With U.S. and Texas natural gas production at record levels, the United States has gone from shortage to a surplus in just a few years.
The Port of Brownsville stands to benefit greatly in the rush to export some of that surplus in the form of Liquefied Natural Gas to meet growing worldwide demand. Before it can be transported overseas, natural gas has to be compressed via liquefaction.
From the perspective of many of the companies scrambling for a piece of the action, Brownsville is the place to be, thanks largely to its proximity to the massive shale and conventional gas fields of Eagle Ford in South Texas.
The port is popular with potential LNG hub developers also because there’s plenty of room for big projects.
“These projects are large footprints of land,” said Eddie Campirano, port director and CEO at the Port of Brownsville. “There are not a whole lot of places left in deep sea ports where you have that kind of land available.”
Gulf Coast LNG was the first, signing a lease option agreement with the port two years ago. That company and two other of the port’s LNG suitors have submitted applications to the Department of Energy for permission to export to Free Trade Agreement and/or non-Free Trade Agreement countries.
The most recent, Texas LNG, submitted its FTA and non-FTA applications Dec. 31. The company’s principal executives were in town earlier this week to tour the site and discuss details of the project with officials from the port, the Brownsville Economic Development Council and the Brownsville Public Utility Board.
CEO Vivek Chandra, Mike Maloney, chief technical officer; and Langtry Meyer, chief operating officer, also met with Mayor Tony Martinez and Rep. Filemon Vela’s office.
Texas LNG proposes to build a mid-sized LNG liquefaction facility and export terminal on the Brownsville Ship Channel that would get most of its feed gas from the Eagle Ford fields, via a pipeline that does not yet exist.
“At this point, we expect our FTA permit to happen in the next two months,” Chandra said. “The non-FTA will happen when it happens. It’s a political decision. I have very little control over that. We’re not that worried about that.”
The United States has FTAs with 20 countries, including Canada and Mexico. Chandra said his project, which would serve a niche market not served by much larger export ventures, is feasible even without being able to sell to non-FTA nations.
“We think that we can actually place all of our gas in FTA markets,” he said. “We would like to have the opportunity to place it in non-FTA markets, but that’s not a constraint for us.”
The project’s next big hurdle is submitting an application to the Federal Energy Regulatory Commission for a permit to begin work on the project. The step requires “serious studies” on the part of Texas LNG, which will soon announce a big-name engineering firm for the project, Chandra said.
“We are now in the process of talking about getting socio-economic studies done,” he said. “We are talking to the university and some other people as well, and we have environmental work to get done.
“The port and the mayor’s office have agreed to share a lot of the reports that have been done for other projects that are in the public domain.”
Chandra said that ideally work on the FERC application will begin in the next few weeks.
“At that point it becomes very real, because we start spending lots and lots of money,” he said. “Hopefully by the end of the year we can submit our FERC application.”
Maloney said the Texas LNG project calls for “innovative engineering.” The liquefaction facility itself would be built on a barge, probably at an Asian shipyard. Once at the Port of Brownsville, the liquefaction facility would be moved to land.
It sounds like a big deal from an engineering standpoint, but it’s really not, Maloney said.
“The technology’s quite simple and first started in the early ’70s in the North Sea, where they did exactly the same thing but in reverse,” he said. “They would build the entire platform on land and then excavate around that, build a seawall, flood it and float it offshore. I have done a couple of those in the North Sea in the ’70s. All we’re doing is taking that process and putting it into reverse.”
Chandra said that, just before traveling to Brownsville, the group was in Japan and Korea trying to generate interest in the project. He said he’s been busy promoting Brownsville around the globe as an ideal place for LNG projects.
“That attracts a lot of investment,” he said. “That attracts a lot of attention. It’ll just put Brownsville on the map. We want to be the leader in doing that.”
Campirano said LNG would be economically beneficial in multiple ways, starting with the direct benefit of companies already paying to option large pieces of property at the port. Long term, each project would take an investment of hundreds of millions, if not billions, of dollars to develop, which would have a major impact on the tax base, he said.
Then there are jobs: Texas LNG estimates the project would create 300 temporary jobs during construction, 150 long-term direct jobs and up to 500 indirect jobs. Campirano said a LNG project would be a “huge shot in the arm” in terms of employment.
“If we’re able to get even one project it would be a big boon for the area,” he said.