US to export LNG to China: Cheniere seals a deal with ENN Energy for Sabine Pass LNG

It's official. The US is set to become an LNG exporter.

Cheniere Energy Partners (NYSE:CQP) reported a deal with Chinese energy firm ENN Energy for 1.5 million tonnes per annum of bi-directional LNG from the Sabine Pass LNG terminal in Louisiana. The MOU covers a 20-year agreement for the supply of LNG to ENN, should regulatory approvals proceed as planned.

Cheniere is working to jump regulatory hurdles to transform its Sabine Pass LNG recieving terminal into a liquefaction export terminal. The Sabine Pass project will incorporate up to four LNG trains with a capacity of 0.7 Bcf/d of natural gas and an average liquefaction processing capacity of 3.5 mtpa.

The company foresees LNG export as early as 2015. 

"We are excited to participate in supplying natural gas to China, and we believe that ENN is a successful model for developing diverse solutions to serve its fast growing energy markets," said Charif Souki, chairman and CEO of Cheniere Partners. "ENN Energy Trading is an ideal customer that is expanding its natural gas distribution network and seeking new sources of natural gas supply in order to increase its customer connections and increase its sales volumes."

I'm sure US natural gas producers are excited about the agreement, as well.


This means that the glut of natural gas in the North American market has someplace to go, and an increasing demand to meet -- China.


With the development of the vast shale plays across the US, the amount of natural gas in the market has skyrocketed, and the price of natural gas has dropped.
"We believe current market fundamentals have created an opportunity for the U.S. to offer natural gas to global markets at competitive prices. The U.S. is experiencing an increase in natural gas production, primarily driven by unconventional gas plays, while natural gas demand in the U.S. continues to lag behind market projections. Due to the depth of the markets in South Louisiana with an abundance of supply and existing pipeline infrastructure, we can provide an additional outlet for U.S. natural gas production while offering a low cost source of supply for global buyers seeking alternatives to oil-indexed contracts," said Souki.


What does this mean for the US? Should this deal (and others) go through, the US is poised to become a major exporter of LNG -- which should prove a strong catalyst for increasing prices.


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Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.

Is the Wolfberry the next Eagle Ford?

Shale is hot. People are interested; production and drilling are up. I attended the Unconventional Gas show in Fort Worth a couple of weeks ago, and people are certainly interested -- in US shale, as well as shale potential in Europe and China and beyond.

The first to really take off were Haynesville and Marcellus. Then more dry-gas shales came on the scene. Now, liquids-rich or oil-laden formations, such as Eagle Ford and Bakken, are garnering all the attention of both investors and producers. 

Billions of dollars have been spent on acquiring acreage and interest, as well as forming JVs. The number of land rigs has picked up across the nation, spurred by -- you guessed it -- shale exploration and developments. Additionally, pipeline, refinery and gas processing facility construction is on the rise.

Not just oil and natural gas are flowing, money is too.

Enter the Wolfberry and Wolfcamp plays.

Now, as an oil and gas writer, my ears perk when any shale or unconventional play is mentioned. In addition, this particular play is located in my father's home county -- I can't help but notice that.

I first read about it when El Paso Corp. revealed in late September that it was adding more than 120,000 acres in West Texas to its leasehold. I know Crockett County, and it is natural gas country, but this release stated that it was in the emerging Wolfcamp oil shale play.

What? How had I never heard about this? I did a little back-digging on the PennEnergy site, and lo and behold: there have been a couple of smaller stories about the Wolfcamp -- and it's supposed to be liquids- and/or oil-rich.

Then, I noticed a couple more stories about the Wolfberry trend. LINN Energy spent $352.2 million acquiring natural gas acreage in the Wolfberry trend, with notes of oil.

My curiosity is piqued, and I've been asking everyone who will listen in the oil patch whether or not they know anything about it. What's the word?

Enter a very nice oil patch pal I fortuitously sat next to on the plane from Tulsa to Houston. He was investigating the Wolfberry, as well. Imagine that! He had a meeting the next week with someone in West Texas, and he'd share his insight.

Here it is:

Presently, there are about 260 rigs working the Wolfberry formation in West Texas. Not quite shale, Wolfberry is a tight formation that's being drilled vertically. "The same fracturing techniques apply; therefore this formation previously unproductive to drill becomes viable, considering each well produces 200 - 800 BPD Oil and 0.2 to 1.0 MMSCFD rich natural gas, making it very attractive."

Is the Wolfberry the next Eagle Ford? What's the difference between the Wolfberry and the Wolfcamp? I'm searching, asking, begging. Do you know? Please share.

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Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.