ExxonMobil and Qatar Petroleum have given the go-ahead for a $10bn-plus project to export liquefied natural gas from the US, opening a new route for low-cost resources unlocked by the shale revolution to reach world markets.
The Golden Pass LNG project in Texas, a conversion of a site originally built as a gas import facility, is intended to come on stream in 2024, exporting 16m tonnes of LNG a year.
It is owned 70 per cent by Qatar Petroleum and 30 per cent by Exxon, extending a longstanding partnership between the two companies that includes co-operation on giant LNG export projects in Qatar.
Darren Woods, Exxon’s chief executive, said in a statement that Golden Pass would “provide an increased, reliable, long-term supply of liquefied natural gas to global gas markets, stimulate local growth and create thousands of jobs”.
The project is expected to create about 9,000 jobs over its five-year construction period, and more than 200 when in operation.
Mr Woods also highlighted the importance of the financial strength of Exxon and Qatar Petroleum in being able to make the investment. Many companies are looking at building new LNG export plants in the US to take advantage of its low-cost gas production, but are still looking for long-term contracts they need to secure financing.
Wood Mackenzie, the energy research company, suggested in December that it expected three US LNG projects to be given the green light to go ahead in the first half of this year: Golden Pass, Venture Global’s Calcasieu Pass, which has signed contracts with BP and Royal Dutch Shell, among others, and an expansion at Cheniere Energy’s Sabine Pass plant.
The Center for LNG, an industry group, welcomed the announcement. Charlie Riedl, the group’s executive director, said the announcement “paves the way for a great year for US LNG.”
He added: “The size of Golden Pass is exciting, yet amazingly it represents only a tiny fraction of the enormous supply of natural gas that is domestically available.”
Analysts have suggested that the investment in the US is linked to Qatar’s announcement last December that it is withdrawing from Opec, the oil producers’ cartel, after 57 years.
Its energy minister said the decision had come after the resource-rich country had reviewed the ways it could enhance its role abroad while shifting the focus of the country towards gas.
The US Congress is considering legislation that would make it illegal for any foreign state to limit the production or distribution of oil or gas, or take any other action that has “a direct, substantial, and reasonably foreseeable effect” on fuel supplies and prices in the US.
The enforceability of such a law has been debated, but Opec member states with valuable assets in the US could be at risk if the legislation passes.
Amid souring relations with its Arab neighbours, which have imposed a trade and travel embargo on the country since June 2017, Qatar has sought to bolster its economy through higher levels of LNG production.
It is already one of the largest exporters of LNG in the world, alongside Australia, and plans to increase output from 77m to 110m tonnes a year by 2023-2024. It is undertaking a mega expansion project at home as well and is engaged in talks with international energy companies.