$10 billion Golden Pass LNG export project to go ahead

FEBRUARY 6, 2019 — There’s a reason why orders for LNG carriers are on the increase: Burgeoning U.S. LNG exports. And those export volumes are set to grow, ExxonMobil and partner Qatar Petroleum yesterday announced they had made a final investment decision (FID) to proceed with development of the $10 billion Golden Pass LNG export project located in Sabine Pass, Texas.

“Golden Pass will provide an increased, reliable, long-term supply of liquefied natural gas to global gas markets, stimulate local growth and create thousands of jobs,” said Darren Woods, chairman and chief executive officer of Exxon Mobil Corporation (NYSE:XOM). “The extensive experience of ExxonMobil and Qatar Petroleum provides the expertise, resources and financial strength needed to construct and operate an integrated liquefaction and export facility in the United States.”

Qatar Petroleum will invest more than $8 billion and ExxonMobil more than $2 billion in the project.

The Department of Energy has authorized 23.05 billion cubic feet per day (235 billion cubic meters per year or 177 MTPA (million tons per annum) of LNG) of natural gas primarily spread across 10 large-scale export projects in Louisiana, Texas, Maryland, Georgia, and the Gulf of Mexico. Once completed, Golden Pass will be the seventh large scale LNG export project in the United States and be capable of exporting more than 2 billion cubic feet per day of U.S. LNG to any county not prohibited by U.S. law or policy.

Barclay’s Research notes that Golden Pass joins Cheniere’s Corpus Christi Train 3 and Shell’s LNG Canada as part of the so-called “second wave” of LNG export projects. It is the first major new project to move forward since Elba Island’s final investment decision (FID) in 2016.

“The project has some of the characteristics we believe are necessary for success: brownfield sites, proximity to diverse gas supplies, and strong financial backing,” says Barclays. “Like Shell’s LNG Canada, Golden Pass was approved without the backing of offtaker contracts, with ExxonMobil and Qatar Petroleum instead apparently adding the LNG volumes to their portfolios and relying on their own balance sheets to finance the project. This stands in contrast to many of the other proposed export projects, which are looking for support from end-users to finance construction. By self-financing the project, Golden Pass’s FID indicates Qatar Petroleum and ExxonMobil’s confidence in LNG demand growth over the longer term.”