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Final investment decision reached for $10B Cameron LNG liquefaction-export project

7 August 2014

San Diego-based Sempra Energy announced that the Cameron Liquefaction Project sponsors, Sempra LNG, GDF SUEZ S.A., Mitsui & Co., Ltd. (Mitsui) and Mitsubishi Corporation (Mitsubishi), through a related company jointly established with Nippon Yusen Kabushiki Kaisha (NYK), each have approved a final investment decision for the development, construction and operation of the natural gas liquefaction and export project planned at the site of Sempra Energy's Cameron LNG receipt terminal in Hackberry, La.

The total project cost is estimated at approximately $10 billion, including contribution of the existing Cameron LNG facilities, construction of the new facilities and financing cost. The financing commitments for the project total $7.4 billion and will be provided by the Japan Bank for International Cooperation (JBIC), Nippon Export and Investment Insurance (NEXI) and a group of 29 commercial banks.

This represents one of the largest project financings in the US. Today’s commitments from our project sponsors and international banks put us one step closer to delivering domestic natural gas to America’s trading partners in Europe and Japan.

—Octavio M.C. Simoes, president of Sempra LNG

The three-train natural gas liquefaction facilities will have an export capability of 12 million tonnes per annum of liquefied natural gas (LNG), or approximately 1.7 billion cubic feet per day. Subject to final regulatory approval, satisfaction of conditions of the initial equity funding and first disbursement of the financing, construction on the project is expected to begin later this year. All three trains are expected to commence operations during 2018, with the first full year of operations in 2019.

Earlier this year, Cameron LNG received authorization from the Federal Energy Regulatory Commission to site, construct and operate the liquefaction facilities and was awarded conditional authorization from the US Department of Energy (DOE) to export LNG to non-free-trade-agreement (non-FTA) countries, including Japan and European nations. A final authorization from DOE is expected later this year.

Subject to the finalization of permits and other conditions to the equity and debt financing, Sempra Energy will have an indirect 50.2% ownership interest in Cameron LNG and the related liquefaction project, and the remaining portion will be owned by affiliates of GDF SUEZ, Mitsubishi (through a related company jointly established with NYK) and Mitsui, each with 16.6% stakes.

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Comments

Once we start large-scale export of natural gas, domestic prices will tend to approach world prices, and cheap domestic natural gas will be a nostalgic memory.

Yes, but look at all those wonderful jobs we will have in the tracking industry. (Sarcasm)

There are many positive implications of higher US natural gas export.

1) Higher US natural gas prices (over 6 USD per million BTU) will make US wind power competitive with natural gas combined cycle without subsidies. If the price rises to about 8 USD per million BTU wind power would grow fast enough to replace much use of natural gas in the US. Provided new coal power is banned.
2) The Marcellus shale is already profitable to drill at 4 USD per million BTU. Any higher price in the US will accelerate growth in production of natural gas and thereby slow the price increases in the US. It takes decades to build significant LNG export capacity and US production of natural gas will easily pick up to supply any export. My point is that it is going to take a long time or at least 15 years for US gas prices to reach 8 USD per million BTU as a result of LNG exports. Consumers will not notice.
3) Exporting US natural gas for 10 to 15 USD per million BTU at production cost of 3 USD is probably the most easy money that can be made in any US industry. The US could/should tax the profits from natural gas exports in order to lower income taxes for all Americans.
4) Important US allies in Europe, Japan and South Korea need to buy their gas from dependable suppliers. It is strategically the right thing to do for the US and its allies.

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