Caterpillar company), and Gaz
Metro of Quebec.
Caterpillar and Westport are
combining technologies and ex-
pertise, including Westport HPDI
technology and Caterpillar's indus-
try leading off-road engine and
machine product technology, to
develop these new products.
Westport signs Canadian Railways LNG deal
amid fuels expansion in industrial sectors
The innovative company will supply four LNG fuel tenders, special rail vehicles containing the fuel
8
BP and Royal Dutch Shell are em-
broiled in a dispute with Dominion's
Cove Point US LNG export project
on the shore of Chesapeake Bay in
Maryland over pre-existing regasifi-
cation capacity agreements.
Dominion is adding liquefaction
capabilities which will transform
the existing Cove Point LNG im-
port terminal into the first US LNG
export plant on the US East Coast.
Filings
However, the two European energy
companies have filed with the US
Federal Energy Regulatory Commis-
sion not to approve an application
for the $3.4 billion export project
without modifications, arguing that
Dominion hadn't justified its
proposed tariff adjustments.
BP for its part has asked the
FERC this week that Dominion
should be required to cancel the
BP regasification capacity agree-
ment as it had done with a similar
capacity accord signed with Nor-
wegian energy company Statoil.
The UK company argues that
Dominion had given Statoil "a
broad opportunity" to relinquish
its import capacity at Cove Point
in the wake of the new project
proposal, which it had not given
BP or any other importer.
Before FERC even considers
Dominion's proposed tariff adjust-
ments, it should order the com-
pany to correct its discriminatory
treatment and file an adjusted
proposal which explicitly gives
the same "turn back" rights to all
importers at the facility in future,
BP said.
"Without having made a compa-
rable offer to BP Energy, DCP
engaged in plainly discriminatory
behaviour," BP said.
"The commission has a statu-
tory responsibility to cure the
obvious undue discrimination by
immediately requiring DCP to
offer BP Energy a meaningful and
similar 'turn back' option," BP said.
Dominion has already signed
liquefaction service agreements
with major LNG buyers and also
signed an engineering contract to
transform its LNG import terminal
into a liquefaction plant to export
gas from areas such as the nearby
Marcellus shale.
Liquefaction
One liquefaction agreement is
with Japanese trading company
Sumitomo Corp., and another with
Gas Authorities of India.
Dominion has additionally
awarded its engineering, procure-
ment and construction contract
for new liquefaction facilities to
IHI/Kiewit Cove Point, a joint ven-
ture between the Houston office
of Japan's IHI and Kiewit Corp. of
Omaha, Nebraska.
BP and Shell seek FERC ruling in disputes
with Dominion's Cove Point LNG project
Our North American editor