ConocoPhillips, Sound Energy sign MOU for LNG facility

Kristen Nelson

Petroleum News editor-in-chief

ConocoPhillips and Sound Energy Solutions, a wholly owned subsidiary of Mitsubishi Corp., said July 12 that they have signed a memorandum of understanding “to work jointly on the continuing development” of Sound Energy Solutions proposed liquefied natural gas import terminal at Long Beach, Calif.

Asked if ConocoPhillips would only be a gas provider or would also invest in the receiving terminal, ConocoPhillips spokeswoman Linsi Crain told Petroleum News that the roles of ConocoPhillips and Sound Energy Solutions “are currently being negotiated and will be formalized if a joint development agreement is reached.”

Crain said ConocoPhillips “is looking to monetize its worldwide reserves of natural gas and deliver that gas to market. In this case, it would be Pacific Rim gas.”

She noted the company is also developing two other LNG import facilities in the United States. ConocoPhillips said July 6 that it had finalized its transaction with Freeport LNG Development L.P. to participate in a proposed LNG receiving terminal in Quintana, Brazoria County, Texas. And in April the company applied to the U.S. Coast Guard for an LNG terminal in federal waters offshore Alabama in the Gulf of Mexico.

Sound Energy Solutions is proposing to use a portion of Pier T at the Port of Long Beach — some 25 acres at Pier 126 — for a terminal capable of unloading LNG ships ranging in capacity from 90,000 cubic meters to 145,000 cubic meters, with send out capacity of 700 million cubic feet per day and a peak capacity of 1 billion cubic feet per day.

Sound Energy Solutions said it expects that some 70 vessels a year, about one ship every five days, would bring in LNG, primarily from the Pacific Rim.

There would be two 160,000 cubic meter cryogenic receiving tanks where the LNG would be temporarily stored in its liquefied state, natural gas liquids would be recovered and the LNG revaporized.

A new natural gas pipeline would connect the receiving terminal with the Southern California Gas Co.’s existing pipeline system. Sound Energy Solutions said the pipeline would be “constructed, owned and operated by a third party, not SES.” A portion of the LNG would not be vaporized, but would be sold in its liquid state as vehicle fuel, the company said, with LNG trailer trucks transporting the LNG liquid fuel.

Sound Energy Solutions said the offloading dock, two LNG storage tanks, regasification facilities, equipment for recovery of NGLs and an LNG vehicle fuel truck-loading facility are estimated to cost about $400 million. The facility is expected to be operational by 2007 or 2008.