[INTERVIEW] US LNG companies eye second-wave exports

Kathleen Eisbrenner, chairwoman and CEO of NextDecade, poses in this file photo./ Courtesy of NextDecade Corporation

NextDecade CEO Eisbrenner discusses Korea's energy shift, future LNG demand

By Kim Ji-soo

President Moon Jae-in's announcement of the country's shift from coal and nuclear energy toward cleaner and safer yet affordable energy has started new debates.

As Koreans debate just how fast or slow the shift should happen and what the energy mix should be, President Moon already vowed to import U.S. liquefied natural gas (LNG) when he met with U.S. President Donald Trump in June in Washington, D.C.

Surging U.S. production of LNG has prompted Korea to consider it as an energy option. This expected new demand is good news for U.S. LNG companies like NextDecade, founded by Kathleen Eisbrenner, as they look to ride the second wave of U.S. LNG exports.

"When I heard he had won the election, and then in the first week of his administration, he announced the shift away from coal and nuclear energy and that the country is going to do so quickly, that was very, very impressive and tremendously exciting for us," Eisbrenner said.

NextDecade Corporation, an LNG portfolio company based in the Woodlands, Texas, co-hosted a seminar with the American Chamber of Commerce in Seoul last month. Interviews with NextDecade's Chairman and CEO, Kathleen Eisbrenner, were conducted both at the seminar and via email.

"LNG has a higher energy yield and lower greenhouse gas emissions than conventional hydrocarbons such as coal and oil and is therefore a likely beneficiary of these policies," said Eisbrenner, who also attended an international gas conference in the southern city of Daegu that week.

"In addition, it is widely recognized as a bridging fuel for renewables and can serve as a reliable, fast-acting power source to complement Korea's energy mix."

After more than a decade of surging production thanks to the shale boom, the first wave of U.S. LNG exports was delivered to various markets around the world, including Korea, starting last year. More than a dozen second-wave export projects are targeting final investment decisions in the next few years, and NextDecade is looking to be the front-runner of the second-wave of U.S. LNG projects.

"Short-term oversupply, rapid demand growth over the next decade will result in a shortfall in the early 2020s if new projects/capacity is not invested in," she said.

"NextDecade's proposed Rio Grande LNG project is a Greenfield project and we believe it will be the leader of the second wave of U.S. LNG projects."

The project has the potential to produce 27 million tons of LNG per year.

"We hope to receive all necessary approvals by mid-2018, the final investment decision later that year and the first LNG (export) in 2022," she said.

Because of the significant time and investment needed to fulfill LNG exports, she stresses the importance of making new investment decisions soon, "That means new contracts must be signed so a global supply shortage and price impact can be avoided," she said.

Eisbrenner forecast that demand from Korea will rise by 50 percent by 2030. Seoul currently imports about $12.2 billion worth of LNG per year, with 70 percent coming from Middle Eastern and Southeast Asian countries.

"We expect demand from South Korea for natural gas to rise by 50 percent from today's level of 35 million tons per year, which would be about 50 million tons per year," she said. "That growth is fantastic, but there is also an opportunity within the existing 35 [million tons per year] to consider the U.S. as a replacement supplier," she said.

More details on the country's energy plan will emerge when the government announces its eighth energy plan late this year. Energy Minister Paik Un-gyu has said the plan will entail lesser coal and nuclear energy and more LNG and renewable energy.

Eisbrenner, a former Shell executive and founder and CEO of Excelerate Energy (2003-2007), said NextDecade has significant potential in meeting the world's LNG needs

"I have done this successfully before," she said. She also added that the company sees significant potential in a number of markets around the world.

"For Korea and some other Asian countries, U.S. LNG exports provide an opportunity for our nations to address existing trade imbalances."

Asked to quote a relevant oil price for LNG to remain attractive, she said there is not necessarily a magic number to the question, adding that the company's natural gas source from the Permian Basin and Eagle Ford Shale will provide some of the lowest product costs.

Eisbrenner, who majored in civil engineering at Notre Dame University, also was executive vice president of Global LNG of Royal Dutch Shell from 2007 to 2009.

She said she was fortunate in having relished taking on challenges of being "the only or one of only a handful of women in almost any room or conference" in the energy sector.

"I am passionate about getting more women in energy, more women in engineering and more women in positions of leadership, regardless of industry. I hope that through my efforts and the efforts of others we can work to change this dynamic — if we do, it will be to everyone's benefit," she said.