Cheniere Energy stated Thursday that it will receive $3.4 billion to construct the first U.S. liquified-natural-gas export facility.
A total of eight banks agreed last week to provide the funds for financing the facility, which could enable natural gas producers to ship to overseas clients, easing the national gas oversupply.
According to the U.S. Energy Information Association, natural gas storage levels are lower than the average 90 billion cubic feet for this time of year, but they are still up by 33 bcf.
Improvements in drilling technology have led to a glut of natural gas from shale in the U.S. Using the process of hydraulic fracturing, or fracking, with horizontal wells, developers have been able to produce natural gas that wasn’t previously accessible, sending prices to a ten-year low.
With the ability to export natural gas overseas, the U.S. could reduce some of the oversupply taking up storage facilities.
The Louisiana facility will be designed to export 1.1 billion cubic feet per day by the end of 2015.
“They have all the capital they need, they have all the permitting they need,” said Will Frohnhoefer, BTIG. “I think they’re good to go.”
MarketWatch mentions Devon Energy (NYSE: DVN) and SandRidge Energy (NYSE: SD), two natural gas liquids production companies that could be affected by the facility.