LNG Facilities Bring Associated Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--Earlier this week, Kinder Morgan (NYSE:KMI) (Houston, Texas) announced it will construct and operate about 40 miles of pipeline to help supply more than 310 million cubic feet per day of natural gas to Train 3 of Freeport LNG Development LP's (Houston) liquefied natural gas (LNG) production and export facility on Quintana Island in Texas. Freeport LNG Development LP is a subsidiary of ConocoPhillips Company (NYSE:COP) (Houston).

The development accompanies a 20-year natural gas tolling agreement with South Korea's SK E&S LNG LLC, which has itself signed a 20-year tolling agreement for 2.2 million tons per annum (mtpa) of LNG from Train 3. Japan's Toshiba Corporation (Tokyo) has contracted the remaining 2.2 mtpa from the train, which is expected to complete construction and begin production in late 2019 or early 2020.

While the LNG projects themselves often receive most of the spotlight, Kinder Morgan's announcement highlights the additional project activity accompanying these massive, multibillion-dollar projects.

One of the larger planned grassroot pipeline projects associated with an LNG facility is the 232-mile Pacific Connector natural gas pipeline, which would feed the Jordan Cove LNG liquefaction terminal in Coos Bay, Oregon. The U.S. Federal Energy Regulatory Commission (FERC) issued a draft Environmental Impact Statement regarding the pipeline and LNG facility in November, and FERC is holding a series of public meetings about the projects this week.

In addition to pipelines, some of the other large projects accompanying LNG construction include the power infrastructure needed to run these massive plants. Depending on existing infrastructure, some of these are smaller unit-addition projects, such as the addition of a 54-megawatt (MW), natural gas-fired unit at Cheniere Energy's (NYSE:LNG) (Houston) Sabine Pass LNG production plant in Louisiana.

Again, one of the larger Power Industry projects is associated with the Jordan Cove plant, which is planning to add 420 MW of natural gas-fired power to help operate the facility. The project calls for the addition of six 58-MW combustion turbines and two steam turbines to power the liquefaction cycle. Other LNG projects also are requiring build-out of additional power lines and substations to existing generating utilities.

As can be seen, while much of the focus on the current build-out of LNG infrastructure is on the actual production facilities, these massive projects bring many accompanying projects, as well as many short- and long-term jobs.

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