Meet the Energy Executive Holding the Reins of American LNG
Corey Grindal sits behind a modest desk inside a modest office high over the streets of Houston at Cheniere Energy’s downtown headquarters. Flanked, befittingly, by a hard
hat and surfaces covered with the day’s work, Cheniere’s down-to-earth Chief Operating Officer sat down to an exclusive one-on-one with Shale Magazine to uncover how Cheniere went from a relative unknown to the largest producer of American liquefied natural gas (LNG) in the country.
How To Succeed in U.S. Energy? – Be Light On Your Feet
Cheniere Energy is a Texas-based company with a rich history steeped in innovation and transformation. The company was founded in 1996 as an oil and gas explorer but quickly transitioned into regas. Regasification is the process of converting LNG back into a natural gas.
For the uninitiated, LNG is natural gas cooled to incredibly low temperatures to turn it into a liquid, shrinking it by 600 times. That LNG is then loaded onto ships to be sent to countries around the world. Regasification takes a lot of energy to pull off. Once the LNG is regasified, natural gas can be transported through pipelines throughout the distribution system. That distinction is crucial to understanding from whence Cheniere’s LNG dominance was born.
Building the Sabine Pass LNG port in coastal Louisiana was part of a push to hedge the U.S. from an anticipated gas shortage and thus create an import terminal for LNG. Work on the regas facility began in 2003, and was completed in 2008. Sabine Pass was meant to be a massive regas facility where imported LNG could be stored, warmed, and distributed throughout the United States’ natural gas pipeline. When the Great American Gas Boom turned the anticipated shortage into a surplus, Cheniere did what Cheniere does best – they pivoted.
Throughout its history, Cheniere has overcome challenges and capitalized on opportunities by walking a tightrope of adaptability to market needs, a rare trait among energy cor- porations. “We don’t want to be the biggest; we just want to be the best,” Grindal explains in an unassuming Texas drawl that belies the genius behind the engineer-turned-executive’s vast experience. Cheniere announced plans to add liquefaction and export capabilities at Sabine Pass in 2010 and began commercialization in 2011. That milestone would grow Cheniere from a regional player into the leading producer of LNG in the U.S. and the second-largest operator in the world.
Addressing the challenge required a slew of firsts. Cheniere penned its first LNG sale and purchase agreement (SPA) with a unique contract structure that would change the status quo. They achieved further industry renown with a first-of-its-kind federal authorization to add Sabine’s liquefaction services. That decision would result in their first two liquefaction trains.
Over the next year, construction commenced on the first two trains at Sabine Pass, along with a second liquefaction facility in Corpus Christi that, in turn, would boast
its own two trains (which has since grown to three with more expansion on the way). Construction for the trains at Corpus Christi would begin in 2015. In a long list of firsts, the Corpus Christi liquefaction facility is the first greenfield LNG facility built in the contiguous U.S. and the first fully operational LNG export plant in Texas.
In 2016, Sabine Pass came fully online and began production. The first cargo of LNG was produced and exported in February of that year. 2018 would see LNG production begin in Corpus Christi, and with that landmark, Cheniere would find its name among Fortune 500 companies.
Continuing the Highlight Reel of Success
2020 would mark a world record when Cheniere exported its 1,000th LNG cargo four years after starting those operations, faster than any other LNG operator had previously done. Taking the lead for its stakeholders, Cheniere would also create Cargo Emissions Tags. These tags help track emissions data for cargoes that Cheniere produces and is provided to all of their long-term customers. With transparent data, customers have greater access to this critical ESG element.
With such a long road of relatively unfettered expansion, there’s no indication that Cheniere is slowing down anytime soon. So, where is Cheniere currently, and where are they going?
Today, Cheniere operates six trains and SPL and three trains at CCL with a combined LNG production capacity of 45 million tons per annum and with expansion projects under development at both facilities. In industry terms, Cheniere is moving some 7 to 7.5 billion cubic feet (BCF) daily – some 7% of everything the U.S. produces.
More growth is on the way. Its CCL Stage 3 Project is a bustling construction site that will add 7 midscale trains that are expected to add 10+ million tons per annum (MTPA) of capacity. Another expansion project at CCL is currently in application with the Federal Energy Regulatory Commission (FERC), and, if approved, would add 2 more midscale trains (8 & 9). Furthermore, there’s an SPL expansion in the pre-filing stages that stands to add up to 20 million tons per annum of capacity at the Louisiana site.
“We’re the largest owner of pipeline capacity in North America,” Grindal explains, “pipelines are a critical piece to meeting the obligations of our customers and shareholders,” he continues, “The existing infrastructure that goes to Sabine is fully contracted. So, yeah, we will need new infrastructure.”
Tanks and berths aren’t the issue, however. With an administration that’s repeatedly bashed fossil fuels in general, there does loom some question as to whether permitting issues or other variables might impede the progress of the LNG behemoth Cheniere has grown into.
The Energy Executive Leading the Charge
Grindal is well poised to oversee pipeline infrastructure improvement since graduating from the University of Texas at Austin with a degree in mechanical engineering. Grindal began his storied career working at Tenneco/El Paso as a pipeline engineer before moving into marketing and eventually trading. Before coming to Cheniere, Grindal would spend time at Louis Dreyfus, a leading global merchant and processor of agricultural goods, and Deutsche Bank. In the trading realm, Grindal would be put in charge of several ventures that would alter his career trajectory. Notably, Grindal played a pivotal role in launching a gas and electricity trading group for Deutsche.
When Cheniere received approval to transition from regasification to liquefaction, they needed a supply platform built. That’s when they brought Grindal on board for the job. Coming to Cheniere in 2013, Grindal would start with the company as Vice President of Gas Supply. That initial role was all about building the essential groundwork for ensuring the company’s LNG deliveries to Cheniere’s terminals were as solid as a rock. Not only that but he was also put in charge of forging critical connections with the United States’ producer community. And, lest he be bored, he also had the monumental task of putting all the systems, processes, and people power in place that would catapult Cheniere to the top spot as the United States’ go-to LNG exporter.
In his unassuming way, the global energy executive pointed out he’s worked with many great teammates and mentors along the way who have helped pave a successful career. But through it all, Grindal is quick to give a lot of the credit for his career’s success with his wife, Dana, and three children, who have “stood by him through thick and thin,” he says. Grindal even recounts working offshore when Dana suddenly went into labor with their second child. Placing family first, Grindal chartered a helicopter to get him there in time so he wouldn’t miss the birth.
The changing global energy landscape in recent years means Cheniere must continue to adapt. When asked how they’ve transformed, Grindal was resolute in his response. “Our core principle has always been to honor our commitment to customers,” he explains. Those customers include China and others around the globe, including powerful European allies. This dedication remains unwavering, even considering the events leading up to 2022, before the conflict in Ukraine.
Grindal explains that their fundamental business model has remained constant: Cheniere specializes in selling long-term contracts that underpin the development and financing of critical energy facilities. Therefore, adaptability lies in the simple ability to persist in selling energy well into the future.
The Inherent Beauty of Destination-Free Cargo
In 2022, more than 70% of everything Cheniere produced found its way to Europe, emphasizing the significance of its exports to the continent during a time of incredible upheaval. What sets them apart is that a substantial portion, around 90% of their cargo, was sold to third parties, most of whom are long-term customers, showcasing that U.S. LNG profoundly impacts the global LNG landscape. The unique approach offers destination-free cargo, affording both Cheniere and the customers the freedom to transport them to any corner of the globe. This market transition marks a significant departure from the rigidity observed in the pre-Cheniere LNG market. Back then, exporters lacked the destination flexibility enjoyed today.
Note that Cheniere pioneered destination-free capabil- ity, contributing to the growth and evolution of the U.S. LNG export market, and from which their customers supremely benefit. Leveraging this flexibility empowers Cheniere to meet market demands and strengthens the United States’ geopolitical position.
Keeping Up with Global Demands for Cleaner Fuel
In true gentlemen’s fashion, Grindal chose not to draw comparisons between Cheniere and other LNG players. Instead, he focused on Cheniere and its unique journey. Bear in mind that Cheniere’s current capacity of 45 million tons, will be bolstered with ongoing expansion efforts under construction that will quickly take them up to 55 million tons in the coming years. Additionally, they’re addressing bottlenecks, expecting to free up an extra 3-5 million tons, bringing them to a total of 60 million tons in the near future. Their expansion plans, which include adding up to approximately 20 million tons, aim to ultimately place them in the neighborhood of 80 million tons.
Cheniere adheres to stringent investment rules to accomplish aggressive goals and a structured checklist guiding their decisions. They commit to selling capacity in long-term contracts, aligning with their financial metrics and only proceeding with construction when they meet all criteria. Cheniere’s goal is to secure contracts that tick all the boxes on its investment checklist, ensuring that they expand their capacity in tandem with the demand from willing customers, thereby delivering the best outcomes while prudently allocating capital. This approach underscores a commitment to treating shareholders across the board fairly.
Looking back to 2015, the U.S. witnessed a significant grid shift, which was not initially geared toward gas exports. Fast forward to today, with several projects in play, and they’re seeing their capacity grow from 13 billion cubic feet to approximately 20 billion cubic feet.
Note that infrastructure plays a pivotal role here. Washington desperately needs to hear the critical message that we must continue bolstering American infrastructure, not just for gas but also for power, natural gas liquids, and crude oil. These resources are essential for our global allies and crucial in the context of evolving electric vehicle technology and geopolitical considerations. “LNG will be needed for the foreseeable future and longer than that. We can’t deploy other sources fast enough and efficiently enough to meet the needs of the people,” says Grindal.
What About Sustainability?
As we highlighted above, Cheniere has taken significant steps to understand and mitigate its emissions over the past couple of years. One notable effort is developing its QMRV program, which enables Cheniere to accurately measure methane emissions—helping the company look for actionable ways to mitigate emissions over time. They’re actively testing various technologies, from satellites and helicopters to drones and fixed equipment, to ensure accurate and robust monitoring and measurement.
It’s important to note that they’re not just embracing these technologies blindly; they’ve experimented with various approaches and have discarded some that didn’t make the cut. The almost unheard-of corporate dedication to ESG transparency is evident in their corporate responsibility reports, where investors and stakeholders alike will find a strong emphasis on sustainability efforts. And all of this from a company which purveys in fossil fuels, you say?
As our society moves towards expanding renewables, building infrastructure, developing tech like microgrids, and adopting electric vehicles (EVs) over gas, infrastructure must be in place. The transition away from fossil fuels will take time. Cheniere aims to be at the forefront, leading the way, testing, and reducing emissions while ensuring they have the necessary infrastructure “to support customers, allies, and stakeholders, all in an environmentally sound manner,” Grindal notes.
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At Shale Magazine, we sit one-on-one with energy executives like Corey Grindal to get the true pulse of the industry today and see where it’s heading tomorrow. To dig deeper, check out our past issues, where we interview thought leaders, present groundbreaking studies, and dig deeper into the facts so our readers can be informed, not influenced. If you’re on the go, consider checking out our award-winning “In the Oil Patch” podcast.
Author Bio
Tyler Reed began his career in the world of finance managing a portfolio of municipal bonds at the Bank of New York Mellon. Four years later, he led the Marketing and Business Development team at a high-profile civil engineering firm with a focus on energy development in federal, state, and local pursuits and picked up an Executive MBA from the University of Florida along the way. Following an entrepreneurial spirit, he founded a content writing agency servicing marketing agencies, PR firms, and enterprise accounts on a global scale. A sought-after television personality and featured writer in too many leading publications to list, his penchant for research delivers crisp and intelligent prose his audience continually craves.
