Shell, BP and Statoil have held preliminary discussions about exporting LNG cargoes from US utility Dominion’s proposed liquefaction facility at Cove Point, Maryland.
The talks have yet to progress to formal negotiations, according to a source, and Dominion is still listening to offers from other potential customers understood to include Asian players such as Korea Gas and Sumitomo.
The European companies are being seen as more serious about securing the liquefaction rights to the facility because of its proximity to their home markets, said a source with knowledge of the negotiations.
The trio enjoy an advantage because they are already import partners at Cove Point.
The terminal operator is looking to sign up one to three companies under export capacity contracts. The early nature of the discussions may put Dominion slightly behind its schedule, which had called for capacity contracts to be signed by the end of the first quarter, another source said.
Unlike Cheniere Energy’s facility at Sabine Pass on the Gulf Coast, which includes a provision to procure the gas that companies will use for export, Cove Point’s model only calls for leasing liquefaction capacity. Shell and Statoil already have significant upstream operations in the Marcellus shale gas play, though additional pipeline infrastructure would probably be needed to link their fields to the facility.
BP currently does not have operations in Appalachia but the company has an active trading operation that could source gas for export from the open market. An upstream entry into Marcellus may also be possible.
KBR and CB&I handled the pre-front-end engineering analysis for the liquefaction proposal and both will work on competing full FEED studies for the facility.
Dominion is initially planning up to two trains that will process about 750 million cubic feet of gas per day into 5 million tonnes per annum of LNG. First cargoes are planned for 2016.
