Cheniere Energy Adds a Fourth LNG Receiving Terminal to its Texas Coast Plans

---

Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Cheniere Energy Incorporated (AMX:CXY) (Houston Texas) is exploring the possibility of constructing a fourth LNG receiving terminal at Sabine Pass, Texas. Cheniere Energy currently has plans for three other LNG terminals on the Texas coast to be located at Freeport, Corpus Christi, and Brownsville. Each of the proposed terminals will cost over $350 million and will have a capacity to gasify one billion cubic feet per day and a storage capacity of six billion cubic feet.

Cheniere has created Freeport LNG Development L.P. (Houston Texas) in conjunction with Michael S. Smith and expects to develop the Freeport location first. Freeport LNG has already executed a non-binding memorandum of understanding for 650 mmscfd of the proposed terminals capacity. Cheniere Energy has selected the Texas coastal locations because of its deep-water port locations, existing facilities for terminals, and the significant under utilized natural gas related infrastructure, which has access to the markets of the Midwest and Northeast U.S.

Construction on the LNG terminal could begin as early as late 2003 with first cargos being accepted in late 2005 or early 2006.

Freeport LNG has assembled a preliminary project team for the Freeport location including Ecology & Environment Incorporated (Boston Mass) for the environmental assessment for site development; Technip USA (Houston Office) for the site design; Project Technical Liaison Associates (Spring Texas) for safety and permitting; Shiner, Moseley & Associates, Incorporated (Corpus Christi Texas) for the marine design; Mustang Engineering Incorporated (Houston Texas) for the pipeline design and engineering; and Brown, Williams, Moorhead & Quinn Incorporated (Washington DC) for the FERC permitting process.

Click on the image at right to view the U.S. LNG Operational & Under Development Terminal Project Tables.

Cheniere Energy is competing with numerous other companies including some of the "blue chip" companies in developing new LNG receiving terminals to serve U.S. markets. LNG is a relatively mature product in many areas of the world, but in the U.S. it is still a new frontier. There are presently only four operating LNG terminals in the U.S. with import capacity of nearly 870 billion cubic feet per year. There are close to 20 expansions or new LNG terminals under development in the U.S. with planned in-service dates ranging from 2005 to 2007.

The majority of these projects are economically feasible at a natural gas price of $3.50 per mmBtu. The major LNG suppliers for these new terminals will be Algeria, Libya, Nigeria, and Trinidad. As a sign of things to come, LNG shipping companies have ordered the construction over 40 new LNG tankers of which over 20% of the new builds are being constructed without route contracts. The U.S. at present is a minor LNG importer when compared to such countries as Japan, which imports over 50 million tons of LNG per year.

IIR has been tracking the progress of Cheniere Energy's proposed LNG terminal since June of 2001.