North America becomes LNG export powerhouse
The world has a new entrant to the select group of LNG exporters
Over the past few years, new gas processing/LNG capacity has surged in nearly every region. Growth on both the supply and demand sides has resulted in the announcement of billions of dollars of capital investment across the world. Millions of tonnes of new LNG import and export capacity have commenced operations, and millions more is under development.
The global LNG export market has been dominated by the likes of Qatar, Australia, Malaysia, Algeria and Indonesia for the past 15 years. However, in the next decade, it is the US that will significantly expand its liquefaction capacity and become one of the most prominent LNG exporters in the world.
The US shale gas boom has created an infrastructure building boost in both domestic natural gas processing capacity and the construction of LNG export terminals. According to the Hydrocarbon Processing Construction Boxscore Database, the US has announced more than 36 LNG export terminal projects. These projects equate to more than 330mn t/y of new liquefaction capacity by 2030 at a cost of nearly $200bn. By 2020, approximately 71mn t/y of new US LNG export capacity should begin operations. These facilities include:
- Sabine Pass LNG-27.5mn t/y (5 trains)
- Cameron LNG-13.5mn t/y (3 trains)
- Freeport LNG-13.2mn t/y (3 trains)
- Cove Point LNG-5.75mn t/y (1 train)
- Corpus Christi LNG-9mn t/y (2 trains)
- Elba Liquefaction-2.5mn t/y (10 modular liquefaction system trains).
This buildout will move the US from the sixteenth-largest LNG exporter in 2016, to the second- or third-largest by the end of the decade, depending on additional capacity that may go online in Australia.
In Canada, about 65pc of the region's active projects are within the gas processing/LNG industry. The majority of the region's projects are LNG export terminals that have been announced over the past several years. Most active projects in Canada reside in the country's plans to build out its LNG export capacity.
27.5m t/y—the capacity of the Sabine Pass LNG plant
Historically, Canada exported nearly all its excess natural gas to the US. However, due to the shale gas boom, the US no longer needs vast quantities of Canadian natural gas. To offset this ﬁnancial hit, the region announced more than two dozen LNG export terminal projects several years ago. Unfortunately, the region has seen very little capacity built.
In British Columbia, total active LNG export capacity has decreased from approximately 250mn t/y in 2016 to about 157mn t/y in 2018. This capacity decline represents a decrease in capex from more than $170bn to just over $100bn.
Although most of these projects are at a standstill, a few projects are progressing. The most notable projects are LNG Canada's $18bn, 14mn t/y export terminal, along with the 2.1mn t/y Woodﬁbre LNG project. LNG Canada, a JV between Shell, Petronas, PetroChina, Mitsubishi Corp. and KOGAS, greenlit its LNG Canada export terminal in early October 2018. The JV reached a positive final investment decision (FID) to build the project's ﬁrst two liquefaction trains (14mn t/y). A second phase could double the terminal's capacity, if needed. The terminal will receive feed gas from natural gas production in British Columbia's Montney play. The Woodﬁbre project plans to make an FID on its terminal by 2019.
Four LNG export projects are active on Canada's east coast: Goldboro LNG, AC LNG, Bear Head LNG, and Energie Saguenay LNG. According to Natural Resources Canada, two additional east coast projects have applied for an export license—Stolt LNGaz and Natural Gas Tugliq Quebec Inc. Even though the region has vast potential to become a global leader in LNG trade, government delays, public opposition, infrastructure constraints, First Nations negotiations, and funding have hampered the industry from realising its full potential.
Latin America is focusing on natural gas for power generation. Recent trends in industrial power production include combined-cycle plants and steam turbines. The region's gap between natural gas supply and demand has continued to grow and will likely continue unless additional investments are made in more E&P activities. Many Latin American nations have announced additional E&P activities, but these operations will take time to materialise. In the short term, many Latin American nations will continue to rely on piped natural gas and LNG imports to satisfy demand.
Lee Nichols is Editor/Associate Publisher, Hydrocarbon Processing