North America LNG Rebound to Continue in 2019

North America LNG Rebound to Continue in 2019
North America should lead an expected record year for global LNG project sanctions in 2019, predicts Wood Mackenzie.

North America should lead an expected record year for global liquefied natural gas (LNG) project sanctions in 2019, Wood Mackenzie reported Tuesday.

According to Wood Mackenzie’s latest quarterly North America LNG projects update, three U.S. Gulf Coast developments – Sabine Pass Train 6, Golden Pass and Calcasieu Pass – are expected to reach final investment decision (FID) in the first half of 2019. In addition, the consultancy contends that two additional U.S. projects should follow shortly thereafter and another two projects in Canada and Mexico are “on the horizon.”

“With FID imminent on three U.S. Gulf Coast LNG projects, North America is set to lead an expected record year for LNG project sanctions,” Alex Munton, principal analyst for Americas LNG with Wood Mackenzie, said in written statement emailed to Rigzone. “With at least two other Gulf Coast projects – Freeport Train 4 and possibly Driftwood LNG – also not far behind, the first half of 2019 will be an especially busy one for the U.S.”

Recalling that the North American LNG market experienced a “lull in investment” before 2018, Wood Mackenzie noted that the market has “sprung back to life.” Since September of this year, it pointed out that:

  • Six LNG project developers – Cheniere Marketing (CMI), Venture Global, Sempra, Tellurian, Freeport and Woodfibre – have announced long-term offtake agreements
  • 13 million tonnes per annum (mtpa) of sales have been announced, raising the total sales figure for the year above 20 mtpa

“2018 was a stellar year for sales of North American LNG, and U.S. LNG in particular,” said Munton. “Renewed confidence in the outlook for LNG, combined with the choice, flexibility and competitiveness of the U.S. market offers, facilitated this surge in interest.”

Wood Mackenzie stated that the construction of the three Gulf Coast LNG facilities, representing up to 30 mtpa of capacity, could translate into $20 billion worth of investment for the region over the next four years.

Outside the United States, Wood Mackenzie’s analysis finds that Canada’s Woodfibre LNG could reach FID in 2019; but, it observes that FID hinges on the execution of an engineering, procurement and construction (EPC) contract. In Mexico, the Costa Azul Phase 1 export terminal still needs a final EPC contract, binding offtake agreements, permitting and financing arrangements, stated Wood Mackenzie. However, the firm noted that a 2019 FID for that project is achievable as well.

“While the Gulf Coast remains the key growth region for North America LNG, projects in Canada and Mexico are also progressing and attracting interest,” said Munton. “Additional west Canadian capacity could help further open Canadian supply to global markets, and we are now seeing momentum around Mexico as an alternative export route for U.S. production.”


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