To hear Corey Grindal tell it, Cheniere Energy Inc. (NYSE MKT: LNG) created the U.S. LNG export model when it decided to remake its Sabine Pass, La., import facility and designed its Corpus Christi, Texas, plant from scratch. Then it broke the mold.

A competitor wishing to follow the Houston company’s lead will either have to chart its own course or attempt to mimic Cheniere’s business plan.

Either way, it won’t be easy. To succeed, an export facility operator needs a stable, experienced labor force that will stay on from project to project. It needs long-term contracts with reliable customers. It needs access to infrastructure to enable it to deliver product, steady sources of financing, partnerships with a variety of producers and a procurement system that everyone can count on.

Cheniere has already checked off all of the above boxes. Sabine Pass is on track to produce first LNG in late 2015, with Train 1 revved up to 100% production by first-quarter 2016.

Pricing policy

Cheniere’s model begins with the supply price, which it tied to the Henry Hub price—the New York Mercantile Exchange contract—back in 2011.

“We are fully subscribed at Sabine Pass,” Grindal, Cheniere’s vice president for supply, told attendees at Hart Energy’s recent North American LNG Export conference in Houston. “We are fully subscribed for the first two trains at Corpus Christi and almost done for the third train, and the reason why is because we sell everything at 115% of that month’s settlement price. [The strategy was] very revolutionary in the LNG world in 2011 and 2012 because most of the LNG, if not all of the LNG at that time, was traded on an oil index for the Japan [Customs-Cleared Crude] cocktail, which was made up of a couple of different oil indexes.”

Cheniere also maintains transparency as a component of its strategy, an element that Grindal believes has been instrumental in propelling the company’s LNG projects far ahead of competitors.

“All of our contracts—except for a few specific things in different customer contracts—they are all the same,” he said. “So we don’t have special contracts, we don’t have most-favored-nation clauses in our contracts. They are all homogenous across customers.”

No tolling

The other factor setting Cheniere apart from the competition is that it eschews the tolling process and takes responsibility for the supply function. In tolling, commonly used, a customer typically is charged for liquefaction, but is also responsible for securing supply, transport and shipping.

Taking on that risk made sense to Cheniere, Grindal said, because of the customers that Sabine Pass and Corpus Christi will serve. None, except for Total SA (NYSE: TOT) and BG Group Plc (LONDON: BG.L), are engaged in U.S. domestic oil and gas markets.