RE:RE:RE:RE:RE:FID soona few things about your questions:
1. Goldboro is sucking a ton of money each quarter and it is all EXPENSED as it can be
considered capex only if an investment decision was made with the finance in place.
2. Hedging - until now a large percentage of the ng & ngl had to be hedged (60% for
8 months), but now the production can be hedged at higher prices and they are not
made to maintain 18 months for 60% of the volume. on the ng side (0.25 bcf/d) a
$0.50 per mcf means $125,000 per day of extra revenue. if you assume 75% margin
on the added revenues, you are talking $68M per year addition to cash flow.
improved oil price means another $10M more or less and ngl will add too.
3. In order to make Goldboro an asset and not a liability, it probably needs to be sold.
the people who will make money out of the project are northeast producers (just like
Cabot did ng long term deals few years ago) and the pipeline owner that leads to the
site (Enbridge). running the Maritime & Northeast just for local usage is going to be not
very profitable at all. running another 1.4 bcf/d could add $300M per year of revenue
that is mostly pure margin. that should make the project very economical for them.
Here is how the economics look for Enbridge:
$8.5B costs (assumed) x 6% interest rate for 20 years (1.06 ^ 10 due to straight line
reduction of principle) / 350 days (turnaround each year etc) / 1.3 bcf/d (93% utilization
at operational days) = $1.68 per mcf. that is for 20 years operations only.
operational costs should also be the liquifying of the gas (in the gulf 10% of gas, here
should be much lower - assume 8%) + costs of the plant operatrions = ~$2.20.
add transportation costs + ocean transportation.
Considering the ocean transport transit time vs the gulf being much shorter, Enbridge
should be able to run a very competitive operation vs other lng shipping points. last
point to remember is that in basin discounts in the Marcelus are so high that ng coming
to NS would be hh value or less. even with a $2.75 - $3 per mcf total add costs, it is
still very competitive in international price terms.