Golden Pass LNG gets final environmental approval

OREANDA-NEWS. August 01, 2016. The US Federal Energy Regulatory Commission (FERC) today issued final environmental approval for the Golden Pass LNG export project along the Gulf coast.

The brownfield project would not significantly hurt the environment if specified mitigation measures are implemented, FERC said in its final environmental impact statement.

The proposed \\$10bn facility would be built at the site of the existing Golden Pass LNG import terminal. The export project is a venture of ExxonMobil with a 30pc share and Qatari state-owned Qatar Petroleum (QP) with 70pc. The two companies are partners in Qatari liquefaction projects and jointly built the Golden Pass import facility to provide an outlet for LNG from that country. But the shale gas boom has significantly reduced US demand for LNG imports.

Golden Pass would have three liquefaction trains with combined capacity of 15.6mn t/yr, equivalent to 2 Bcf/d (57mn m?/yr) of gas. The US Department of Energy (DOE) has authorized exports of up 15.6mn t/yr to countries that have free trade agreements (FTAs) with the US. With FERC environmental approval, the DOE will now consider an application to export the same volume to non-FTA nations.

The project includes construction of 2.6 miles (4.2km) of 24 inch (61cm) diameter pipeline, three new compressor stations and interconnections for bidirectional flow to provide feed gas.

Golden Pass told Argus today that it expects "to be in a position to consider FID" after completing permitting in 2017, and it could start operating as early as 2021. But it is unclear if that timeline is viable because low oil prices have hurt the economics of US LNG exports, which are based on a wide differential between domestic gas prices and global oil prices.

In addition, with a wave of liquefaction capacity in Australia and the US coming on line in the next few years, ExxonMobil expects the global LNG market to be oversupplied by 2020-2023, putting pressure on spot prices in that time frame. The firm expects demand to roughly triple by 2040 and it will only make FIDs on LNG projects for which it secures long-term contracts.

ExxonMobil and Qatar Petroleum own the South Hook LNG import terminal in the UK and could send some of their US LNG there, but the partners have said they still need to sign long-term capacity deals with other customers to finance Golden Pass.

Five LNG export projects are being built in the US, as they signed long-term capacity deals before oil prices plummeted in mid-2014. The planned mid-scale Elba Island LNG export project in Georgia has said it will also start construction this year. If built, the six contiguous US facilities would have combined peak capacity of 75mn t/yr, equivalent to 10.2 Bcf/d (289mn m?/d) of gas, nearing Qatari output of 77mn t/yr.