Shifts in U.S. capabilities and the global market picture profoundly expand LNG export demand.

BY: Mike Chalmers

(photo above: Construction progress continues at the Golden Pass LNG export project site and is on track to start up Train 1 in 2024. Photo courtesy of Golden Pass LNG)

Over the course of the last decade, and specifically within the past five years, the U.S. has experienced a significant increase in liquefied natural gas (LNG) production and export—becoming a major player in the global LNG market.

Several factors have contributed to this rise, including the shale gas boom that took off in the mid-2000s, an increase in the development of export terminals in places like Maryland and along the U.S. Gulf of Mexico coast, a surge in demand for natural gas in China and India, and government-supported regulatory and policy measures aimed at facilitating the growth of the industry.

Perhaps the most notable factor at present, however, is the ongoing Russian-led war in Ukraine, and its impact on the global energy economy—which has caused massive fluctuations in the price of LNG and accelerated the globalization of the gas market. As a result, industry analysts have forecasted that $42 billion in LNG infrastructure will be built worldwide next year—up from $2 billion in 2020.

And much of that growth is taking shape along the U.S. Gulf Coast, which now plays a critical role in the industry due to its strategic location, extensive pipeline networks, shipping infrastructure, and proximity to both natural gas production and major export facilities.

In fact, the area comprising the Gulf Coast, both onshore and offshore, is one of the most important regions for energy resources and infrastructure in the country. Gulf of Mexico federal offshore oil production accounts for 17 percent of total U.S. crude oil production, and federal offshore natural gas production in the Gulf accounts for 6 percent of total U.S. dry production. Additionally, nearly 50 percent of total U.S. petroleum refining capacity is located along the Gulf Coast, as well as over 50 percent of total U.S. natural gas processing plant capacity.

Perhaps not surprisingly, the U.S. surpassed all other countries to become the world’s leading exporter of LNG in the first half of 2023, according to the U.S. Energy Information Administration, citing data from CEDIGAZ (The International Association for Natural Gas). To that end, European countries and the UK remained the central destination for U.S. LNG exports during that time, with five countries specifically—the Netherlands, the UK, France, Spain, and Germany—importing more than half of those exports.

According to Michael Stoppard at S&P Global Commodity Insights, in a recent statement for Reuters, demand is only going up. “We expect global LNG demand to grow from 399 million tons [in 2022] to 627 million tons by 2035—a more than fifty percent increase.”

Consistent with the U.S. Department of Energy’s most recent data, there are currently nine LNG import and export terminals in operation within the U.S. Additionally, four FERC (Federal Energy Regulatory Commission)-approved LNG plants are under construction, with another 13 approved but not under construction, and six more either pending applications or in the pre-filing stages.

For the purposes of this review, we’ll take a deeper look at three of those facilities: Golden Pass LNG in Sabine, Texas; the Port of Corpus Christi, Texas (specifically its channel improvement project); and Plaquemines (Venture Global LNG), an export facility in development in Plaquemines Parish, Louisiana.

Evolving Energy Market

With a vision to be the premier LNG export company in North America, the $10 billion Golden Pass LNG export project will add natural gas liquefaction and export capabilities to the existing terminal in Sabine Pass, Texas. With an anticipated startup of Train 1 in the second half of 2024, this investment by QatarEnergy and ExxonMobil has been developed with the goal of creating hundreds of direct jobs, enhancing U.S. energy security, and helping to bring clean energy to the world.

The existing LNG terminal is among the largest in the world, and this addition of liquefaction and export capabilities comprises an historic transformation.

Looking back, the actual Golden Pass LNG import project began in November 2003, with construction of the pipeline completed in 2009, itself followed by the completion of the terminal construction in 2010. Golden Pass received its first LNG cargo in October 2010.

Over time, due to advances in technology, the U.S. built up an abundant domestic natural gas resource base. For context, around 2012, it was estimated that the U.S. had enough natural gas supply to last more than 100 years. Golden Pass was then forced to examine an important question: what role would the existing facility play in the evolving energy market? Turning a challenge into an opportunity, from 2012-2017, the project completed a rigorous application and permitting process before receiving approval to move forward. The Golden Pass LNG export project commenced in 2019.

A quick look at the numbers. Approximately a dozen years after the application process began, the Golden Pass LNG export project will ultimately come online next year and operate three liquefaction process trains, with a total output of around 18 million tons of LNG per year. Five existing 155,000-cubic-meter, full-containment LNG storage tanks will store the LNG produced on site.

Two existing marine berths, the area of 77 football fields, will be able to accommodate two of the largest LNG carriers in the world at one time. And upgrades to the existing 69-mile pipeline will include installation of three miles of 24-inch pipeline to facilitate bi-directional flow capability and improve system hydraulics, while installation of two new compressor stations will facilitate the receipt and redelivery of up to 2.6 billion cubic feet per day of natural gas supply to the export facility.

Complementary build-outs within the project also include associated treatment, power and utility systems, and interconnections to existing import facilities and controls, as well as an expansion of the facility’s storm-protection levee system and other safety and security assets.

All told, according to a 2019 study performed by The Perryman Group, over the life of the project, Golden Pass LNG’s investment will create approximately $34 billion in U.S. economic gains (gross product) and generate $5 billion in taxes for the U.S. at local, state, and national levels. The project will also generate tens of thousands of jobs across the life of the facility. During operations, the project will generate around 5,200 direct and indirect jobs for the life of the facility, including more than 200 new, permanent jobs.

Widening the Waterway

As a leader in U.S. energy export ports and a major economic engine of Texas and the nation, the Port of Corpus Christi is the largest port in the United States in total revenue tonnage. Strategically located on the western Gulf of Mexico with a 36-mile, soon to be 54-foot-deep Mean Lower Low Water (MLLW) channel, the Port of Corpus Christi is a major gateway to international and domestic maritime commerce. Additionally, the Port boasts excellent railroad and highway network connectivity via three North American Class-1 railroads and two major interstate highways.

The Port is currently undergoing significant expansion and improvement via initiatives that include the development of additional berths, dredging and widening of channels to accommodate larger vessels, and the construction of new storage and terminal facilities. These enhancements, aptly titled the Port of Corpus Christi Ship Channel Improvement Project (CIP), aim to enhance the port’s capacity for handling energy-related exports, such as crude oil and natural gas.

Relatedly, the U.S. Army Corps of Engineers (USACE) recently awarded the fourth and final contract of the CIP, signaling the conclusion of a national infrastructure initiative that will render the ship channel the most improved waterway along the U.S. Gulf Coast from Texas to Florida.

The channel has actually been expanded several times since it opened in 1926, and as mentioned above, the CIP will increase that depth to 54 feet MLLW, along with a new width of 530 feet. An additional 400 feet of barge shelves will also be constructed, allowing for two-way traffic of both vessels and barges in tandem.

The overall project goes as far back as 1990, when Congress authorized a study to determine the feasibility of expanding the channel through widening and deepening the waterway. In 2017, the project advanced to construction. The first phase was completed in February 2020, while Phase 2 wrapped up in July of this year. The third phase is also expected to be completed in 2023, with completion of the final phase estimated for early 2025.

In a September press release for USACE, Lisa Finn, environmental program manager for operations at USACE’s Galveston district, pointed out that the overall channel improvement project would combat erosion within the channel by providing 395 acres of sacrificial erosion protection along with the construction of a 2,000-foot breakwater—to tie into a currently planned 4,000-foot breakwater—in the Nueces Delta. She added that the Nueces Delta is currently eroding at a staggering rate of about 8.2 feet per year.

“Through extensive resource agency coordination, cooperation with our non-federal sponsor—the Port of Corpus Christi—a close relationship with the Texas General Land Office and a tremendous partnership with the Coastal Bend Bays and Estuaries program,” she explained, “about five million cubic yards of dredged material will be turned into almost one thousand acres of something useful while leaving capacity in upland placement areas for routine maintenance dredging disposal.”

The nearly $681.6 million project is jointly funded by the federal government and Port of Corpus Christi, with the final tranche of project funding allocated by Congress in the Consolidated Appropriations Act of 2023.

Stages of Development

A little more than 600 miles east of Corpus Christi, Venture Global Plaquemines LNG, LLC is developing an LNG export facility in Plaquemines Parish, Louisiana, approximately 20 miles south of New Orleans. When fully developed, Plaquemines LNG will have an export capacity of over 20 million metric tons per year.

The 630-acre site is located on the Mississippi River, with approximately 1.3 miles of river frontage, and the river itself provides deep-water access without the need for dredging—allowing for an expedited environmentally friendly development process.

Plaquemines LNG anticipates that it will commence commercial operations of the project in approximately mid-2025, with a phased operational start-up that (subject to the requisite review and approvals from FERC) could include the first exports of LNG by the end of 2024.

The project’s first phase, which began construction in 2021, should produce up to 13.3 million metric tons of LNG, according to the U.S. Energy Information Administration. The second phase, which is already underway, should boost the terminal’s export capacity by up to another 10.7 million tons.

Once the facility officially comes online, it will look to utilize: up to thirty-six 0.626 MTPA (million tons per year) liquefaction trains, configured in eighteen blocks; up to six pre-treatment trains; up to three ship-loading berths for LNG vessels—carrying a capacity of up to 185,000 cubic meters; up to four 200,000-cubic-meter full-containment LNG storage tanks; two 720 MW combined cycle gas turbine power plants, including additional 25 MW gas-fired aeroderivative turbines; a utility dock on the Mississippi River to handle waterborne deliveries of equipment and material during both construction and project operations; and two 42-inch-diameter pipelines, 15 and 12 miles long respectively, that connect to existing interstate natural gas pipelines.

All told, Venture Global has raised around $21 billion in total for Plaquemines, the largest project financing ever done in the space. It comprises another step in Venture Global’s march to become one of the nation’s largest suppliers of LNG through four export terminals, which are in various stages of development.

Calcasieu Pass in Cameron Parish (Louisiana) began operations in 2022, and another terminal, CP2 LNG, is planned for land nearby. The company is also planning a second Plaquemines Parish terminal to be called Delta LNG, though little movement has occurred on that project as Venture Global has set its sights on moving Plaquemines LNG and CP2 LNG forward.

Altogether, the terminals should export around 70 million tons of LNG annually at their peak capacity, which would exceed Cheniere Energy’s Sabine Pass LNG terminal in Cameron Parish, currently the nation’s leader in max export capacity at 34.5 million tons per year.

However, Cheniere Energy announced plans earlier this year to expand Sabine Pass LNG to more than 54 million tons annually by 2032. To bring the information above full circle, Cheniere Energy also operates the country’s second-largest LNG exporter, Corpus Christi Liquefaction, which has the ability to ship out 18.3 million tons annually.