Chevron Corporation announced on July 19 that its Australian subsidiaries signed a Heads of Agreement (HOA) with Korea Gas Corporation (KOGAS) for the delivery of liquefied natural gas (LNG) from the Chevron-operated Wheatstone natural gas project in Australia.

Under the HOA, KOGAS expects to purchase 1.5 million tons per annum (MTPA) of LNG for up to 20 years from the Wheatstone project participants. Approximately 75 percent of the 1.5 MTPA is expected to be purchased from Chevron, with the remainder from other Wheatstone hub participants.

In addition to being a foundation customer of the Wheatstone project, KOGAS signed an equity HOA to acquire a 5 percent interest in each of Chevron's Wheatstone field licenses and in the Wheatstone project LNG and domestic gas processing facilities. Including this equity participation, KOGAS plans to take delivery of a total of approximately 1.95 MTPA of LNG from the Wheatstone project.

Front-end engineering and design is currently being completed on the Wheatstone project ahead of a planned final investment decision in 2011.

In September 2009, KOGAS and Chevron also agreed to an HOA for the delivery of 1.5 MTPA of LNG from the Gorgon project for 15 years, with an option to extend the agreement for an additional five years.

In October 2009, Chevron announced it had signed a binding agreement with Apache Julimar Pty Ltd., a subsidiary of the Apache Corporation, which will assume a 16.25 percent equity interest in the Wheatstone project, and with KUFPEC Australia (Julimar) Pty Ltd, a subsidiary of the Kuwait Foreign Petroleum Exploration Company k.s.c., which will assume an 8.75 percent interest in the project. Chevron is responsible for the marketing of LNG from the Wheatstone project.

Inpex Corporation has announced on July 15 that the Ichthys Project joint venture (INPEX Browse, Ltd. 76%, Operator, and Total E&P Australia 24%) has reached a significant milestone with the release of its Draft Environmental Impact Statement (Draft EIS) for an 8 week public review and comment period.  

The Draft EIS applies to all aspects of the proposed Ichthys Gas Field Development Project, including the offshore processing facilities at the Ichthys Field in the Browse Basin, 200 kilometres off the coast of Western Australia; subsea gas pipeline to Darwin; and onshore processing facilities in Darwin. 

The Project is designed to produce 8.4 million tonnes of liquefied natural gas (LNG) and 1.6 million tonnes of liquefied petroleum gas (LPG) per annum, along with 100,000 barrels of condensate per day at peak. The operating life of the Project is expected to be 40 years.

The Draft EIS is the culmination of several years of comprehensive surveys and studies to define the existing natural and social environment; potential environmental impacts due to construction and subsequent operation activities; social and economic benefits and impacts from the Ichthys Project; and proposed management controls to limit potential impacts.

Emerson Process Management announced on July 9 that it has been appointed by Technip Samsung Consortium to serve as Main Automation Contractor for the Shell “Prelude” project, which will potentially be the world’s first Floating LNG (liquefied natural gas) development.  Emerson Process Management was selected by Technip Samsung Consortium due to its Global Framework Agreement with Shell, announced in February 2010.  This is the first project award for Emerson Process Management resulting from its Global Framework Agreement.

Supporting Technip Samsung Consortium, the project’s overall front end engineering and design contractor, Emerson will be responsible for providing the strategy, design, and engineering of the process control and monitoring technologies to support the production facility.

Floating LNG unlocks gas reserves that would otherwise be stranded as they might be too far offshore.  It is the next step in LNG production, which eliminates the need for transportation pipelines of gas to shore and onshore processing.  The new production facility will operate as an integrated extraction, gas processing, and liquefaction plant, all directly above the gas reserves.

With rich experience in offshore production and project execution, plus global leadership in LNG automation, Emerson is perfectly positioned to support Shell’s goals for the initial construction project and long-term operational success.

The Shell Floating LNG facility is expected to have dimensions of 480 meters in length by 75 meters in width, with a production capacity of 3.5 million to 4 million tons of LNG per year, with the ability to also process and export liquefied petroleum gas and condensate depending on gas composition.  When fully ballasted, the vessel will weigh an estimated 600,000 tons, and it also has the flexibility to relocate to another gas field once production at one gas field is complete.

The Floating LNG project is located in the remote Browse Basin off the coast of Western Australia.  The project is currently in the engineering and design phase of development and subject to a final investment decision.

Shell and Emerson Process Management entered into a Global Framework Agreement earlier this year, positioning Emerson as a Main Automation Contractor for all of Shell’s operating businesses.  This agreement aligns with Shell’s strategy to reduce traditional project bidding in favor of strategic relationships and is consistent with industry trends toward collaborative, performance-based engagements that improve value for both supplier and customer.

Foster Wheeler AG announced on June 28 that its Global Engineering and Construction Group has been awarded a contract by GDF SUEZ to carry out the pre-front-end engineering design (pre-FEED) for the development of an onshore LNG plantand offshore gas gathering infrastructure. The project seeks to establish a national gas transportation network linking Cameroon's offshore gas resources with the State-sanctioned onshore sitenear Kribi on the southern coastline of Cameroon. Foster Wheeler is working with GDF SUEZ and GDF SUEZ's partner, Cameroon's Société Nationale des Hydrocarbures (SNH).

The Cameroon LNG project involves a single-train onshore LNG plant with a production capacity of up to 3.5 million tons per annum. The project also includes an upstream gas gathering system and subseapipeline tie-ins to offshore production facilities. In carrying out the pre-FEED for the entire mid-stream project, Foster Wheeler will develop the preliminary design basis for the liquefaction facility, gas gathering and treatment facilities and LNG export facilities, and will prepare capital cost estimates and other documentation. The pre-FEED is scheduled to be completed in early 2011.

Repsol announced on June 24 that the delivery of its first Liquefied Natural Gas (LNG) shipment, onto the Barcelona Knutsen Tanker, from the Pampa plant Melchorita (Peru) which was officially inaugurated on June 10th. 

This shipment marks the start of Repsol’s exclusive-rights contract to market the entire output of the plant, in accordance with the agreement signed with Peru LNG in 2005 for a term of 18 years from the start of commercial operations. In terms of volume, this will be the biggest LNG acquisition ever made by Repsol. 

Additionally, Repsol has an LNG supply contract with the Federal Commission of Electricity (CFE), Mexico for the natural gas terminal at Puerto de Manzanillo, on the Mexican Pacific coast. This contract envisages the supply of LNG to the Mexican plant for a period of 15 years and with a volume of at least 67 bcm, which is due to be operative during the fourth quarter of 2011. The Manzanillo plant, which will supply power plants of the Federal Commission of Electricity (CFE) in West Central Mexico, will source the gas from the Peru LNG plant. 

The Barcelona Knutsen Carrier, with a capacity of 173,400m3, is heading for the Costa Azul energy terminal in Ensenada (Baja California), Mexico with its first LNG delivery. The Carrier, which was delivered last April to Repsol, is the first of six vessels assigned to the Peru LNG project (four of which are long term, two short/medium term).

The plant, with a nominal capacity of 4.4 million tons per year, will process 17 million cubic feet of gas per day, equivalent to 15% of the annual gas consumption in Spain. It has the two largest storage tanks in Peru (each holding 130,000 m3 of LNG) and a marine terminal that stretches more than a kilometre in length, able to receive carriers with a capacity of between 90,000 m3 and 173,000 m3.

The natural gas supply comes from the Camisea gas field, in which Repsol also has a 10% stake, and is fed through a 408-kilometre gas pipeline built as part of the Peru LNG project.

CB&I announced on June 22 that PERU LNG has successfully produced its first cargo of LNG. CB&I is the engineering, procurement and construction contractor for the full scope of the project, the first LNG liquefaction plant in South America.

Hunt Oil Company is the owner and operator of PERU LNG, partnering with SK Energy of South Korea, Spain's Repsol YPF and Marubeni of Japan. The project is located in the remote Pampa Melchorita area about 170 kilometers south of Lima.

The plant, with capacity of approximately 4.5 million tons per year, cools the natural gas to -160°C (-260°F), reducing the volume by approximately 600 times to facilitate storage and transportation. The liquefaction plant utilizes a propane pre-cooled mixed component refrigerant process, four refrigeration compressors, two gas turbines and associated systems. In addition, CB&I constructed a gas treatment plant, power generation utilities, two 130,000 cubic meter LNG storage tanks, the topsides of the 1,300 meter trestle and the ship loading facilities.

CB&I directly employed more than 5,600 workers at peak construction on the project, which indirectly supported another 25,000 local jobs. About 90% of CB&I's workforce was comprised of Peruvian employees who spent nearly one million hours in training to learn the necessary skills and safety procedures required for a project of this magnitude. Employees achieved an outstanding safety record, working more than 27 million hours on the jobsite with a lost-time incident rate of 0.01.

Officials of Sempra LNG, a subsidiary of Sempra Energy, reported that, on June 18, they learned of a Mexican federal district court issuing an order on June 17 directing Mexican regulatory authorities to provisionally suspend authorizations for the operation of Sempra LNG’s liquefied natural gas (LNG) terminal near Ensenada, Mexico, pending further legal proceedings.  These legal proceedings will address an action by Ramon Eugenio Sanchez Ritchie based on his claim of possession of a land parcel adjacent to the terminal property.

The June 17 court order was issued, without notice or an opportunity to be heard to Sempra LNG, which has been engaged in a long-standing dispute with Sanchez Ritchie over this land parcel.  The company purchased the parcel in 2006 after already having obtained all permits necessary to construct and operate the terminal.  None of these permits are conditioned on ownership of the land parcel in dispute.

KBR announced on June 15 that they have received final change order agreements with its joint venture partners Technip of France and JGC Corporation of Japan, for the Yemen LNG Plant. The contract on this lump-sum turnkey project, valued at more than $2 billion, was first announced in September 2005. As announced in KBR's First Quarter 2010 Earnings Call, Train 2 of the Yemen project achieved ready for start-up status on March 12 and care, custody and control of the project has been turned over to the client. The final change order agreements generate KBR after tax income of approximately $27 million or $0.17 of earnings per diluted share.

AMEC announced on June 10 that they have been appointed by South Hook LNG Terminal Company Limited to undertake a three-year term services contract for one of the largest and newest Liquefied Natural Gas (LNG) terminals in Europe, the South Hook Terminal in South Wales.

AMEC will be the design company for the newly completed terminal, providing it with essential engineering support to ensure round-the-clock delivery of gas into the national transmission system. AMEC's scope of work includes engineering conceptual design, detailed design, procurement, construction, commissioning and project management services.

AMEC will be working in collaboration with Black and Veatch Ltd, with whom it has a strategic partnering agreement and who will provide specialist LNG knowledge.

Cheniere Energy Partners, L.P., a subsidiary of Cheniere Energy, Inc.,  announced on June 3 that its general partner's Board of Directors has approved the initiation of a project to add liquefaction services at the Sabine Pass LNG receiving terminal in Cameron Parish, Louisiana. Adding liquefaction capabilities would transform the Sabine Pass terminal into a bi-directional facility capable of liquefying and exporting natural gas in addition to importing and regasifying foreign-sourced LNG. Cheniere expects to take advantage of the existing infrastructure at the Sabine Pass terminal to offer customers bi-directional services at attractive pricing. Based on preliminary estimates, the expected fee for bi-directional services will be approximately $1.40/MMBtu to $1.75/MMBtu. This added service would provide customers with an attractive option to source natural gas supply from the U.S. pipeline grid at prices indexed to Henry Hub.

The Sabine Pass site can readily accommodate up to 4 LNG trains capable of processing approximately 2 Bcf/d of natural gas. The capacity of each liquefaction train would be approximately 3.5 million tons per annum (mtpa). The initial project would include two trains with liquefaction capacity of approximately 1 Bcf/d. Further expansion would be considered based upon customer interest.

Cheniere estimates that it can construct liquefaction capacity comparable to liquefaction expansion economics since the Sabine Pass terminal already has many of the needed facilities for an export terminal. Cheniere would use its existing infrastructure, including five storage tanks and two berths at the Sabine Pass terminal, as well as Cheniere Energy Inc.'s 94-mile Creole Trail Pipeline, which would be reconfigured as a bi-directional system. The 853-acre Sabine Pass site is strategically situated to provide export services given its large acreage position, proximity to unconventional gas plays in Louisiana and Texas, and its interconnections with multiple interstate and intrastate pipeline systems.

Cheniere plans to work with Bechtel Oil, Gas and Chemicals, Inc. to design and construct the liquefaction facilities, using the ConocoPhillips Optimized Cascade(R) liquefaction technology. This proven process has been successfully deployed at several LNG export terminals around the world, and offers a high degree of reliability and control.

Assuming typical project development scenarios, Cheniere anticipates LNG export could commence as early as 2015. Cheniere plans to make a request to the Federal Energy Regulatory Commission to begin the NEPA pre-filing process by the end of June 2010. Cheniere will work with federal and state regulators to facilitate the permitting process. Commencement of construction is subject to regulatory approvals and a final investment decision contingent upon Cheniere obtaining satisfactory construction contracts and long-term customer contracts sufficient to underpin financing of the project.