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First U.S. Shale Gas Exports Imminent as Tanker Docks at Sabine Pass

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LNG_550x300A liquefied natural gas (LNG) tanker on Sunday docked at the Sabine Pass terminal in Louisiana, with only days to go before the United States ships its first export cargo of seaborne gas from the lower 48 states.

U.S. exports will add to a wave of supply coming from Australian projects at a time when demand is faltering in major consuming countries and prices plummeting in line with oil.

Expected to become an importer of LNG just a decade ago, the shale gas revolution in the United States that unlocked cheap, abundant supplies has wreaked havoc on global gas markets as LNG meant for the country was redirected around the world.

Set to load the first shale gas to export markets, the Asia Vision LNG tanker docked at Cheniere Energy‘s Sabine Pass LNG terminal on Sunday, Reuters ship tracking data showed.

The tanker arrived in January in the Gulf of Mexico, but has been anchored off the coast of the terminal after the first shipment from the facility was delayed due to mechanical problems.

Another tanker, the Energy Atlantic, has also been waiting in the Gulf of Mexico to pick up LNG from Sabine Pass since January.

Cheniere said it expected its first cargo to leave the facility by the end of this month or in early March.

“We will export the first cargo shortly. Touch wood, it’ll be at the end of February or in early March,” Andrew Walker, Cheniere Energy‘s vice president for strategy, said during an energy industry event in Germany last week.

The company initially intended Sabine Pass as an LNG import terminal but will draw on shale gas production for exports instead.

AUSTRALIA RAMPS UP EXPORTS

First exports from Sabine Pass comes within days of the world’s most expensive LNG plant – the $54 billion Gorgon project in Australia – shipping its first cargo.

“The timing is incredible,” said Bernstein analyst Neil Beveridge.

Companies including Chevron Corp, Royal Dutch Shell and Exxon Mobil Corp have invested some $180 billion in seven Australian LNG export plants ramping up production from 2015 to 2017, making the country the top exporter of the fuel ahead of Qatar.

“Sabine Pass will just add to the global oversupply,” said Beveridge, although he expects the facility to run below capacity for the time being because of weak demand and low prices.

Four other U.S. projects have already broken ground, including Dominion Resources’ Cove Point plant in Maryland expected in 2017, Sempra Energy‘s Cameron LNG in Louisiana and Freeport LNG’s plant in Texas expected in 2018, and Cheniere’s Corpus Christi plant in Texas in 2019.

Once operational, Sabine Pass will be the first LNG export terminal outside of Alaska. The United States has been exporting LNG mostly to Japan from Alaska since 1969.

With growth in pipeline exports to Mexico and LNG exports to the world, the United States is expected to transition from a net importer of gas, mostly from Canada, to a net exporter by 2017 as the nation’s shale gas production continues to grow, according to federal energy forecasts.

The United States was last a net exporter of gas in 1957.

In 2015, the U.S. exported on average 0.07 billion cubic feet per day from Alaska, according to federal data. That is expected to rise to 0.5 bcfd in 2016 and 1.33 bcfd in 2017 with the startup of the liquefaction units at Sabine Pass and other LNG facilities, according to federal forecasts.

For comparison, the United States produces about 80 bcfd of gas, according to federal data.


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