LNG, Pipelines and Midstream

On 24 February 2016 a tanker called the Asia Energy sailed from Sabine Pass, on the Louisiana–Texas border, carrying the first cargo of liquefied natural gas ever exported from the lower 48 United States. It was bound for Brazil, bought by Petrobras (reported). The terminal it left had been built to do the opposite. Its owner, Cheniere Energy, had spent about $1.5 billion (reported) on tanks, berths and regasification equipment designed to unload imported LNG and send about 4 billion cubic feet a day into the US grid, on the mid-2000s consensus that American gas production had peaked. When it opened in April 2008, Henry Hub gas cost about $7–13 per million British thermal units (EIA). By 2009 shale had pushed it to about $3–4. The terminal was nearly idle, and Cheniere, a company that had never earned an operating profit, was carrying the debt.

Its founder, Charif Souki, a former investment banker, decided in 2010 to reverse the flow: cool American gas to −162°C and ship it abroad. That required permission and buyers. The Department of Energy granted Sabine Pass the first authorisation to export to countries without a US free-trade agreement in May 2011 (reported), and between October 2011 and early 2013 Cheniere signed 20-year sale-and-purchase agreements with BG Group, Gas Natural Fenosa, GAIL, KOGAS, Total and Centrica. Each buyer agreed to pay 115% of the Henry Hub price for the gas it took, plus a fixed fee for every unit of contracted capacity, about $2.25/MMBtu in BG's case and about $2.49–3.00 for the others, whether or not it lifted a cargo (reported). Against those fees Cheniere raised non-recourse project debt and took the final investment decision on its first two liquefaction trains in August 2012.

By the time the first cargo sailed, the company that had done all this had fired its founder. Carl Icahn had built a stake of about 8% in August 2015, arguing that the contracted business was worth more run as infrastructure than as a platform for expansion, and on 13 December 2015 the board terminated Souki (reported). The timing of the first cargo was poor: Henry Hub was about $2/MMBtu and Asian spot LNG about $5–6, the narrowest spread in years. It did not matter. The fees did not depend on the spread. Ten years later Cheniere was the largest US LNG exporter, with about 30 million tonnes a year (mtpa) of capacity at Sabine Pass and about 25 mtpa at Corpus Christi once Stage 3 was finished on 28 August 2026; it exported a record 188 cargoes in the third quarter of 2026 and guided to $8.75–9.25 billion of adjusted EBITDA for the year (company).