Cheniere Energy planning LNG terminals on Texas coast

By the OGJ Online Staff

HOUSTON, June 12 -- Cheniere Energy Inc., Houston, Tuesday said it is acquiring three land lease options to develop liquefied natural gas (LNG) terminals along the Texas Gulf Coast.

A Cheniere spokesman declined to release details yet on the locations. Estimated to cost $300 million each, Cheniere said each LNG terminal would be capable of initially processing 200 bcf/year and is slated to be operational within 6 years.

Regulatory permits from the Federal Energy Regulatory commission as well as state, local, port authority, and the Coast Guard are expected to take 2-3 years, making the project construction-ready in late 2003. Initial LNG imports are anticipated to start in late 2006.

Cheniere follows several other announcements by companies looking to establish new US terminals.

El Paso Corp. said in March it tentatively agreed to begin purchasing LNG from a Phillips Petroleum Co. plant near Darwin, Australia, and ship it to California or Mexico. El Paso is still evaluating potential terminal sites.

Chevron Corp. also reported it was studying plans to ship LNG from Australia to the US West Coast by 2005. And in January, Enron Corp. said it was considering a new LNG import terminal in the Bahamas, connected by a 90-mile pipeline to Florida.

CMS Energy Corp. operates an LNG terminal at Lake Charles, La., while Cabot has an LNG terminal at Everett, Mass. Two other US LNG import terminals, at Cove Point, Md., and Elba Island, Ga., are expected to reopen in 1-3 years. If that happens, all four US LNG terminals would be back in operation for the first time since 1982 (OGJ Online Apr. 3, 2001).

Cheniere Energy Pres. and CEO Charles Reimer said, "We're bullish on natural gas, and believe that prices will remain at $3.50-$4.00/Mcf over the long term, which makes this project economically attractive."

Reimer will direct the LNG project development, construction, and operation. For more than 12 years, Reimer directed the operations of Virginia Indonesia Co., a participant in the Bontang LNG project in East Kalimantan, Indonesia.

The US Energy Information Administration projects gas consumption will grow to 30 tcf in 2010. Meanwhile, domestic production has stabilized at 20 tcf in the past decade.

"Clearly, we must turn to foreign sources of gas to satisfy demand -- and we have to be able to transport that supply safely, economically, and efficiently,'' Reimer said. Worldwide LNG supply has grown from less than 2 tcf in 1980 to more than 5 tcf in 2001. Announced capacity additions could increase supply to more than 11 tcf by 2010.

Cheniere Chairman Charif Souki said Texas has existing infrastructure to deliver gas to destinations north and northeast, and increasingly, to the west.