Freeport LNG applies to export gas imports

By OGJ editors
HOUSTON, Aug. 19 -- Freeport LNG Development LP is the first US firm to request permission to export LNG imported into its Freeport, Tex., terminal.

It applied this month to the Department of Energy's Office of Fossil Energy for "blanket authorization" for short-term exports of LNG totaling 24 bcf, or about eight tanker cargoes, over 2 years. Freeport LNG Vice-Pres. Bill Henry told OGJ, "We need to do this to keep the equipment cold and sell the excess LNG either into the US market or export the LNG into the [higher priced] international market."

Due to lower prices for gas in the US and increased domestic production from the shale gas plays, Henry said, "There is very little LNG scheduled into the US for the next 12 months." Moreover, capacity holders at the 1.5 bcfd Freeport LNG terminal, which came online in June, do not have a dedicated source of supplies. Yet the terminal still must import a minimal amount of LNG to keep its storage and regasification equipment cooled to the proper temperature.

With an export permit, Henry said, imported LNG would be stored at the terminal until a market develops either in the US or abroad. The company emphasized it has no plans to export gas produced in the US. The terminal has two 3.4 bcf storage tanks.

According to Freeport LNG's application, a minimum of 4-7 MMcfd of natural gas from LNG imports into the Freeport terminal would be sold into US markets "as a result of boil-off and other maintenance and operational requirements at the terminal."

Henry said upgrades, including replacement of a check valve with a short spool required for loading LNG onto vessels, would be "minor" at an estimated cost of less than $10,000 and could be completed within weeks. The company has not let contracts for the project, pending DOE approval, Henry said.

It's not yet known if other terminals have similar plans. The Zeebrugge LNG import terminal in Belgium recently offered to load LNG tankers. The Kenai LNG liquefaction plant in Alaska has a permit to export domestically produced LNG, and an Alaskan group has proposed building another liquefaction plant in Valdez to export North Slope gas.

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