Shell president says announcement underscores how the abundance of natural gas in the U.S. is changing the energy landscape
HOUSTON—Two energy giants have agreed to join forces and develop a natural gas liquefaction plant near Savannah, Ga.
Shell US Gas & Power LLC (Shell), a subsidiary of Royal Dutch Shell plc, and Southern Liquefaction Co., LLC—a Kinder Morgan company and unit of El Paso Pipeline Partners, L.P.—will form a limited liability company to develop a natural gas liquefaction plant in two phases at Southern LNG Co. LLC’s Elba Island LNG terminal.
Subject to various corporate and regulatory approvals, the plan—which Kinder Morgan Chairman and CEO Richard D. Kinder says has already received Free Trade Agreement approvals—is to modify EPB’s Elba Express Pipeline and Elba Island LNG Terminal to physically transport natural gas to the terminal and to load the liquefied natural gas (LNG) onto ships for export.
“This project will facilitate further development of the abundant natural gas resources in the U.S. and will be a positive factor in the overall balance of trade between the U.S. and other countries,” said Kinder Morgan chairman and CEO Richard D. Kinder, who added that the facility anticipates receiving non-Free Trade Agreement approval soon.
“This announcement underscores how the abundance of natural gas in the U.S. is changing the energy landscape,” said Marvin Odum, president of Shell.
Once finalized, EPB, through its affiliates, will own 51 per cent of the entity and operate the facility. Shell, through its affiliates, will own the remaining 49 per cent and subscribe to all of the operation’s liquefaction capacity. The project will integrate Shell’s small-scale liquefaction unit with the Elba Island facility and enable rapid construction compared to traditional large-scale plants.
The total project is expected to have liquefaction capacity of approximately 2.5 million tonnes per year (mtpa) of LNG or 350 million cubic feet of gas per day (Mmcfd). In June 2012, the Elba Island terminal received approval from the U.S. Department of Energy (DOE) to export up to 4 mtpa (500 Mmcfd) of LNG to Free Trade Agreement (FTA) countries. In August 2012, the terminal submitted a filing to the DOE seeking approval to export up to 4 mtpa (500 Mmcfd) of LNG to non-FTA countries. Phase I of the project, approximately 1.5 mtpa (210 Mmcfd), requires no additional DOE approval.