The unexpected plunge in the price of crude oil is throwing the energy markets in turmoil. It could force energy companies to defer $150 billion in future projects. However, it’s not expected to cause much near-term damage to LNG projects in the U.S, despite the fact that the price of oil is an important component in LNG prices around the world. At least that’s the view of analysts at energy intelligence firm, Wood Mackenzie, who see LNG’s momentum in America continuing in 2015.
Construction boom continues
Wood Mackenzie sees 2015 as a pivotal year for America’s budding LNG industry. The industry currently has four major LNG export projects under construction including Freeport LNG, Dominion Resources’ (NYSE: D ) Cove Point LNG, Sempra Energy’s (NYSE: SRE ) Cameron LNG, and Cheniere Energy’s (NYSEMKT: LNG ) Sabine Pass LNG, which is expected to begin exporting its first LNG cargos later this year. None of these projects are expected to be affected by the current turmoil in the energy market as all have signed up much of their LNG capacity under long-term contracts meaning construction should continue as scheduled.
Meanwhile, Wood Mackenzie sees two more projects beginning construction before the end of the year. One of the two is expected to be Cheniere Energy’s Corpus Christi project, which is seen receiving its Final Investment Decision early this year. That project looks like a lock to begin construction as it recently signed a long-term transportation and storage agreement with Kinder Morgan (NYSE: KMI ) , which is going to build a new pipeline to supply gas for Cheniere’s facility.
The other project that Wood Mackenzie expects to see begin construction this year is Elba Island, which is also known as Southern LNG. The project is a joint venture between Kinder Morgan and Royal Dutch Shell Plc (NYSE: RDS-A ) (NYSE: RDS-B ) , and according to Kinder Morgan’s timeline this project could begin construction in the second quarter of this year.