Cheniere Energy, in Reversal, Wants to Export Natural Gas

CAMERON PARISH, La. — The oil patch is a world of risk takers, but few are as daring as Charif Souki, the chairman and chief executive of Cheniere Energy.  A decade ago, Mr. Souki warned of an impending natural gas shortage, and set out to build a network of gas import terminals after none had been built in a generation. He lured Chevron and the French oil giant Total into signing long-term use agreements, and Cheniere’s stock price rocketed from less than $1 a share in 2002 to more than $40 in three years.

But the sudden boom in gas drilling that took off around 2005 created a glut, ruining Mr. Souki’s dream. Cheniere’s stock price collapsed to $2. And he managed to complete only one terminal, at a cost of $1.4 billion, that stands idle much of the time. Now he is trying to recoup his investment by making the opposite bet: that he can profitably export cheap American natural gas to Europe and Asia, where prices are roughly twice as high.

Mr. Souki intends to sink at least another $3 billion into Cheniere’s terminal of docks and storage tanks, located in an alligator-infested marsh here near the Texas border. Cheniere plans to install two, maybe four, giant refrigeration units capable of cooling methane gas into liquid for shipment on giant cargo ships. Currently, only one American terminal, built in Alaska 30 years ago, can do that.

“If you keep digging, digging, digging, you find something,” said Mr. Souki, 58, who in a varied career has invested in real estate in Paris, hotels in Hawaii and natural gas wells in the Gulf of Mexico. A Lebanese immigrant and former investment banker with a taste for double-breasted suits in a world of cowboy boots, Mr. Souki thrives on the sheer excitement of speculation.

Citing a quote that he once heard, attributed to a racecar driver, Mr. Souki said, “If I’m not making mistakes, I’m not driving fast enough.” If Cheniere can obtain the necessary regulatory approval and financing, Mr. Souki says he can start exporting gas as early as 2015. He predicts he will eventually be able to export two billion cubic feet of liquefied natural gas a day from his facility, or about 3 percent of current domestic gas production. As other companies like Freeport LNG join Cheniere in exporting liquefied natural gas, Mr. Souki says the United States has the potential to become a premier global provider, capable of exporting 10 billion cubic feet a day, roughly the amount that Britain consumes.

Not surprisingly, some energy experts are snickering at Mr. Souki’s latest plan to make a bundle from liquefied natural gas, also known as L.N.G.

“This is somebody who basically enjoys being on a roller coaster,” said Fadel Gheit, a senior oil analyst at Oppenheimer & Company. “It is more likely to see snow in New York in July than to see exports of gas from L.N.G. terminals in the United States.” But gas producers desperately looking for ways to raise prices view Mr. Souki as a hero, and enough investors like his ideas to reward Cheniere’s stock with a modest rebound. Shares closed at $6.62 on Thursday. “You have to have self-confidence to be out there alone when most people say you are wrong,” said Aubrey K. McClendon, chief executive of the Chesapeake Energy Corporation, the second-biggest domestic gas producer, who has pledged large shipments for Cheniere to export. “He’s going to be successful and it’s going to be great news for the U.S.”

When Mr. Souki set out to build at least three liquefied natural gas import terminals, bankers were so skeptical initially that he was forced to borrow $30,000 from Cheniere’s president to meet payroll. The company persevered, but Mr. Souki had to settle for one terminal.

Over time, Sempra Energy and Exxon Mobil also bought into the idea of building terminals on the gulf, and Chevron and Total signed 20-year agreements guaranteeing Cheniere payments of more than $250 million a year for use of half the Louisiana terminal capacity.

The other half was intended to give Cheniere the opportunity to trade gas on the spot market. But new drilling techniques opened up vast shale rock fields to gas prospecting over the last few years, bolstering domestic production and adding a century or more of reserves. That has made the import terminal a disappointment. Meant to receive 30 tankers a month, it only received a dozen all of last year. Much of that business was simply temporarily storing gas for re-export.

Mr. Souki has plenty of excess capacity to provide similar long-term contracts to other companies interested in export. As long as he can complete definitive long-term agreements, he says, finding the financing to build out the terminal should be easy.