Wood Mackenzie: Golden Pass FID crests second wave of US LNGWood Mackenzie has released a statement discussing the recent positive final investment decision (FID) on the Golden Pass LNG export project in Sabine Pass, Texas, US.
Wood Mackenzie claims that the decision signals the beginning of what could be a record year for LNG project FIDs.ExxonMobil and Qatar Petroleum stated that project construction will commence this quarter, with startup planned for 2024.
Alex Munton, principal analyst, Americas LNG, at Wood Mackenzie, said: “The US$10 billion liquefaction project, which will have capacity to produce around 16 million t of LNG per year, is one of the few remaining brownfield LNG development opportunities in the US Gulf Coast.
“The repurposing of the existing facility has commercial logic. The Golden Pass regas terminal, with its five storage tanks, two shiploading berths and header pipeline, already includes much of the infrastructure needed for an export project. Even if costs come in at slightly above the US$10 billion mark, on a dollars-per-tonne basis, it's still one of the lowest-cost opportunities for new large scale liquefaction capacity anywhere in the world.
“From a cost standpoint, the timing is prudent. Proceeding with construction now will enable the project to lock in costs and minimise exposure to inflationary pressures before the next cycle of global LNG investment heats up. By moving ahead now, the partners ensure that Golden Pass will be at the forefront of the second wave of US LNG.”
Wood Mackenzie claims that Golden Pass offers Qatar Petroleum the opportunity to optimise shipping costs, especially into Europe and Latin America. It also helps Qatar to protect its market share as it looks to leverage all of its LNG assets in response to a changing market structure.
Munton said: “To delay FID any longer would simply create the space for other US LNG projects to be developed. Golden Pass would miss out on the opportunity to press home the brownfield advantages it has over planned US greenfield projects in terms of cost and schedule.”Wood Mackenzie goes on to say that there are also advantages for ExxonMobil. The company is the second-largest producer of natural gas in the Lower 48 and Golden Pass supports additional upstream supply development, although the project partners have not announced intentions to tie the export project directly to ExxonMobil’s upstream production.
The project strengthens ExxonMobil’s relationship with Qatar (the most valuable country in its global portfolio) even further. Through its joint investment in Golden Pass LNG, the company will deepen this relationship and work with Qatar Petroleum to diversify both upstream and internationally. According to Wood Mackenzie, it is likely that there will be further upstream deals between the two parties in future.
In its 4Q18 results, ExxonMobl reportedly announced that Rovuma LNG (Area 4) in Mozambique was also targeted for FID in 2019.
Liam Kelleher, an analyst on Wood Mackenzie’s Global LNG team, said: “Rovuma will share some plant and marine facilities with the adjacent Anadarko project – Mozambique LNG (Area 1). Anadarko is also targeting FID in 2019 and made some significant progress in the first week of February, signing three long-term SPAs totalling 6.1 million t per annum.
“This brings the project’s total volume contracted in long-term sales to 7.58 million t per annum, just shy of the 8.5 million t per annum Anadarko says is needed to secure financing for the 12.88 million t per annum development.
“However, Anadarko has stated that further deals are under negotiation as it looks to reach its stated goal of taking FID during the first half of the year.”
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