All CATEGORIES
☰ Menu
Ohio Utica Shale

Analysts offer look at LNG approvals, projects pending

By Bob Downing Published: September 12, 2013

A look at LNG from Sterne Agee analysts Michael Dudas and Patrick Uotila:

Our Call
Encouraging news flow continues to reflect the materialization of a strong U.S. LNG cycle that should offer a long tail of revenue and margin growth opportunities for select E&C firms. We believe portfolios with cyclical growth strategies should add E&C positions in Fluor, CB&I, Jacobs and URS Corporation in front of pending EPC awards surrounding North American natural gas monetization.

• Dominion (D, $58.61, NR) received Department of Energy approval for its $3 billion plus Cove Point project in Maryland. Dominion previously awarded the EPC contract to a joint venture of IHI Corporation (7013-TKS, 407 JPY, NR) and Kiewit (private). The Cove Point approval follows the last DOE approval, The Lake Charles project, by about a month. Front End Engineering and Design (FEED) on the Lake Charles project will be done by Technip (TEC-PAR, 89.42 EUR, NR). Several of the larger LNG projects have awarded FEED contracts which should be completed during 2014 when larger Engineering Procurement and Construction (EPC) contracts should be rewarded.

• We remain encouraged by the accelerated pace of approvals. So far, 4 LNG projects worth over $20 billion have been approved for U.S. export approval. The $6 billion Cameron LNG project remains second in line to receive the next approval. Joint ventures bidding on the EPC for this project include Fluor/JGC (1963-TKS, 3705 JPY, NR) and CB&I/Chiyoda (6366-TKS, 1141 JPY, NR). We believe Exxon's (XOM, $88.84, NR) $10 billion Golden Pass project remains around 10th in line for DOE approval. A CB&I/Chiyoda JV was awarded the pre-FEED on the terminal at Golden Pass while Worley Parsons (WOR-ASX, 22.77 AUD, NR) was awarded the pipeline pre-FEED.

• Freeport LNG (private) recently signed two additional deals to export gas to Asia supporting commitments to justify a third train which would bring the total project cost to $11 billion. We continue to expect a Freeport LNG announcement regarding an EPC contract where we think CBI remains well positioned in a JV with Zachry construction. Japan's Toshiba (6502-TKS, 413 JPY, NR) and SK (018670-KRX, 71700 KRW, NR) of Korea signed agreements for 2.2 million tons of LNG per year. We believe the first two trains together should come in $5.0-$6.0 billion. One train per year remains expected to open during 2017, 2018, and 2019.

• Our LNG project development base case scenario assumes more than 10 billion cubic feet (bcf) per day of proposed project capacity comes on line in North America during 2015-2020, with capital spending of $30 billion plus. Liquefaction terminals remain considerably expensive ($2-$10 billion) projects that support a very long construction cycle (4-6 years). Peripheral construction activity around LNG pipelines, processing and storage should offer incremental opportunities worth billions of dollars starting in 2013, lasting through 2017. We expect Front End Engineering and Design (FEED) activities during 2013-2015 and Engineering Procurement and Construction (EPC) awards during 2013-2018. We believe Fluor, Jacobs, and Chicago Bridge & Iron remain particularly well suited to win scope at each project. We expect the size and complexity of these projects to dictate multiple scopes providing several angles for participation in addition to the main EPC contract.

 

Print
Add This

SUBSCRIBE VIA RSS

OHIO.COM VIDEOS

See the most recent drilling report and an injection wells map From NewsOutlet.org
Prev Next

Utica and Marcellus shale web sites

Ohio Department of Natural Resources' Division of Oil and Gas Resources Management State agency Web site.

ODNR Division of Oil and Gas Resources Management. State drilling permits. List is updated weekly.

ODNR Division of Geological Survey.

Ohio Environmental Protection Agency.

Ohio State University Extension.

Ohio Farm Bureau.

Ohio Oil and Gas Association, a Granville-based group that represents 1,500 Ohio energy-related companies.

Ohio Oil & Gas Energy Education Program.

Energy In Depth, a trade group.

Marcellus and Utica Shale Resource Center by Ohio law firm Bricker & Eckler.

Utica Shale, a compilation of Utica shale activities.

Landman Report Card, a site that looks at companies involved in gas and oil leases.FracFocus, a compilation of chemicals used in fracking individual wells as reported voluntarily by some drillers.

Chesapeake Energy Corp,the Oklahoma-based firm is the No. 1 driller in Ohio.

Rig Count Interactive Map by Baker Hughes, an energy services company.

Shale Sheet Fracking, a Youngstown Vindicator blog.

National Geographic's The Great Shale Rush.

The Ohio Environmental Council, a statewide eco-group based in Columbus.

Buckeye Forest Council.

Earthjustice, a national eco-group.

Stop Fracking Ohio.

People's Oil and Gas Collaborative-Ohio, a grass-roots group in Northeast Ohio.

Concerned Citizens of Medina County, a grass-roots group.

No Frack Ohio, a Columbus-based grass-roots group.

Fracking: Gas Drilling's Environmental Threat by ProPublica, an online journalism site.

Penn State Marcellus Center.

Pipeline, blog from Pittsburgh Post-Gazette on Marcellus shale drilling.

Allegheny Front, environmental public radio for Western Pennsylvania.