Activity continues to percolate in Qatar's massive liquefied natural gas export program.
In the latest development, France's Ste, Nationale Elf Aquitaine and Japan's Sumitomo Corp. agreed to promote development of Qatar's LNG export project based on supergiant North offshore gas field and step up discussions with potential buyers in coming months. Target markets lie in Japan and the Far East.
Among other LNG operations, Columbia Gas System Inc. last week said it was told by Shell LNG Co. it is unlikely that presale conditions will be met prior to Shell LNG's scheduled purchase July 29 of 40.8% of the stock in Columbia LNG.
Columbia LNG owns an LNG receiving terminal at Cove Point, Md., with a design sendout capacity of 1 bcfd of regasified LNG. That makes it the biggest in the U.S.
Columbia said it had not received word on what action Shell LNG will take on the purchase agreement. However, failure to meet the undisclosed conditions will allow Shell LNG to end the agreement.
QATAR PROJECT
Elf and Sumitomo will continue studies of the implementation of Qatar's integrated LNG export project. It's scheduled to include offshore production, a liquefaction plant at the new Qatari industrial site of Ras Laffan, and LNG transport aboard a number of tankers.
The plant is to consist of two trains designed to liquefy a total of 4 million metric ton/year for 25 years.
Current studies are expected to require 9-18 months and will involve investment and new partner requirements as well as technical feasibility.
Elf said present contacts with Qatar will be intensified to put in place "all necessary structures" for project development.
Elf is responsible for all studies and operations required to implement the project. Sumitomo is in charge of LNG marketing in Japan, project financing, and marine transport.
Construction is to begin in 1996, aiming for start of deliveries at the end of the 1990s.
Elf and Qatar signed an agreement May 30, 1991, attributing part of North field to Elf.
North field is one of the world's largest gas reservoirs, with reserves estimated variously at 160-210 tcf.
Qatar last month chose Italy's Snam SpA as its partner to sell North field LNG in Europe (OGJ, June 15, p. 32).
COLUMBIA'S PENDING SALE
To date, Columbia has sold 9.2% of Columbia LNG's stock to Shell LNG for $18.5 million. The conditional stock sale agreement, signed last November, provides that Shell LNG purchase in two installments Columbia's remaining interest in its LNG subsidiary for $110 million.
In addition, the agreement provides for refinancing and repayment of Columbia LNG's outstanding debt to Columbia Gas System, estimated to be $44 million at final closing in March 1993.
Meantime Columbia Gas System and its Columbia Gas Transmission Corp. subsidiary asked a federal bankruptcy court in Delaware to extend to Nov. 25 the period in which they have exclusive rights to file reorganization plans. The current exclusivity period for both companies is to expire July 28.
If granted, it will be the companies' fourth extension (OGJ, Apr. 27, p. 31). Both companies have been operating as debtors in possession under Chapter 11 protection since last July.
ALTERNATIVES
Columbia is reviewing alternatives to allow it to recover its investment of about $95 million in Columbia LNG if the Shell sale agreement is terminated.
Alternatives include selling all or part of its interest in Columbia LNG to other buyers or using the Cove Point terminal in a storage and peaking operation that employs liquefied U.S. natural gas or imported LNG.
The Federal Energy Regulatory Commission's Order 636, which shifts more gas supply management responsibility to local distribution companies and requires unbundled services, is generating increased opportunities for peaking services, Columbia said. The terminal also would be maintained and available for future imports of base load LNG to complement domestic gas supply.
Columbia estimated the peaking alternative would require an additional outlay of $20-40 million. While Columbia has no plans to close the Cove Point terminal, additional dismantling and site restoration expenses could be incurred by Columbia LNG if the facility were ultimately abandoned.
Built in the 1970s, the terminal has been maintained on standby since 1980 when it received and processed the last shipload of LNG.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
