October 9, 2015 [OPIS] - Spanish contractor Duro Felguera announced Wednesday that it had been awarded a turnkey contract to build the Penco-Lirquen LNG Regas Terminal in the Penco-Lirquen harbor on Chile's Concepcion Bay.
Both the regas terminal and the accompanying onshore gas-fired power plant must receive environmental approval before work can begin.
The new power plant, Central El Campesino, is a 640-MW combined-cycle gas turbine (CCGT) installation to provide baseload power to the grid serving Chile’s second largest urban area, Concepcion-Talcahuano, in the southern Region 8, Bio-Bio.
Region 8 has been on a major building program to increase import capacity of gas-based fuels. OPIS ran an article on Feb. 18 about completing construction on the Hualpengas LPG Terminal located on San Vicente Bay, just to the west of Concepcion Bay. By adding a new 30,000 cbm tank, the project developers raised capacity of the facility from 5,600 tons of LPG to around 23,000 tons.
Now the region is to get an LNG terminal to complement the primary 2.5 million tons per annum (MTA) Quintero terminal in the center of the country and the 1.37 MTA Mejillones regas terminal in Chile’s far north.
From the perspective of global LNG, the most interesting element of the project is that Cheniere Energy is present as a 50% partner in Penco-Lirquen. Thus, the founding father of U.S. LNG exports, on the way to an astounding 60 million tons per annum by 2025, is now positioning itself on the receiving end as a customer of its own LNG.
Penco-Lirquen will be the first physical facility to backstop the tremendous marketing program unfolding under the new Cheniere Marketing International (CMI) unit under the leadership of CMI President Meg Gentle. CMI is being set up as the default buyer of any LNG from Cheniere’s liquefaction projects at Sabine Pass and Corpus Christi that is not already committed by contract to other buyers.
As of the latest announcement from CMI on Sept. 21, CMI’s LNG portfolio is expected to reach 9 million tons per annum in four to five years. At this point, the company has sold a total of 92 cargoes to buyers in Europe and Asia through 2018. CMI indicates that the gas volume will be around 340 Bcf, which provides a handy yardstick for average LNG cargo size. That would be 3.7 Bcf per cargo, which translates into 71,700 tons per ship.
The primary facility at Concepcion Bay is the 640-MW Central El Campesino being developed by local company BiobioGenera in a joint venture with Electricite de France (EDF). El Campesino is required to supply local power distributors with 3,800 gigawatt hours (GWh) per year starting in January 2019, under a long-term power purchase agreement awarded in a supply tender at the end of 2014.
On July 30, Cheniere announced a 20-year purchase and sale agreement (PSA) with El Campesino for 600,000 tons per annum (600 KTA) sourced from Corpus Christi Liquefaction to be delivered by ship starting in 2019. BiobioGenera is also a 50% partner in Penco-Lirquen regas terminal, but this time teamed up with Cheniere as its J.V. partner.
Using our handy conversion factors for the LNG trade, OPIS calculates that 600 KT of LNG x 51.59 is 30,954 MMcf of gas per year, or 84.8 MMcfd. This is a helpful guide in trying to figure out the size of the regas terminal. Published reports of this vital quantity are contradictory, and the only definite capacity number in project announcements is the 15 million cubic meters per day in the Duro Felguera news release yesterday.
But 15 million cbm x 35.3 translates into 530 MMcfd. That number is almost certainly erroneous since it would make Penco-Lirquen the largest of Chile’s three LNG terminals, much bigger than the 350 MMcfd sendout capacity of Quintero or the 194 MMcfd from Mejillones.
The other factor that points to a much smaller size, in addition to the 85 MMcfd supply deal with CMI, is the $175 million price tag on the contract awarded to Duro Felguera. Capex for big regas terminals runs up around $500 million. Based on these conjectures, OPIS hazards the guess that Penco-Lirquen might be sized around 1 million tons per annum, 140 MMcfd sendout.
The regas terminal will be a Floating Storage and Regasification Unit (FSRU), and the Duro Felguera (DF) announcement talks about putting it on a “terminal island.” The terminal island will be capable of berthing two ships, one being the FSRU and the other being the LNG delivery vessel. Target completion date for the facility is June 2018.
The regasified gas will move to shore via a subsea pipeline which will then continue on land to Central El Campesino and then on to a connection with the existing gas grid in the area. DF has a turnkey contract to design, build and commission all of this, including the pipeline connection to shore.
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