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LNG Unlimited

An LNG JOURNAL PUBLICATION

11 June 2013

US LNG developers build shipping and marketing for Asia-Americas

Cheniere Energy is building a portfolio of LNG marketing for other players to follow

Our North American editor

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 nation’s 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

LNG Unlimited An LNG JOURNAL PUBLICATION 11 June 2013 US LNG developers build shipping and marketing

The full global LNG demand and supply picture through to 2025

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 Concepción 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

Mexico’s 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.

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CONTRACTS

Canadian LNG project’s deal with Germany’s E.ON stirs Atlantic basin

2

SHIPPING

The largest Indian LNG buyer initials shipping agreement with SCI for cargoes

3

IMPORTS

UNLIMITED UNLIMITED UNLIMITED UNLIMITED AGENDA AGENDA AGENDA AGENDA CONTRACTS Canadian LNG project’s deal with Germany’s E.ON

Singapore in LNG consulting process ahead of next step in Hub development

4

TENDERS

Petronet LNG sets June 28 deadline for east coast of India import facility tender

5

LIQUEFACTION

Three of Australia’s CSG-to-LNG plants make move to share some feed-gas stock

6

REGULATION

BP and Shell seek FERC ruling in disputes with Dominion's Cove

Point LNG project

8

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Canadian LNG project’s 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

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

2 NEWS LNG Unlimited 11 June 2013 Canadian LNG project’s deal with German utility E.ON stirs

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. Sorensen’s energy company is based in Calgary

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.

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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.

Largest Indian LNG buyer initials shipping agreement with SCI for US cargo imports

Our Asia editor

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.

Tax breaks give momentum to the majors planning South Central Alaska LNG project

Alaska’s 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.

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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

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.

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4 NEWS LNG Unlimited 11 June 2013 Singapore in LNG consulting process with the market players

Singapore’s LNG terminal received its first commercial LNG cargo a month ago. There are already development plans for the hub

"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.

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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.

Golden Pass US LNG exports targeting UK will only be available by about 2018

Our North America editor

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.

Petronet LNG sets June 28 tender deadline for east coast of India import facility development

Our Asia editor

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.

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Three Australian CSG-to-LNG projects to cooperate as last resort through feed-gas

Our Asia-Pacific editor

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.

Gorgon LNG project in Western Australian is now expected to be on stream next year

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.

Canadian firm wins Australian LNG contract with Chevron’s 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.

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Sunrise LNG project with Timor-Leste put in doubt by Woodside commitments elsewhere

Our Asia-Pacific editor

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 won’t 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

11 June 2013 LNG Unlimited NEWS 7 Sunrise LNG project with Timor-Leste put in doubt by

The Sunrise and Troubadour natural gas fields in Joint Petroleum Development Area for Australia and its small island neighbour

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.

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.

8 NEWS LNG Unlimited 11 June 2013
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NEWS
LNG Unlimited
11 June 2013

BP and Shell seek FERC ruling in disputes with Dominion's Cove Point LNG project

Our North American editor

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.

Westport signs Canadian Railways LNG deal amid fuel’s expansion in industrial sectors

The innovative company will supply four LNG fuel tenders, special rail vehicles containing the fuel

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.