LNG plant is already too small
Before building begins, developer asks to double size
By LYNN J. COOK
Copyright 2005 Houston Chronicle
chron.com
One week after federal regulators said construction could begin on the massive regasification terminal in Quintana, the owner is trying to double the size of that project.
Freeport LNG Development said Tuesday it has signed a 17-year agreement with Mitsubishi Corp. to take 150 million cubic feet of liquefied natural gas a day, shipped from abroad and turned into gas in the United States. The Mitsubishi deal calls for a Tokyo-based subsidiary, MC Global Gas, to start paying for that LNG beginning Jan. 1, 2009. Mitsubishi, which handles 25 percent of the global LNG trade, has the option of taking as much as 250 million cubic feet of gas per day. A large portion of that LNG would come from Oman, where MC Global Gas signed a deal last summer with Qalhat LNG. But to deliver on that deal, the scale of the project would have to expand.
ConocoPhillips has also optioned 500 million cubic feet of gas from the proposed expansion, bringing the partnership a long way toward filling up customer rosters for phase two, according to Freeport LNG Chairman Michael Smith.
As it stands, ConocoPhillips and Dow Chemical, both of which are partners in the project, have agreed to buy the entire 1.5 billion cubic feet of capacity that has already been planned and permitted for the first phase of the Quintana regasification facility.
Smith got into the LNG business after selling his Denver-based company, Basin Exploration, to Stone Energy for $410 million in 2001. He says Basin's declining success in shallow-water gas fields of the Gulf of Mexico convinced him LNG development would take off.
"If 23 percent of our natural gas supply comes from a rapidly playing out shelf, then we have a situation that's going to be desperate in the United States."
Freeport LNG, which applied to build the regasification facility in Quintana in 2003, passed its final regulatory hurdle on Jan. 11 when the Federal Energy Regulatory Commission said it could start building. The Houston-based liquefied natural gas partnership broke ground Monday and is applying for expansion permits. |
