Second New Gulf Coast Terminal Receives LNG Shipment

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Researched by Industrial Info Resources (Sugar Land, Texas)--Last week, a second liquefied natural gas (LNG) tanker arrived in the Gulf Coast and delivered an inaugural load of LNG to a new terminal. Cheniere Energy's (AMEX:LNG) (Houston, Texas) Sabine Pass terminal in Louisiana was the first new Gulf Coast terminal to receive a load of LNG. The second new terminal to receive its shipment of LNG was Freeport LNG Development L.P.'s (Houston, Texas) terminal in Quintana, Texas. Cheniere Energy has a 30% stake in Freeport LNG Development LP.

Freeport LNG received its initial load of LNG midday April 15, 2008, aboard the Excelsior, one of the largest ships ever to berth in the Port of Freeport. The 900-foot-long Excelsior was delivered in 2005 and was the world's first LNG reliquefaction ship. The terminal is expected to begin commercial start-up by June 1, 2008. Once the terminal is operating at full capacity, Freeport LNG expects to receive 150 tankers annually and have a send-out capacity of 1.55 billion cubic feet per day (Bcf/d).

The $1 billion terminal began construction in early 2005 with engineering, procurement and construction responsibilities handled by a joint venture of Technip Incorporated (Paris, France), Zachry Construction Corporation (San Antonio, Texas) and Saipem (Milano, Italy). Technip handled engineering, Zachry the construction and Saipem tank design.

The terminal comprises two 160,000-cubic-meter tanks, one dock and seven vaporization trains that connect to a 9.5-mile, 42-inch-diameter pipeline. The terminal is designed to vaporize 1.55 Bcf/d with a peaking capacity of 0.2 Bcf to bring total peak capacity to 1.75 Bcf/d.

The terminal's capacity has been contracted to three companies: ConocoPhillips (NYSE:COP) (Houston) has two-thirds of the terminals capacity (0.9 Bcf/d), and the remaining one-third is split between Dow Chemical Company (NYSE:DOW) (Midland, Michigan) (0.5 Bcf/d) and Mitsubishi Global Gas Corporation (0.15 Bcf/d).

ConocoPhillips owns 50% of Freeport LNG-GP Incorporated, which owns and operates the terminal. The remaining 50% is owned by Freeport LNG Development LP, which is comprised of a combination of entities. In addition to Cheniere owning 30% stake of the limited partnership, oilman Michael Smith of Denver owns 45% through Freeport LNG Investments LLP. Dow's Texas Holdings owns 15%, and Osaka Gas Company Limited (Osaka, Japan) owns the remaining 10%.

In addition to Sabine Pass LNG and Freeport LNG, a third LNG import terminal was planned to receive its first shipment this month. Excelerate Energy LLC's (Houston) Northeast Gateway off of the coast of Boston was originally scheduled to receive its first shipment April 16 aboard the LNG carrier the Excellence. That shipment has been delayed until sometime in May.

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