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Construction begins at Texas LNG site ConocoPhillips adds new proposal for offshore LNG terminal in Gulf of Mexico Allen Baker Petroleum News Contributing Writer
Construction began Jan. 17 on the first new LNG terminal built in the United States since 1982, with the start of work on the Freeport LNG Development L.P. site near Freeport, Texas.
Just two days later, ConocoPhillips, which is financing construction of the Freeport terminal, announced it had submitted an application to the U.S. Coast Guard to build yet another terminal, this one 56 miles south of Louisiana in the Gulf of Mexico. The company has an interest in a third terminal project in the region, also offshore. That facility would be 11 miles south of Dauphin Island, off Alabama.
ConocoPhillips said construction could start as early as next year on the newly announced LNG terminal, called the Beacon Port Clean Energy Terminal. It would have the same throughput capacity as the initial phase at Freeport, or 1.5 billion cubic feet daily.
Plans call for two concrete LNG storage tanks, regasification equipment and docking facilities, with a second platform for the crew. Deliveries are scheduled to start in 2010.
The LNG would be converted to gas at the terminal, then sent toward the mainland on 46 miles of new pipe, connecting to existing lines 29 miles offshore. ConocoPhillips didn’t provide an estimated cost for the complex. Phase one work under way at Freeport Back at Freeport, about 70 miles from Houston, work started swiftly after the project received final approvals from the Federal Energy Regulatory Commission on Jan. 11.
But that was just for phase one. And with another new customer in hand, the Freeport partnership was planning to submit plans for a second phase shortly.
The Freeport terminal partnership announced Jan. 18 that it has signed a 17-year agreement for the terminal to receive and regasify the equivalent of 150 million cubic feet of natural gas daily for a 17-year period, which amounts to a million tons of LNG annually.
The contract with a subsidiary of Mitsubishi Corp., a big player in worldwide LNG, calls for deliveries to start in 2009. A second phase at Freeport would be needed to handle that contract, since the 1.5 billion cubic feet of capacity in the first phase is already contracted, with ConocoPhillips taking a billion cubic feet of daily capacity and Dow Chemical Co. the remainder.
The expansion would add a second berth and essentially double throughput capacity. ConocoPhillips already has an option for 500 million cubic feet of capacity in any expansion.
Last summer, Mitsubishi signed an LNG supply deal with Qualhat LNG in Oman, and some of the LNG from that deal likely would come through Freeport.
As for supply for ConocoPhillips, that company is working on developing several liquefaction plants around the world, including projects in Venezuela, Nigeria, Qatar, Russia and Australia. It has extensive experience in the technology with its operation of the Nikiski liquefaction plant in Alaska for nearly four decades.
The general partner for the Freeport LNG project is half owned by ConocoPhillips and half owned by Michael S. Smith, CEO of Freeport LNG Development and former owner of Denver’s Basin Exploration. Limited partners are Freeport LNG Investments 45 percent, Cheniere Energy 30 percent, a Dow subsidiary 15 percent and Contango Oil & Gas 10 percent.
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