Cheniere delays first Sabine Pass LNG export

OREANDA-NEWS. January 15, 2016. Cheniere Energy delayed the first export from its Sabine Pass LNG facility in Louisiana to late February or March because of instrumentation issues. The cargo was originally scheduled to depart in late January.

It will be the first cargo exported from the contiguous US, as Sabine Pass has about a two-year head start on other liquefaction plants being built in the country.

The problem will not delay the contractually guaranteed start-up dates for 20-year supply contracts with various customers, ranging from late 2016 to March 2018 for liquefaction trains 1-4, Cheniere said. Full production from train 1 is expected in late February, so the train will be able to sell supplies into the spot or short-term market from March until late 2016, when its contract with BG begins. Cheniere expects to sell at least one spot cargo a month.

Each of the five trains being built at Sabine Pass will have peak capacity of 5mn t/yr, equivalent to 690mn cf/d (19.5mn m?/d) of gas. The contractually guaranteed start-up date for train 5 is December 2019.

Cheniere declined to say where the first cargo is likely to go.

Cheniere discovered the problem during the commissioning of the first liquefaction train that was recently completed. Each train has two cold boxes that liquefy gas, and thermocouples are supposed to control the pace of cooling to about 2°C/hr. That pace was not being achieved because of wiring problems that can be easily fixed.

However, removing perlite insulation from each cold box to access the wiring and then putting the insulation back in will likely take more than a month because a vendor from Trinidad and Tobago only has one specialized vacuum to remove the insulation. That means it will take nine days to remove the insulation from each box and nine days to put it back, for a total of 36 days.

The wiring problem for trains 2-5 can be fixed without delaying the start-up dates because those facilities are still under construction, Cheniere said.

"With construction of train 1 finished, we remain well ahead of the guaranteed contractual schedule with Bechtel and anticipate no issues in meeting all contractual targets and guaranteed completion dates," said Cheniere interim president and chief executive Neal Shear. "Additionally, construction for trains 2-5 continues to be on an accelerated schedule and these trains are expected to come on-line on a staggered basis."

Train 1 has processed about 1.3 Bcf of gas. A typical LNG cargo is equivalent to about 3 Bcf.

Under the accelerated timelines, train 2 is scheduled to start full production in June 2016, train 3 in April 2017, train 4 in August 2017 and train as early as 2018. Those trains could each sell all their output under spot or short-term contracts until their respective commercially guaranteed start-up dates. Cheniere would also be able to sell about 10pc of the output from Sabine Pass in the spot market, as not all its output has been sold under long-term contracts.

The issue was not related to a statement made yesterday by Lithuanian state controlled utility Lietuvos Energija that it would not buy LNG from Sabine Pass until unspecified gas specification issues are resolved, Cheniere told Argus.

Cheniere said it does not know what problem Lietuvos Energija is referring to and it does not have any contract to sell LNG to that company. Lithuania could buy spot or short-term supplies from Cheniere in the future through a bidding process.