Shale Gas: Export Destinations, Players, Expectations

The Permian—and the Texas Gulf Coast—is playing a major role in shale gas production and the justifiable presence of new LNG production or export facilities.
By Luke Geiver | January 20, 2020

(This story appears in North American Shale Magazine's Permian Report). 

The International Association of Oil & Gas Producers Director of EU Affairs, Francois-Regis Mouton, believes the EU needs more U.S. shale gas. In a joint effort with the American Petroleum Institute, the IAOGP is working to help the EU and the broader world understand the value and need for liquified natural gas produced from U.S. shale fields. “If we really want to reach our climate objectives in Europe, we need our policymakers to acknowledge the value and role of gas in both the short and longer term,” Mouton said. “By making a smart use of Europe’s own gas resources and the LNG supplied by partners such as the U.S., we can bring about a system combining renewables and gas.” The U.S. is doing its part to meet the current and oncoming demands of Europe and other countries looking for LNG. Since 2017, the U.S. has exported more natural gas than it imports. The Permian—and the Texas Gulf Coast—is playing a major role in shale gas production and the justifiable presence of new LNG production or export facilities. 

FERC’s LNG Approvals
As the main regulatory entity responsible for approving LNG export facility buildouts in the U.S., the Federal Energy Regulatory Commission has been busy the past two years. FERC has approved 21 new facilities to date, eight of which are currently under construction. The vast majority of the new facilities are located along the U.S. Gulf Coast. While many are land-based facilities, some of the new LNG production or export sites will be utilizing a floating vessel. 

Operators Become Partners
Although the price of natural gas has at times required some Permian operators to pay a third-party to offtake their produced gas, most believe in the future demand and use for shale gas. Apache Corp. signed a first-of-its-kind agreement with Cheniere Energy for the E&P’s shale gas volume. Under the 15-year deal, Apache will supply and sell 140,000 MMBtu per day of gas to Cheniere’s Corpus Christi III project, one of the largest LNG production facilities in the world. Cheniere will pay the global indices price for the gas. Altus Midstream will handle the gas and get it to Corpus Christi. Jack Fusco, president of Cheniere, said the deal with Apache will give the company flow assurance for its gas stream. 

Foreign Entities Invest In US LNG
U.S. operators and project developers are not the only groups interested in LNG. Several non-U.S. firms have made a financial play or stake into shale gas from the Permian. Aramco Services Inc. signed a 20-year offtake agreement with Sempra Energy in a deal that would provide Aramco with 5 million tons per year of LNG. Amin Nasser, Saudi Aramco’s CEO and president, said Aramco hopes to become a long-term player in LNG. “We see significant opportunities in this market and we will continue to pursue strategic partnerships which enable us to meet rising global demand for LNG.” Mubadala Investment Co., the Abu Dhabi-based sovereign investor, agreed with NextDecade in an all stock deal valued at $50 million. NextDecade is working on the largest Permian LNG production and export facility called Rio Grande LNG. Westbourne Capital, an Australian investment firm, infused Freeport LNG with more than $1 billion for Freeport’s fourth LNG facility. PR