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Freeport LNG Expansion Receives Environmental OK

FERC staff has issued a favorable environmental assessment on Phase II of the Freeport LNG project on Quintana Island south of Houston, saying that with appropriate mitigation the project -- to increase LNG sendout from 1.75 Bcf/d (peak) to 2.5 Bcf/d -- does not constitute a major federal action significantly affecting the quality of the human environment (CP06-361).

The project sponsor is Freeport LNG Development LP. The expansion is considered a small project, not subject to the more rigorous environmental impact statement process.

Construction currently is under way on Phase I of the import terminal in Brazoria County, TX and is expected to be completed in early 2008. Phase II, including a second marine berthing dock and unloading facilities, expanded vaporization, 7.5 Bcf/d of underground storage and a third LNG storage tank, would go online in 2008-2009.

Almost 40% of Phase II capacity is already sold to MC Global Gas Corp., a subsidiary of Mitsubishi Corp. and ConocoPhillips. Freeport LNG is in the process of commercializing the remainder of Phase II (approximately 0.7 Bcf/d) beginning in 2009.

After Sept. 30, 2009, Phase I capacity is fully contracted under two separate long-term terminal use agreements with ConocoPhillips for 1 Bcf/d and The Dow Chemical Co. for 0.5 Bcf/d. However, as part of its arrangements with ConocoPhillips, Freeport said it has retained 0.5 Bcf/d of capacity from commercial start-up to Sept. 30, 2009. This capacity is being marketed either as short-term capacity or as part of the planned expansion of the facility.

Deliveries would be made into the Texas intrastate pipeline system in the Stratton Ridge area.

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