Dynegy plans LNG terminal on Louisiana coast

By the OGJ Online Staff

HOUSTON, July 12 � Energy marketer Dynegy Inc. Thursday joined the competition to build a liquefied natural gas receiving and regasification terminal on the US Gulf Coast.

The Houston company said it will construct a facility at Hackberry, La., on the company's existing liquefied petroleum gas terminal site. In the past 6 months, Cheniere Energy Inc., Houston, and Texaco Inc., White Plains, NY, reported plans either to study or locate new terminals in the region.

In April, CMS Energy Corp. said it received final approval from the federal government to boost LNG capacity at its Lake Charles, La., terminal by 40% to 1 bcfd and was evaluating further expansion to 1.3 bcfd.

Dynegy spokesman Steve Stengel said the existing location will allow the company faster "speed to market." The company said because the Hackberry site is already developed the facility could be operational 2-3 years sooner than a greenfield project.

Dynegy expects to begin the first phase of commercial operation by the end of 2003, representing an 18 to 24-month time-to-market savings, with full capacity available by early 2004. The LNG facility will be capable of receiving and processing 750 MMcfd of LNG. It will be expandable to 1.5 bfcd.

The Hackberry site was operated as an LPG terminal by Trident and acquired by Dynegy in 1995. The terminal has access to the Gulf of Mexico and the Atlantic Basin and will have the ability to connect to a number of natural gas pipelines that reach most major natural gas markets in the US. Dynegy will add one LNG tank and vaporization facilities to the Hackberry site.

Stengel said the company is in talks with a "number" of potential gas suppliers, and he said the project is realistic at today's prices. "We wouldn't be doing it, if we didn't think it was economically viable," he said. Gas prices are down to the $3.50/Mcf range from a winter high of $10/Mcf.

Dynegy has completed a feasibility and detailed engineering analysis at Hackberry and is working to obtain necessary permits from state and federal agencies. Stengel said the company also is talking with various shipping interests and other entities concerning tankers.

Chuck Watson, Dynegy chairman and CEO, said the terminal will be an important addition to the company energy delivery network in the US and "will allow us to participate in a growing global LNG trade to meet our customers' energy needs."

In June, Cheniere Energy Inc. said it was acquiring three land lease options to develop liquefied natural gas (LNG) terminals along the Texas Gulf Coast but declined to release details on the locations. Cheniere said each LNG terminal would be capable of initially processing 200 bcf/year and is slated to be operational within 6 years.

In May, Texaco Inc. said it had begun a 6-month study for the development of a liquefied natural gas receiving and regasification terminal in the US Gulf of Mexico. The study will examine and evaluate infrastructure requirements and costs of the proposed terminal, which would be designed to process 1 bcfd initially. The proposed terminal would connect with Texaco's offshore infrastructure, which has excess capacity.

The terminal could be operational in 4-5 years, and then could be expanded up to 2 bcfd. The LNG would be produced from one or more potential projects in the Atlantic Basin in which Texaco holds an equity interest.

In 2000, there were 55 LNG tanker ships unloaded at the CMS Trunkline LNG terminal. The company said it expected the number to be higher this year.

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