Glitch Delays Cheniere's Natural-Gas Exports
January 14 2016 - 5:20PM
Dow Jones News
Cheniere Energy Partners LP said on Thursday that it faced an
unexpected delay in its plan to be the first company to export
natural gas from the lower 48 states.
The natural gas shipment had been expected to depart from the
Houston-based company's Sabine Pass plant in southwest Louisiana
later this month.
Cheniere said the shipment had been postponed until late
February or March, citing "instrumentation issues" uncovered during
the final phases of the commissioning of the first of its five
so-called trains, or refrigeration units.
The instrumentation issues involved problems with wiring that
prevented Cheniere from obtaining accurate readings on the internal
temperature of refrigeration equipment, said one person familiar
with the matter.
Sabine Pass is one of two liquefied-natural-gas facilities
Cheniere is building to export super-chilled natural gas by ship.
It is the first of dozens of planned projects in the U.S. and
Canada designed to tap into cheap supplies of North American shale
gas.
The delay comes as global prices for LNG have plummeted because
of weaker demand from Asia, which makes up 70% of the market.
The setback for Cheniere raises questions about whether Sabine
Pass will be dogged by construction delays and cost overruns that
have affected other LNG facilities in Australia, another emerging
natural gas export hub.
Cheniere had been negotiating to sell its first cargo to Petró
leo Brasileiro SA, Brazil's state-run oil company, according to
people familiar with the talks. But those discussions were scuttled
because of the instrumentation issues, and the company will have to
strike a new deal when it is ready to start shipments, one of the
people said.
Cheniere has long-term supply contracts that are scheduled to
kick-in later this year, and the company said it still expected to
meet those obligations for delivery. Cheniere's board replaced the
company's â <chief executive and founder of its operating unit
last month over strategic differences.
Bechtel Corp. has finished construction of the first of five
refrigeration units at Sabine Pass and Cheniere said the others are
being built on an accelerated schedule. Bechtel is also building
two additional trains at Cheniere's Corpus Christi, Texas,
plant.
Cheniere has contracted nearly all the processing capacity of
its first train at Sabine Pass to U.K.-based oil and gas firm BG
Group PLC, which is in the process of being taken over by Royal
Dutch Shell PLC.
Write to Chester Dawson at chester.dawson@wsj.com and Christian
Berthelsen at christian.berthelsen@wsj.com
(END) Dow Jones Newswires
January 14, 2016 17:05 ET (22:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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