Cheniere eyes US condensate exports

OREANDA-NEWS. Cheniere Energy, which will become the first major LNG exporter in the contiguous US, plans to also export US condensates, it told Argus.

The Houston-based company plans to start exporting 200,000 b/d of condensates in 2017 from a location near its planned greenfield LNG export terminal in Corpus Christi, Texas. The initial project has an estimated cost of \\$1bn, but could be expanded to a capacity of 1mn b/d at a total cost of \\$2bn.

The project would primarily export condensates from the nearby Eagle Ford shale formation and target Asian markets by arbitraging the WTI-Brent spread. Cheniere plans to make a final investment decision this year, after completing commercial agreements and getting all necessary permits.

Interest in exporting US condensates has surged since the US Department of Commerce ruled in December that distilled condensates can be exported as freely as other refined products. The US strictly limits the export of most crude oil and can restrict the export of natural gas.

Cheniere likely will sell processing capacity and for now is the only company that will provide producers the ability to both export condensates and associated gas in the form of LNG, company officials told Argus. A number of other companies, such as Enterprise Products Partners, Shell, BP, BHP Billiton and Trifigura have started to export US condensates or are developing plans to do so.

The Cheniere project would involve construction of three elements. The San Patricio hub would process and store condensates from the raw crude stream in pipelines. A roughly 20-mile (32km) pipeline would deliver the processed condensates west to east from the hub to the Ingleside terminal, which would store and load condensates on ships.

The San Patricio hub would have a splitter with initial capacity of 100,000 b/d that could produce distillates such as heavy and light naphtha and jet fuel, Cheniere said. It also would have straight-run capacity of 100,000 b/d, including 60,000 b/d of stabilization capacity. The stabilizer would produce condensates that can be shipped by removing lighter and more volatile natural gas liquids.

The San Patricio hub would have initial storage capacity of 1.5mn bl and a five-bay truck rack. It would be near the Double Eagle, Harvest and NuStar pipelines that deliver raw crude and condensates to Corpus Christi. The Ingleside export terminal would have initial storage capacity of 3mn bl, throughput of up to 1mn b/d, up to two Aframax-capable docks and a 5-bay truck rack.

Cheniere has secured a 160-acre site for the San Patricio hub and a 550-acre site for the terminal. Cheniere has applied for key permits it needs from the US Army Corps of Engineers and the Texas Commission on Environmental Quality. Cheniere completed preliminary engineering and design in December and has begun detailed design.

Cheniere plans to export its first LNG cargo late this year from its Sabine Pass project in Louisiana, which is scheduled to start commercial operations in February 2016.