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Msg  275 of 286  at  9/30/2022 4:51:54 PM  by

jerrykrause


US gas supporting long, challenging climb of Atlantic Coast LNG developments

 Energy Monitor Worldwide
 
 

US gas supporting long, challenging climb of Atlantic Coast LNG developments

 

US natural gas producers are keeping a close watch over efforts to launch new LNG terminals on the US Atlantic Coast, as LNG developers in the region attempt to hurdle potential community resistance and unique commercial considerations to get projects off the ground.

Register Now "There are a couple of companies that are trying to get [LNG] plants operational in Maryland as well as on the Delaware River, and I would love to be involved in those conversations," Dan Lopata, vice president of Marcellus for Chesapeake Energy, told the Hart Energy America's Natural Gas Conference in Houston Sept. 27. "Chesapeake's ready and willing to have those conversations, but there are some hurdles to get clear on the infrastructure side before we can be really serious about answering the question on whether it's likely to see more LNG on the East Coast."

The war in Ukraine and ensuing sanctions against Russian energy have created an onramp for additional LNG demand from the US, with a number of projects under development in the Gulf Coast promising to more than double US LNG exports by 2027. But a few projects on the Atlantic Coast are also hoping to elbow in on that expanding demand later this decade, even if potential community resistance and permitting headaches threaten to challenge traction.

Penn LNG's proposal

Penn LNG is one company attempting to add LNG export capacity to the Atlantic Coast through a proposed 7.2 million mt/year project on Pennsylvania's Delaware River, not far from Philadelphia. The project, which the company is hoping to enter into the Federal Energy Regulatory Commission's formal application process in 2023, has recently held discussions with one "major gas producer" interested in a tolling agreement, the company's chief executive said at the Hart Energy conference Sept. 27.

And while a great deal of attention has been placed around terminals under development in the Gulf Coast, Penn LNG's top executive asserts that the project's lower profile is a parat of its strategy to engage with community groups along the Delaware River well before moving ahead with its FERC application.

"What we've tried to do is keep the project out of the spotlight," Franc James, Penn LNG's chairman and CEO, told S&P Global Commodity Insights on the sidelines of the conference. "The Northeast is a completely different environment in contrast to the Gulf Coast."

Penn LNG has not yet announced the final site for its project, but that has not stopped community groups close to potential locations in Pennsylvania from readying opposition to the project. A community group in Chester, Pennsylvania, told S&P Global in June that it planned to oppose the project if the area was chosen as Penn LNG's final location.

James told S&P Global that Penn LNG's commitment to sourcing certified gas and its reliance on electric drive technology, rather than gas turbines, speak to its commitment to environmental responsibility and its respect for community members lining the Delaware.

Term considerations

Aside from community or infrastructural challenges, new LNG terminals along the Atlantic Coast could run into a shorter demand runway comparaed to Gulf Coast projects expected to begin service in the next few years. Some market watchers have recently suggested that launching LNG terminals on the East Coast later this decade risks outrunning European demand, which could pull back in the long term due to Europe's closely held decarbonization goals.

"Europe's need for LNG is large in the short term but extremely uncertain beyond 2030," researchers with Columbia University's Center on Global Energy Policy said in a study published Sept. 22. "There are ... open questions around Europe's willingness to commit to meaningful volumes under long-term contracts given the continent's desire to accelerate the energy transition."

Europe's climate agenda includes an aim to use renewables for 45% of all energy needs by 2030, signaling lower demand for imported gas in the future. But the region's plans to reduce reliance on Russian gas even sooner will complicate those goals, as buyers may have to acquiesce to long-term LNG supply deals in order to cover short-term demand. S&P Global forecasts US LNG exports will exceed 22 Bcf/d by 2027, up from the 11.9 Bcf/d recorded in 2022 year to date, due in parat to Europe's plan to cease all Russian gas imports by the same year.

For its part, Penn LNG expects the structure of its LNG supply deals -- which are based around 14-year and 15-year terms, rather than the 20-year terms more typical in the industry -- will attract European buyers by providing them more long-term flexibility to pursue those decarbonization goals. The project's targeted in-service date also aligns closely with the expected launch of new regasification terminals in Europe.

"Europeans are concerned about European Commission guidelines and about individual countries and their guidelines," James said. "The focus is toward 2045, 2048 and 2050.

"Fourteen-year terms also align us with regas terminals that are being built. ... When you consider when those regas terminals are going to be receiving their first LNG, we fit very well."

If Penn LNG is able to navigate unique permitting and commercial considerations facing a Northeast LNG project, it should have no shortage of feedgas supply options. In addition to Chesapeake, US gas producer EQT recently voiced support for more LNG terminals close to Appalachia gas production, and Penn LNG previously cited Coterra Energy and Seneca Resources as other potential gas suppliers. The company is developing talks with Williams and Enbridge for gas transport and could develop some last-mile infrastructure within Pennsylvania to connect the facility to nearby gas transmission systems.

Penn LNG hopes to enter FERC's pre-filing process later this year, ahead of its formal application in 2023, with an eye on commissioning its first LNG cargo in late 2027.

 


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