American Oil and Gas Reporter - October 2015 - 57

Southwest Louisiana lateral pipeline bidirectional), and Kinder Morgan's Louisiana
Pipeline.

Supply Diversity
Although the Corpus Christi facility is
only a short drive from the heart of the Eagle Ford Shale play, as with Sabine Pass,
Cheniere is seeking to access gas from a
wide variety of plays and basins-in some
cases, moving gas long distances. Also, as
it has done at Sabine Pass, Cheniere is
looking for both supply-basin and supplier diversity, and plans to enter term supply contracts with producers ranging
from one to seven years. The company expects to have initial gas contracts in place
by 2016.
One thing that makes Corpus Christi a
great place for liquefying gas and exporting LNG is its proximity to several major
gas pipelines. In fact, a single 23-mile, 48inch diameter pipeline Cheniere is building to serve the plant's first three liquefaction trains will connect with seven regional pipelines with a total capacity of 4.4
Bcf/d (Figure 4).
The 48-inch Corpus Christi pipeline
(CCPL) will have the capacity to move up
to 2.25 Bcf/d, and a parallel 42-inch-diameter, 1.5 Bcf/d pipeline is planned to
supply the fourth and fifth trains. The
CCPL will tie the facility into:
* Kinder Morgan's Natural Gas
pipeline (shown in purple in Figure 4),
which will be able to deliver gas from the
Marcellus and Utica through the increasingly bidirectional Rockies Express system, the Permian Basin, Granite Wash,
Barnett Shale, Woodford Shale and Hay-

nesville Shale;
* Kinder Morgan's Tennessee
pipeline (green in Figure 4), parts of
which extend to the Marcellus and into the
Gulf of Mexico;
* Kinder Morgan's KM Tejas pipeline
(pink), which moves gas produced in the
Eagle Ford and the Gulf;
* Energy Transfer Partners' Houston
Pipeline System (blue), which gathers and
transports gas produced in several parts of
Texas and ties in with the company's 52
Bcf Bammel gas storage facility near the
Houston Ship Channel, as well as Energy Transfer Partners' Oasis pipeline (red),
which connects the Waha and Katy gas
hubs;
* Enterprise Products Partners' Texas
pipeline;
* Williams'
Transcontinental
(Transco) pipeline; and
* Southcross Energy's South Texas
system.
As of July, Cheniere had lined up 550
MMcf/d of long-term pipeline capacity to
service the CCPL: 300 MMcf/d on the
Tennessee Gas line and 250 MMcf/d on
KM Tejas. That 550 MMcf/d accounts for
much of what Cheniere will need to supply the first train (the terminal's total need
is represented by the orange line). The
company has an option for another 250
MMcf/d of capacity on KM Tejas to
meet the first train's remaining needs, and
is in discussions with the owners of two
other pipelines for a total of 785 MMcf/d
of capacity to supply the second and
third trains.
The financial requirements for getting
projects built appear to be easing, or at

least becoming more flexible, which
could be good news for the possible development of additional U.S. LNG export
facilities. For Sabine Pass, Cheniere satisfied lenders with a plan to line up 20-year
sales and purchase agreements (SPAs) totaling 21.25 MTPA (79 percent of the 27
MTPA total capacity). It already has
signed SPAs totaling 19.8 MTPA. The 21
percent of capacity (5.75 MTPA) will be
tied to shorter-term deals and spot market
sales.
The Corpus Christi project is satisfying lenders by lining up 20-year SPAs for
only 10.5 MTPA (47 percent of 22.5
MTPA total capacity). SPAs totaling 8.4
MTPA have been signed to date. The remaining 53 percent (12 MTPA) of capacity will target shorter-term and spot market deals.
Interestingly, of the seven entities that
have entered 20-year SPAs for capacity at
Corpus Christi at fixed liquefaction fees
of $3.50 an MMBtu (LNG costs indexed
at 115 percent of Henry Hub), five are European-based utilities/traders (Endesa,
Iberdrola, Gas Natural Fenosa, Électricité de France, and EDP/Energia de Portugal). The others are Australia's Woodside
Energy Trading and Indonesia's PT Pertamina. This illustrates that U.S. LNG exports can and will be sold into the worldwide market, and not just into Asia,
which at one point was viewed as the primary destination for U.S.-sourced LNG
shipments.
r

FIGURE 4
Corpus Christi Terminal Gas Procurement
■

CCL contracting long-term direct and
upstream pipeline transport capacity
* Tennessee P/L:
* KM Tejas P/L:

■

0.3 Bcf/d ✔

E. RUSSELL
'RUSTY' BRAZIEL

0.25 Bcf/d ✔

CCL purchasing natural gas from producers
and marketers
NGPL
Tennessee Gas
HPL
KM Tejas
Oasis
Enterprise

Shale Plays
Basins

Source: Cheniere Energy

Corpus Christi

E. Russell "Rusty" Braziel is president and chief executive officer of RBN
Energy LLC in Houston, an energy
consultancy providing analysis and advisory services. He spent 20 years
with Texaco (now Chevron), serving as
vice president of natural gas marketing and trading, and manager of natural gas liquids supply. Subsequently,
Braziel was vice president of business
development for The Williams Companies, President of Altra Energy Technologies, and co-owner of Bentek Energy. He holds a B.B.A. and an M.B.A.
in business and finance from Stephen
F. Austin University.

OCTOBER 2015 57

American Oil and Gas Reporter - October 2015

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