Cheniere & Tellurian Release Corporate Reports

Cheniere Energy, Inc. - owner and operator of the Sabine Pass and Corpus Christi LNG projects - and Tellurian Inc. - of the upcoming Driftwood LNG project - released corporate reports this week:

Forecasting growing global demand for American gas, the juggernauts are investing heavily to build LNG infrastructure. Tellurian reports it is on track to reach its final investment decision (FID) on Driftwood 1-H 2019.

WSJ: "Don't Get Complacent About Natural Gas."

American underground natural gas reserves are reported to sit some 24% lower year-over-year and 20% lower than the five year average this August. The Wall Street Journal warns these conditions could foreshadow a winter of strained supply and ballooning prices.


The market's hubris is to blame, the author implies:

The main reason traders are so sanguine is that the U.S. has been in a natural-gas glut for the past decade.


The ongoing natural gas surplus might turn out to be short-lived, after all.

LNG: Heir to Traditional Maritime Fuels


SEA/LNG – a non-profit, multi-sector industry coalition – advocates for the replacement of traditional maritime fuel with LNG. In a recent statement, SEA\LNG explains the environmental importance of investment in the LNG industry. Far more sustainable a power source than traditional mediums like coal and oil, LNG will continue to prompt reductions in greenhouse gas (GHG) emissions as well as improvements in air quality.


While detractors point to LNG’s non-negligible GHG effect, SEA\LNG argues the evaluation of LNG use from an exclusively GHG perspective is “not responsible”.  Alongside GHG appraisals should come air quality assessments when considering LNG as an alternative fuel for marine vessels. On both fronts, the LNG alternative affords great benefits.

Traditional Maritime Fuels & The LNG Alternative

Currently, diesel propulsion engines are the most commonly used engines in the shipping industry. Diesel engines run on “bunker fuels” which emit diesel particulate matter along with other harmful substances. According to the environmental protection agency, “diesel particulate matter is associated with a host of adverse health effects, including cancer.” [2] According to SEA\LNG, the replacement of standard maritime gases with LNG can decrease shipping industry greenhouse gas emissions by as much as 20%, nitrogen oxide (NOx) by 90%, and particulate matter emissions nearly full-stop [1]. As enhancement of the technology continues, emissions are likely to be reduced even further. Concerning the prospect of applying electrical power, the research is skeptical; while hybrid end fully electric batteries can be clean alternatives for short sea operations, they are not so suitable for capacity-demanding deep-sea voyages.


 “It should be noted that the infrastructure for LNG supply is already there; the focus is on investments in the last mile”. As per SEA/LNG’s statement, the onus is on industry leaders to lead in LNG conversion and development. In the meantime, organizations like SEA/LNG and the Society for Gas as Marine Fuel (SGMF) will continue to motivate the transition through empirical analysis and data gathering. The transition from traditional maritime fuel consumption to that of liquid natural gas is not just possible but choice worthy. The opportunity, it seems, is the LNG industry’s to loose.



[2] US Environmental Protection Agency (EPA), Washington, DC. "Control of Emissions from New Marine Compression-Ignition Engines at or Above 30 Liters Per Cylinder." Final rule. Federal Register, 68 FR 9751, 2003-02-28. [Accessed 9 Jul. 2018].

Tariffs Meet LNG

On June 1, 2018, the Trump administration imposed far-reaching steel and aluminum tariffs targeting China but extending well beyond. To what degree will the LNG industry shoulder the effects?

The Price of Protectionism

As Tellurian Chairman Charif Souki recently reflected, American steel tariffs “may significantly increase our construction costs.” We at Gas Land have, unfortunately, received indication from several vendors and sub-suppliers describing the extent to which the tariffs have already spiked production and operating costs, especially impacting piping and valve pricing.  

Tit for Tat

Likely to follow American tariffs are China’s own retaliatory measures pertaining to Western imports. One of the world’s largest LNG importers, China is simultaneously the global economy’s principal steel exporter. The country is at once a beneficiary of LNG infrastructure and instrumental to its construction.

As noted in one of our recent blog entries (link blog post), the United States is one of the fastest growing LNG exporters to the Asian world – a trade war would likely reverberate across industries, endangering confidence in economic exchange. What would stop China from taxing American natural gas?

Mounting Pressures

Already struggling to secure adequate investment and sufficiently long-term contracts in a post-boom market, prospective LNG projects are more budget conscious than ever. Any price fluctuation or mere diffidence in the prospect of steady trade rules could prompt recalculation of prior investment deals/requirements. The tedious final investment decision (FID) process for hopeful LNG projects may thus become even less straightforward. More, complications with Federal Energy Regulatory Commission (FERC) approval follow suit. Should steel tariffs continue to diminish the buying power of American builders and manufacturers, the LNG industry will most certainly feel the effects. LNG players should expect nothing less than a cascade of negative externalities.

For LNG, it is too soon to decipher the full impact of steel and aluminum tariffs. Yet for current and pipelined projects, immediate consideration and reassessment of budgets seems immanent.