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Trunkline Seeks FERC OK to Start Additional LNG Deliveries July 20

The gasification function and the pipeline loop portions of its Lake Charles, LA, LNG operations expansion are ready to go, Trunkline LNG said in asking FERC to authorize start-up and an interim tariff by July 20 to process and send out expected LNG deliveries at the import terminal.

The entire Phase I expansion project had been scheduled to come on line by the end of the year, but Trunkline said construction was running ahead of schedule. In addition, BG LNG Services, which has contracted for the LNG terminal's full capacity, including the expansion, is expecting new import supplies to arrive soon. Trunkline's request for early startup of the gasification function was filed last month and approval for the pipeline startup was filed last Wednesday.

In its filing Trunkline said the contracted LNG supplier is nearing completion of its liquefaction plant in Egypt and will begin cargo lifting this month. Access to the additional vaporization capacity at Lake Charles will allow BG LNG to increase their sendout from 630 MMcf/d to 1.2 Bcf/d.

Also, the 36-inch pipeline loop from the terminal to connections with the Trunkline mainline and Texas Gas and Tennessee Gas pipelines, along with new metering equipment will be ready for service on July 20 for Texas Gas and July 30 for Tennessee.

"This increased sendout will allow BG LNG additional flexibility to schedule its LNG cargoes for the remainder of 2005," Trunkline said. The remainder of the expansion facilities, the LNG storage tank and the increase to the unloading capability of the layberth, continue to be scheduled for completion at the end of the year.

When fully completed next year Phase II of the project will boost the sustained sendout capacity of the Lake Charles facility to 1.8 Bcf/d with a peak sendout capacity of 2.1 Bcf/d. The project goals originally were more modest, with the target at 1 Bcf/d sustained and 1.3 Bcf/d peak, and a 30-inch pipeline, but the plans were expanded late last year and early this year.

In its first quarter 2005 report BG Group said its BG LNG Services subsidiary was mainly using the Lake Charles facility for spot and short term cargoes. And although U.S. gas prices were strong, "high worldwide demand resulted in fewer spot cargoes being available for the U.S. market. Lake Charles was successful in securing cargoes from Atlantic LNG (ALNG) and other sources. A substantial number of cargoes for supply in the second and third quarters of this year have already been secured."

In the future BGLS intends to fill the base capacity at Lake Charles with long-term contracts and to use spot cargoes to take advantage of any spare capacity.

In May, BGLS signed a memorandum of understanding with Nigeria LNG Limited to acquire 2.5 million metric tons of LNG a year for 20 years from the NLNG Plus project (Trains 4 and 5 of Nigeria LNG), which are currently under construction and due to start production in 2005 or early 2006. Also BGLS expects the agreement will also give it the right to take excess volumes from the first three trains that are not taken by existing long-term buyers.

In addition, BG has signed a letter of understanding with Marathon Offshore Alpha Ltd., to acquire 3.4 million metric tons of LNG annually from a proposed LNG export project in Equatorial Guinea for a period of 17 years beginning in 2007.

"These two transactions are a significant step in establishing a competitive supply portfolio for Lake Charles. Discussions continue with other suppliers of LNG, including ALNG Train 4 and [Egyptian LNG] Train 2. We expect to announce further progress on the supply portfolio later this year," BG said.

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