U.S. Shale Gas Exports Near as Cheniere Brings in Record Supply

  • Louisiana plant to become first to export U.S. shale gas
  • The process of liquefying gas to ship has begun: Genscape

Cheniere Energy Inc.’s Sabine Pass export terminal in Louisiana is scheduled to receive a record amount of natural gas, signaling that it’s closer to sending the first exports of U.S. shale gas abroad.

Gas scheduled for a pipeline delivery point that servesthe liquefied natural gas plant more than doubled on Tuesday to about 333.3 million cubic feet, the most since Cheniere began preparing for exports in the fall, Ventyx data compiled by Bloomberg show. Nominations slipped to 216.3 million for Wednesday.

It’s the latest development in America’s bid to supply the world with the gas flowing out of its prolific shale formations. Cheniere, which had planned to load its first tanker in January, put off the cargo until late February or March due to faulty wiring. U.S. drillers have been looking to send gas to markets in Europe, Asia and Latin America as they grapple with the biggest supply glut at home since July 2012.

Last week, U.S. regulators approved the addition of refrigerants at the Sabine Pass plant needed to chill gas into liquid, according to Genscape Inc. Since Feb. 14, the amount of gas flared at the terminal has swung from low to high levels, an activity typically associated with large industrial equipment being started up or shut down, according to the energy data provider, which is monitoring Sabine Pass with infrared cameras.

“The most important thing is they loaded the coolants and they are getting a record amount of feed gas to Cheniere,” Theodore Michael, a Genscape LNG analyst, said in an interview. “We can conclude that they have begun the process of liquefaction.”

Faith Parker, a Cheniere spokeswoman, didn’t respond to an e-mail seeking comment.

Icahn Holdings

The record gas nominations came on the same day that Icahn Associates Corp., the fund run by billionaire activist investor Carl Icahn, reported that it had increased its stake in Cheniere by 4.13 million shares. In December, Charif Souki was ousted as Cheniere’s chief executive officer over his plan to speed the growth of LNG projects, a strategy opposed by Icahn, the company’s largest investor.

While exports will help stoke demand for U.S. gas, the first cargoes will be a tougher sell as the global market starts to grapple with a glut of its own. The plunge in crude oil prices have wiped out most of the discount for U.S. supply. Credit Suisse Group AG warned in a research note earlier this month that the window for spot shipments of U.S. LNG to Asia may be closed this year and next.

Cheniere is in the process of starting up the first of six proposed liquefaction plants at Sabine Pass site. It’s using a three-stage system developed by ConocoPhillips to cool the gas -- using propane, ethylene and methane -- to minus 260 degrees Fahrenheit (minus 162 Celsius). In liquid form, the fuel takes up about 1/600th of its volume as a gas.

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