FERC okays start of service at Sabine Pass LNG train 2

OREANDA-NEWS. October 13, 2016. US Federal Energy Regulatory Commission (FERC) today authorized Cheniere Energy to place its second liquefaction train in service at its Sabine Pass LNG export terminal in Louisiana.

Cheniere completed testing of train 2 on 16 September, days before it started a roughly four-week maintenance shutdown of trains 1 and 2 to repair a flare that had not functioned properly. The trains are scheduled to resume operations late this week or early next week.

Cheniere told FERC today that train 2 was placed in service after the authorization, but the Houston-based company declined to respond to an Argus inquiry asking how quickly operations will resume. Gas flow to Sabine Pass has averaged about 630,000 cf/d since 20 September, a negligible amount compared with average intake of 1.2 Bcf/d on 1-15 September.

After Sabine Pass comes back online, train 2 will start selling some LNG to Gas Natural Fenosa. The Spanish company has a 20-year deal for up to 3.5mn t/yr of Sabine Pass supplies beginning in September 2017, when train 2 is scheduled to start long-term contractual deliveries. But under so-called pre-commercial arrangements, Gas Natural can buy up to 2mn t/yr as soon as train 2 successfully completes testing and produces under correct specifications.

Gas Natural will pay a \\$2.49/mmBtu liquefaction fee plus 115pc of the Nymex price for any pre-commercial cargoes, the same price it will pay under its 20-year deal.

Shell has a 20-year deal for up to 3.5mn t/yr of LNG from train 1 beginning in November, and in May started taking pre-commercial cargoes from that unit. It is paying \\$2.25/mmBtu plus 115pc of the Nymex price for its train 1 supplies.

Cheniere is building five liquefaction trains at the \\$20bn facility, each with peak capacity of 5mn t/yr, equivalent to about 694mn cf/d (19.6mn m?/d) of gas, and baseload capacity of 4.5mn t/yr. Train 1 exported its first cargo on 24 February.

Cheniere has said that trains 3 and 4 would come on line six months after the prior respective train. Train 5 is scheduled to start operating in late 2019.

Cheniere has not said how many commissioning cargoes train 2 exported, but the company previously said each train at Sabine Pass likely would produce 4-10 test cargoes. Train 2 started producing LNG in late July. Sabine Pass exported nine cargoes in August, up from five in July, with at least four commissioning cargoes likely loaded from train 2 since mid-August.

Train 1 exported its first cargo on 24 February and train 2 in August. The facility was exporting about one cargo a week before train 2 came on line, and in August the rate doubled to about two cargoes a week.