In the last few years, US gas exports have been on a rapid rise, with Cheniere Energy’s Sabine Pass terminal leading the way. Now, Cheniere is betting big that this demand isn’t going to slow down anytime soon by announcing an expansion plan for the terminal. This massive investment could be a sign that US gas is here to stay as a major source of energy for other countries. In this post, we’ll explore how the expansion plan works and what it could mean for the future of global energy markets.

Who is Cheniere?

Cheniere Energy, Inc. is a Houston-based energy company that is majority-owned and controlled by its founder, Charif Souki. The company operates a liquefied natural gas (LNG) terminal in Sabine Pass, Louisiana, and has plans to develop other LNG terminals in the United States. Cheniere is the only company in the United States with permission to export LNG to countries that do not have a free trade agreement with the United States.

Cheniere was founded in 1996 as a natural gas pipeline company. It acquired its first LNG terminal in 2005, and began construction on its second terminal in 2010. The company has been exporting LNG since February 2016, and its terminals have a combined capacity of approximately 16 million tons per year.

In addition to its LNG terminals, Cheniere also owns and operates a fleet of LNG carriers, which are used to transport LNG from its terminals to customers around the world. The company has long-term contracts with several major energy companies, including Royal Dutch Shell, Total SA, and Chevron Corporation.

What is liquefied natural gas (LNG)?

LNG is natural gas that has been cooled to -260°F at atmospheric pressure, turning the gas into a liquid. This process reduces its volume by more than 600 times, making it easier and cheaper to transport over long distances. Once it reaches its destination, the LNG is turned back into gas and sent through pipelines to be used as fuel.

LNG is a clean-burning fuel that can be used in place of diesel or gasoline in vehicles, homes, and businesses. It emits less carbon dioxide than other fossil fuels, making it a cleaner option for power generation. LNG is also less expensive than other forms of natural gas, making it an attractive option for power plants and other large-scale users.

Cheniere Energy is betting that demand for LNG will continue to grow in the United States and abroad. The company is expanding its liquefaction facilities in Sabine Pass, Louisiana, to meet the expected increase in demand. When completed, the expansion will more than triple Cheniere’s current LNG production capacity.

Why is Cheniere expanding its LNG export capacity?

As the world’s largest exporter of liquefied natural gas (LNG), Cheniere is betting that demand for US gas exports will continue to grow in the years ahead. The company is in the process of expanding its LNG export capacity by building additional production facilities at its existing Sabine Pass and Corpus Christi terminals.

Cheniere’s expansion plans come as global LNG demand is expected to increase by nearly 40% over the next five years, driven by growing demand from Asia. China, in particular, is expected to become a major driver of global LNG demand growth as the country looks to switch from dirtier coal-fired power plants to cleaner-burning natural gas.

Cheniere is also counting on continued strong demand from other key Asian markets such as Japan, South Korea, and Taiwan. These countries have been increasingly turning to LNG as a way to diversify their energy supplies and reduce their dependence on oil and coal.

Demand for US LNG exports has been strong in recent years, with Cheniere shipping out nearly 20 million metric tons of the fuel in 2017. This is expected to rise to 30 million metric tons by 2019 once the company’s expanded production facilities are fully operational.

How will the expansion be financed?

Cheniere Energy, Inc. (NYSE American: LNG) (“Cheniere”) announced today that its board of directors has approved an expansion of the Sabine Pass Liquefaction Project (“Project”) in Cameron Parish, Louisiana to include up to six additional liquefaction trains (Trains 5-10), two LNG storage tanks with capacity of approximately 16.9 million cubic meters (mcm) each, and two berths for LNG vessels with a draft up to 50 feet. The expansion is designed to add export capacity of up to 13.5 million tonnes per annum (“mtpa”) of LNG, or approximately 18 mtpa of nominal production capacity. Cheniere expects the expansion to cost approximately $11 billion and to be financed with a combination of cash on hand, project-level debt financing, and equity contributions from sponsors. Subject to obtaining necessary approvals, Cheniere anticipates beginning construction on the expansion in 2019 and achieving commercial operations by 2024.

The expansion of the Sabine Pass Liquefaction Project is a big bet by Cheniere Energy, Inc. (NYSE American: LNG) that there will be lasting demand for U.S. gas exports. The expansion will add export capacity of up to 13.5 million tonnes per annum (“mtpa”) of liquefied natural gas (LNG), or approximately 18 mtpa of nominal production capacity. The expansion is designed to include up to six additional liquefaction trains (Tr

When is the expansion expected to be completed?

The expansion is expected to be completed in the first quarter of 2023.

What are the risks associated with this expansion?

The risks associated with any expansion are always relative to the specific circumstances. In this case, Cheniere is already a major player in the US gas exports market, so its relative risk is likely lower than that of a new entrant. However, there are still some potential risks to consider, including:

-Market conditions: If global demand for LNG falls or if new supplies come online faster than expected, prices could drop, eating into Cheniere’s profits.

-Construction delays: The company’s expansion plans involve building new liquefaction facilities at its existing Sabine Pass terminal. Any delays in construction could lead to cost overruns and missed deadlines.

-Operational problems: Once the expanded facilities are up and running, there is always the risk of technical problems or disruptions that could affect production and exports.

Conclusion

Cheniere’s expansion plan exemplifies the company’s belief that US gas exports will remain in demand over the long-term. The project comes with many risk factors, but if it succeeds, Cheniere stands to benefit significantly and may even become one of the largest exporters of natural gas in the world. With their ambitious plans for growth and a focus on future trends, Cheniere is well-positioned to capitalize on any future market changes.