US Supermajors Ramp Up LNG Portfolios

US supermajors Exxon and Chevron each touted a bullish outlook on LNG in their second quarter wrap-ups.

With an array of present and future LNG projects, the two companies are ramping up their LNG volumes.

Exxon Ramps Up LNG Volumes

Exxon, despite last month's landmark selection as a partner in Qatar's North Field East project, focused on other projects in the works.

Gas began flowing at Coral South LNG off Mozambique and the project remains on track to ship first LNG later this year, the company said.

Golden Pass LNG, which will increase US Gulf Coast LNG capacity by 20%, remains on schedule to start up in 2024.

Exxon said that among its corporate priorities is to maximize output at existing facilities as a way to squeeze out incremental production in today’s tight market at minimal cost/lead time.

The company cited Papua New Guinea LNG as an example, which set record daily production in July.

Can Exxon Help Europe?

Exxon said it was evaluating projects to expand its European LNG import capacity though did not provide details.

Adriatic LNG, majority-owned by Exxon, announced earlier this year that it was expanding import capacity.

In terms of European energy security, Exxon said it could potentially help develop Germany’s unconventional gas resources, should that opportunity present itself.

Exxon cited another incremental way it is responding to Europe’s gas crisis — stepping up efforts to reduce its own natural gas consumption. Wider work has reduced Exxon’s gas consumption across its European refining circuit by 65% already — enough to power 2 million homes in Europe.

“And so there are some substantial steps that we can take with respect to optimizing our current operation,” said Darren Woods, Exxon CEO.

Exxon’s European gas output actually rose from the first quarter to the second — up from 770 MMcf/d to 825 MMcf/d — instead of declining per usual for seasonality reasons. Exxon noted that this reflects the shortages seen in the continent.

But Woods qualified that rise in output. He doesn't see the higher second quarter volumes “as the new norm” – the “big question mark” is weather.

Chevron Ramps Up LNG Volumes

Chevron said it shipped 87 LNG cargoes from its Gorgon and Wheatstone plants in the first half of 2022, up over 10% from the same period last year.

All five trains have been through the first round of turnarounds, the company said, adding that Gorgon Stage 2 is on track to deliver first gas in September.

Chevron “continues to focus on incremental capacity increases” at Gorgon and Wheatstone via debottlenecking or actually expanding capacity, noting that improving reliability also adds volumes.

The company emphasized recent agreements to export 4 million tons of LNG from the US Gulf Coast, with 1.5 million tons starting in 2026. These agreements “leverage our growing US gas production and expand our value chains in Atlantic Basin markets."

Meanwhile, Equatorial Guinea LNG is “one of those more hidden jewels” acquired from Noble, which represents a “very good return to us” with upside potential.

Chevron's Portfolio Path

Chevron upstream head Jay Johnson said the company is “pretty agnostic” when it comes to looking at ownership versus commercial (i.e. offtake) LNG deals.

“We’re looking for the returns and the scale that we can build out of the business. We’re looking at multiple points of supply so that we can maintain an active and profitable portfolio.” He added that commercial deals that are capital light “are always a nice way for us to go.”

However, "where it makes sense, we’ll also make investments as we have in other places and own the facilities or run them through joint venture facilities or non-operated facilities."

It just comes down to returns, he said.

From Angola to the East Med

“So the ongoing effort is to keep that plant running," Johnson said of Angola LNG, which just secured fresh feedstock.

"It's really economic because it builds on existing infrastructure ... the investments have already been made. And importantly, it's supplying needed LNG into the European market and also gives us exposure to that Atlantic Basin," he said.

On the East Med, Johnson emphasized yet again that floating liquefaction is a “viable option” given “benign conditions” of the Mediterranean. But still no timeline was discussed.

The opportunity to supply Israel “continues to grow as coal is displaced,” and the Eastern Mediterranean nation is supplying Jordan for power generation and now also taking gas to Egypt, potentially with an export option.

“Developing additional gas capacity at Leviathan and Tamar is well within the scope of those projects and would allow us to access these additional marketing opportunities through LNG and the flexibility that provides," he said.