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Cheniere's Sabine Pass Train 5 to Come Online in August

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Cheniere Energy, Inc. LNG recently announced the substantial completion of Train 5 of its Sabine Pass Liquefaction (SPL) project. The commissioning of the train has been completed and its custody has been handed over to Cheniere from the contractor Bechtel Oil, Gas and Chemicals. Train 5 is set for first commercial delivery in August 2019, under contracts with TOTAL S.A. TOT and Centrica plc.  

While Trains 1, 2, 3 and 4 of the SPL project are functional and Train 5 is likely to come online soon, Train 6 is being commercialized and has secured the necessary regulatory approvals. Notably, each train is expected to have a capacity of about 4.5-4.9 million tons per annum. 

Cheniere’s First-Mover Advantage in LNG Market

Being the first company to receive Federal Energy Regulatory Commission’s approval to export LNG from its 2.6-billion cubic feet per day Sabine Pass terminal in Cameron Parish, LA, Cheniere definitely enjoys a distinct competitive advantage. Importantly, the Zacks Rank #3 (Hold) company currently exports to around 30 countries worldwide, as the firm aims at turning the natural gas glut in the United States into export revolution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Late last year, Cheniere achieved a major milestone with the dispatch of the first cargo from the Corpus Christi liquefaction (CCL) project. Under the CCL project, the company intends to develop three trains, each having a nominal production capacity of 4.5 million metric tons of liquefied natural gas (LNG) per year. Notably, the CCL project is the third export facility in the United States that produces LNG, after Cheniere’s Sabina Pass and Dominion Energy, Inc.’s D Cove Point terminal.

Cheniere looks well positioned to maintain its revenue growth trajectory over the coming years, on the back of solid operations and long-term contracts. Amid the expectation of a potential trade truce between the United States and China, Cheniere is in talks with China’s state-run Sinopec SNP to supply about $18 billion of liquefied natural gas.

U.S. LNG Exports to Witness a Boom

In 2018, the United States exported 3.6 billion cubic feet per day (Bcf/d) of LNG per day, with Cheniere’s Sabine Pass facility accounting for 77.7%. While the country’s current export capacity is 3.6 Bcf of natural gas per day, the figure is likely to increase to 8.9 Bcf/d by the end of 2019, with nearly 18 LNG production units expected to come online over the next year. Notably, the United States is likely to become the third-largest exporter of LNG, given these enhancements, after Australia and Qatar.

Out of the 18 new LNG production units, three will be from Cheniere itself. Meanwhile, Sempra Energy is likely to bring online all the three trains from its Cameron LNG project by the end of 2019. Importantly, Kinder Morgan, Inc. is also likely to bring into service 10 of its production units at the Elba Island LNG facility by the end of 2019. Moreover, first two trains at the Freeport LNG facility will become functional by 2019-end. These developments will surely boost United States’ efforts to become a global gas power.

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Dominion Energy Inc. (D) : Free Stock Analysis Report
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