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January 30, 2013

Shell and Kinder Morgan plan to export LNG from the U.S.

Gerald Ondrey

Shell US Gas & Power LLC (Shell), a subsidiary of Royal Dutch Shell Plc, and Southern Liquefaction Company, LLC, a Kinder Morgan company and unit of El Paso Pipeline Partners, L.P., announced their intent to form a limited liability company to develop a natural gas liquefaction plant in two phases at Southern LNG Company, LLC’s (Southern LNG) existing Elba Island LNG Terminal, near Savannah, Ga.

Subject to various corporate and regulatory approvals, Shell and Kinder Morgan affiliates have agreed 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.

“Kinder Morgan is delighted to be working with Shell at Elba Island on this project, which has already received Free Trade Agreement approval,” says Kinder Morgan chairman and CEO Richard D. Kinder. “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.” Kinder added that the facility anticipates receiving non-Free Trade Agreement approval in due course.

“This announcement underscores how the abundance of natural gas in the U.S. is changing the energy landscape,” says Marvin Odum, president of Shell Oil Co. “With a measured, phased approach, exports of cleaner burning natural gas can help meet the world’s rising energy needs while also giving a boost to the U.S. economy.”

Once finalized, EPB, through its affiliates, will own 51% of the entity and operate the facility. Shell, through its affiliates, will own the remaining 49% and subscribe to 100% of the liquefaction capacity. The project will use Shell’s innovative small-scale liquefaction unit, which will be integrated with the existing 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 metric tons (m.t.) per year  of LNG or 350 million cubic feet of gas per day. In June 2012, the Elba Island terminal received approval from the U.S. Department of Energy (DOE) to export up to 4 million m.t./yr (500 million ft3/d) 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 million m.t./yr (500 million ft3/d) of LNG to non-FTA countries. Phase I of the project, approximately 1.5 million m.t./yr (210 million ft3/d), requires no additional DOE approval.

 

 

 

 

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