March 6 (UPI) -- U.S.-based shale natural gas producer Chesapeake Energy said Monday it signed a long-term agreement to deliver liquid gas to a company in Singapore.
Chesapeake signed a heads-of-agreement deal with the Singapore branch of multinational commodity trading company Gunvor. The U.S. company said it would supply Gunvor with the gas equivalent of 100 billion cubic feet of liquefied natural gas annually for a period of 15 years.
A start date is set at 2027 and both sides in the interim will look for "the most optimal" U.S. facility to turn gas into the liquid form for exports.
"This agreement reflects the powerful combination of the premium rock, returns, and runway of our competitively positioned Haynesville natural gas assets combined with the strength of our balance sheet and financial position to securely supply global LNG markets," Nick Dell'Osso, the president and CEO at Chesapeake, said.
The Haynesville shale play straddles the border of Louisiana and Texas and is the third-largest inland natural gas producer in the country. It's estimated 16 billion cubic feet of production in March is about half that of the largest shale reserve, the Appalachia basin, which covers both the Marcellus and Utica shales.
Chesapeake during the fourth quarter produced the equivalent of 20% of the daily average from Haynesville.
The company, however, said in its fourth-quarter earnings report that drilling activity will decline in 2023. Chesapeake said it would drop two rigs in the Haynesville play and another in the Marcellus shale this year.
Dell'Osso said that while the demand for natural gas is accelerating, his company was focusing on capital discipline "as we navigate current market volatility."
Chesapeake's ambitions with LNG, however, should help solidify the United States as the world's leading exporter of the super-cooled liquid form of natural gas.