Freeport LNG signs deal

Cheniere Energy said Feb. 26 that Freeport LNG Development signed a 20-year terminal use agreement with Dow Chemical for up to 500 million cubic feet per day of throughput capacity at Freeport LNG’s proposed liquefied natural gas receiving terminal on Quintana Island, near Freeport, Texas. Cheniere holds a 30 percent limited partnership interest in the development.

Dow has made a firm commitment to take 250 mmcf per day, but has until Aug. 31 to exercise its option on the remaining 250 mmcf.

Jody Sumrall, Dow business manager for LNG and Texas Gas, said Dow is the “first industrial energy user in the U.S. to commit to LNG terminal capacity on a long term basis.” The LNG will be used, in part, for Dow’s petrochemical facilities on the Texas Gulf Coast.

According to Michael Smith, chief executive of Freeport LNG, the deal with Dow marks an important milestone for the proposed terminal. Assuming Dow exercises its “option to take the full 500 mmcf per day, and with our previously announced transaction with ConocoPhillips, we believe that the entire first phase of our facility is now sold out. We expect final approval from the Federal Energy Regulatory Commission in the next couple of months, which will keep us on target to begin construction in mid-2004. LNG deliveries would begin in mid-2007.”

Cheniere, a Houston-based Gulf of Mexico E&P company, is also developing LNG receiving terminals in Sabine Pass, La., and Corpus Christi, Texas.