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U.S. shale gas selling at record prices to overseas buyers

Cargoes sent to Mexico, Japan and Jordan for over $7/MMBtu

Petroleumworld 03 21 2017

A year after  Cheniere Energy Inc.'s Louisiana terminal shipped the first exports of U.S. natural gas from shale, cargoes from the facility are fetching higher prices than ever.

The export price of liquefied gas from Sabine Pass rose as high as $7.52 per million British thermal units in January, topping last year's high of $6.21, according to an Energy Department report Friday. Fifteen tankers sailed from the terminal that month and in February, the most since commissioning began at the facility last year.

Abundant gas supplies from America's shale basins have sailed from Sabine Pass to more than a dozen countries from Mexico to China, putting the U.S. on the path to becoming a net exporter of the fuel next year. Houston-based Cheniere swung to a profit for the first time since 2010 in the fourth quarter.

Sabine Pass has “ramped up faster than expected, so it seems like a pretty successful launch into commercial operation” that's being reflected in the export volumes, Jason Feer, head of business intelligence at ship broker Poten & Partners in Houston, said by phone Friday. “The prices have been fairly strong. For Cheniere Marketing that's been good to see.”

Cheniere is in the process of starting up the third liquefaction plant at Sabine Pass, which chills gas so it can be transported by ship, and is expected to bring online a fourth one there later this year. Royal Dutch Shell Plc has contracted most of the capacity for the first plant at Sabine Pass and Cheniere's marketing arm has the ability to trade any spare volume.

Shipments of LNG priced at $7.52 per million were sent to Mexico, Japan and Jordan, the government report showed. A Cheniere spokeswoman said by email Friday that she couldn't immediately provide comment.

Story by Jonathan Crawford and Naureen Malik from Bloomberg

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