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ConocoPhillips Optimistic on Compass Port LNG Permit Approval

ConocoPhillips expects to have its permit approved by the end of this year for the proposed Compass Port liquefied natural gas (LNG) terminal offshore Alabama, a company official said last week.

Phil Frederickson, executive vice president of Commercial Enterprises, said the company remains optimistic about the Compass Port permit approval, even though the offshore permitting process has been delayed. He was speaking at the UBS Global Oil & Gas Conference in Austin, TX.

Compass Port would be located near Dauphin Island, and the Maritime Administration was expected to issue a final permit decision this month. However, the permitting process slowed following opposition to offshore terminals, including opposition by Louisiana Gov. Kathleen Babineaux Blanco. Although she is a proponent of onshore LNG terminals, she does not want any offshore LNG terminals built that use the "open rack" vaporization (ORV) process (see NGI, May 23).

The Maritime Administration has indicated that it does not believe the ORV process would harm marine life, but the Deepwater Port Act grants state governors the right to block offshore LNG terminals. Blanco is only opposing LNG terminals offshore Louisiana that use the ORV method, but her protest is slowing the permitting process for other proposed offshore terminals, according to the Maritime Administration.

However, Frederickson indicated Tuesday that the company expects its Compass Port permit to be approved before the end of the year. He also was optimistic about ConocoPhillips' planned LNG venture offshore Louisiana, the Beacon Port Clean Energy Terminal. Beacon Port would offload LNG from carriers, store and regasify the LNG, then use a system of pipes to deliver it onshore (see NGI, Jan. 20).

"We're very optimistic about both offshore permits, and we're very, very optimistic about the Alabama regas terminal," said Frederickson. ConocoPhillips' long-term strategy is to grow its LNG business across the country. "We want to have that capacity secured in order to integrate it with other opportunities...Our objective is to add 3 Bcf/d of regas capacity in North America, and we will continue to pursue those opportunities."

All of ConocoPhillips' global LNG projects are primarily geared toward bringing more natural gas to U.S. markets, he said. ConocoPhillips now has LNG projects in various stages in Nigeria, Venezuela Angola and Qatar. Besides the proposed offshore Gulf Coast LNG terminals, the company will jointly own the proposed Freeport LNG terminal in Brazoria County, TX with Cheniere Energy, Contango Oil & Gas and Dow Chemical. It also finalized an agreement with Mitsubishi Corp. earlier this month to jointly develop an LNG terminal for the Port of Long Beach, CA.

"We continue to see a lot of opportunities to grow our production in North America," said Frederickson. "Essentially, we now provide significant gas supply in whatever way makes sense. As a physical supplier, we've been able to grow that business, and we market 10 Bcf/d, which makes us now the second largest marketer in North America. With the LNG, as a producer, we'll be able to market that gas as well."

LNG, he said, "offers marketing capabilities to access the customer, and that is very important. It becomes a very potential differentiator in securing those opportunities."

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