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Cove Point boosts US LNG exports

A second facility will start supplying the fuel to international markets as American liquefied gas shipments gather pace

America's second major liquefied natural gas export plant, Dominion Energy's Cove Point project, is nearing its first cargo for export, marking the latest step in the US' transformation into a major supplier.

Dominion said this week that its $4bn export facility in Maryland had started taking in feed gas for liquefaction, making first exports imminent. The initial test gas is being supplied and will be sold on by Shell. But the 5.4m tonnes per year0.7bn cubic feet a dayfacility is fully contracted for 20 years to sell gas to a joint venture between Japan's Sumitomo and Tokyo Gas as well as India's GAIL, some of Asia's biggest LNG buyers.

Most of the gas being fed into Cove Point is expected to come from the prolific Marcellus and Utica shale-gas plays, although it's linked to pipelines that can also bring it in from the Gulf Coast or Rockies.

Record exports

Cove Point's commissioning caps a strong 2017 for US LNG export growth. LNG exports are running around 3bn cf/dnearly 5% of the country's total gas demand and more than twice what they were this time last year. November was a record month for LNG exports with 23 cargoes loaded at Cheniere Energy's Sabine Pass LNG plant on the Gulf Coast. The ramp up of train 2 at Sabine Pass, and the start of train 3, have boosted exported volumes this year. US LNG growth looks set to continue into 2018. Cove Point's facility should ramp up to its full capacity of 0.7bn cf/d in the early part of the year, adding 25% to existing demand from LNG exports. Cheniere will also start shipping super-chilled gas from the fourth train of the Sabine Pass facility in March 2018, adding another 0.6bn cf/d of export capacity. Cheniere also plans to start up the 0.6bn cf/d first train of the Corpus Christi LNG export plant late in the year. Freeport LNG in Texas is slated to begin shipments from the first of four planned trains with a capacity of 0.65bn cf/d each late in the year. Kinder Morgan will ship its initial cargoes from the smaller 0.35bn cf/d Elba Island LNG facility in Georgia.

These facilities will boost US LNG export capacity to more than 4bn cf/d by the end of 2018, rising to around 4.7bn cf/d as they reach full capacity in early 2019. By 2020, export capacity will top 9bn cf/d, more than 10% of current demand, as the first wave of US LNG export projects fully hits the market.

Given the current glut in global LNG markets, further expansion in the foreseeable future is uncertain. However, the first wave of projects have proposed expansions that would add another 4bn cf/d of supply, if there is demand in the market, and more than 60 other projects totaling more than 50bn cf/d of capacity have been put before regulators for approval.

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