Local, national LNG projects on the rise

BY BRENDAN GIBBONS
Times-Shamrock Writer

Liquefied natural gas exporters are eyeing Pennsylvania natural gas, and Northeast Pennsylvania will likely get its own liquefaction facility for domestic sales.

Gulf Oil Senior Director of Marketing and Business Development Jonathan Carroll spoke at a Lackawanna College event Friday, promoting liquefied natural gas, or LNG. He offered more details on the company’s plan to build a liquefaction plant in Great Bend Twp.

Converting natural gas to liquid form requires chilling it from roughly 60 to 70 degrees Fahrenheit to negative 260 degrees, reducing its volume by 600 times. The volume reduction makes LNG attractive for shipping large amounts of gas.

$50 million investment
The Gulf Oil project represents a projected $50 million investment to build a facility capable of liquefying 8 million cubic feet per day, Mr. Carroll said.

Although the investment plan is not final, Gulf is operating on a seven-month permitting plan and hopes to break ground by the end of the year, Carroll said.

He said Gulf has already spoken with state and county officials and submitted permit applications to the state Department of Environmental Protection, though the DEP’s eFacts tracking tool shows no information for the facility.

Gulf plans to use local contractors for construction and buy equipment from Pennsylvania firms, Mr. Carroll said. A minimum of six full-time employees will be necessary to run the facility, plus 20 drivers shuttling LNG to domestic customers in the Mid-Atlantic and New England.

Supply is tight
“The LNG supply situation for domestic consumption is pretty tight,” Mr. Carroll said. “This is a project we’re really excited about.”

Its target customers are peak-shaving plants that store gas during periods of low demand for release into transmission or distribution lines during high-demand periods, he said. The company can also supply large industrial users or distribution networks for home use.

The company is already working with a town in New Hampshire that wants natural gas but finds itself isolated from the pipeline network — a “gas island,” he said.

The high-quality dry gas produced in Northeast Pennsylvania was one factor that drew the company to Great Bend, he said. The other is the local gas price.
“Here the prices are so stable, so cheap,” he said.

Though Gulf’s project could have a big local impact, other LNG terminals being built around the country for export and domestic shipments will dwarf its Great Bend facility.

On Thursday, Dominion Energy broke ground on its Cove Point LNG terminal in Calvert County, Maryland. Cabot Oil and Gas Corp., the top producer in the northeast Marcellus Shale region, has agreed to supply 350 million cubic feet to that facility for 20 years.

Jason French, government and public affairs director for Cheniere Energy Inc., which is currently building the Sabine Pass terminal on the Texas-Louisiana border and the Corpus Christi Liquefaction Project in Texas, also visited Scranton on Friday.

So did Sempra International’s external affairs director JC Thomas. The company is building the Cameron LNG facility on the Louisiana Gulf Coast after opening the Energia Costa Azul terminal in Baja California in 2008.

Both men promoted shipping LNG to buyers around the world to add price stability to the natural gas market and spur investment into huge projects like theirs, along with more drilling upstream.

“Our allies in Europe and Asia are thirsty for natural gas,” French said.

The price foreign buyers would pay at their Gulf Coast facility is tied to the Henry Hub gas price in Louisiana, French said. They agree to pay 115 percent of the Henry Hub price for transfer and liquefaction, working out to $2.75 to $3.50 per thousand cubic feet, not including transportation costs.

Combined, Cheniere’s and Sempra’s proposed liquefaction facilities and terminals can demand more than 10 billion cubic feet of gas per day. That would account for a little less than one eighth of the total gas production in the continental U.S., according to U.S. Energy Information Administration numbers from January.