Freeport LNG expects train 3 FID next week

OREANDA-NEWS. April 23, 2015. The Freeport LNG export project in Texas will make a final investment decision (FID) next week on its third liquefaction train, chief executive Michael Smith told Argus today.

The three-train project has a total cost of \\$14.2bn. Freeport made an FID on the first two trains in November and is in the process of finalizing financing for the third train, Smith said on the sidelines of the CeraWeek conference in Houston.

The three trains will have combined baseload capacity of 13.2mn t/yr, equivalent to 1.8 Bcf/d 51mn m?/d) of gas, and peak capacity of 15.4mn t/yr.

Freeport sold 4.4mn t/yr of liquefaction capacity for 20 years from each train before oil prices plummeted and made the economic prospects of US LNG exports less favorable. The first train is scheduled to start operating in September 2018, and the second and third trains each would come on line five months after the prior train.

South Korean utility SK E&S and Japan's Toshiba each signed contracts for 2.2mn t/yr, starting when train 3 comes on line.

Japanese utilities Osaka Gas and Chubu Electric Power agreed to buy 2.2mn t/yr each, starting when the first train comes on line, and the UK's BP contracted for 4.4mn t/yr of capacity, beginning when the second train starts operating.

The US Department of Energy has authorized Freeport to export as much as a gas equivalent of 2.8 Bcf/d to countries that have free trade agreements (FTAs) with the US and up to 1.8 Bcf/d to countries that do not have such agreements.

Although most major LNG consuming nations, including Japan, do not have FTAs with the US, Freeport expects to be able to export peak production of up to 2.1 Bcf/d because South Korea does have an FTA with the US. Since the capacity contracted to SK E&S is equivalent to 300mn cf/d of gas, Freeport would be able to export the remaining peak capacity of 1.8 Bcf/d to any country.