Sabine Pass LNG may export first cargo during shutdown

OREANDA-NEWS. October 10, 2016. The Bilbao Knutsen LNG vessel is scheduled to dock today at the Sabine Pass LNG terminal in Louisiana, potentially indicating the facility will soon export its first cargo during a four-week maintenance shutdown.

The Bilbao Knutsen is controlled by Shell, which has export rights at Sabine Pass. The ship has capacity of 138,000m?, equivalent to 2.8 Bcf (79mn m?) of gas.

Sabine Pass owner Cheniere Energy apparently shut the first two liquefaction trains at the facility on 20 September to repair a flare that had not functioned as intended, as gas flow to the terminal dropped to zero that day and has stayed at zero. Gas flow likely will resume about 18 October under the four-week timeline announced by Cheniere.

It is possible that the maintenance started a little sooner, as flows on 18-19 September totaled about 21mn cf each day, a negligible amount compared with average intake of 1.18 Bcf/d on 1-15 September. Cheniere has declined to provide more precise information.

According to an Argus analysis, the five LNG storage tanks at Sabine Pass are full with a combined gas equivalent of about 17 Bcf, so up to four or five cargoes could potentially be exported during the shutdown. Typically LNG storage tanks have to be at least 5-10pc full to maintain adequate operating temperatures.

Cheniere and Shell declined to comment as to whether the Bilbao Knutsen will load a cargo, but previously LNG vessels have left Sabine Pass within a few days after arriving.

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.

Cheniere is building five liquefaction trains at the \\$20bn facility, each with peak capacity of 5mn t/yr, equivalent to about 694mn cf/d of gas, and baseload capacity of 4.5mn t/yr.

Shell has a 20-year contract to buy up to 3.5mn t/yr, equivalent to about 483mn cf/d of gas, of Sabine Pass supplies beginning in November, when the first liquefaction train at the facility starts long-term service. But since early May Shell has been able to buy essentially the same volumes under the same terms under pre-commercial arrangements, as long as Cheniere offers Shell cargoes at least 60 days in advance of the loading window.

Shell must pay Cheniere a liquefaction fee of \\$2.25/mmBtu plus 115pc of the final settlement price of the Nymex Henry Hub contract for a month in which a cargo is scheduled.