CMS to Expand LNG Terminal
North America's largest liquefied natural gas terminal is
getting bigger --- CMS Energy officials confirmed yesterday they
will expand the Lake Charles, LA, terminal within a few months if
federal approval is received. The LNG facility, which now produces
up to 700 MMcf/d could eventually increase its daily production to
1.25 Bcf/d, CEO William McCormick said during a morning press
Just this week, McCormick said CMS had received a record 20 major
bids to provide long-term capacity from its Lake Charles facility,
which eventually could transport up to 120 cargoes a year, according
to McCormick. The CMS news follows recent news by other major energy
producers, including El Paso Corp. and Enron Corp., which both have
announced plans to build LNG facilities for U.S. use (see Daily GPI,
Feb. 2, Feb. 6).
The CMS terminal received a record 55 cargoes in 2000 and
McCormick said he expects LNG business there "to do at least that
well, probably more" this year. At the briefing, McCormick and his
executive team outlined plans where they expect to see the most
growth for the entire company in the near term.
Besides LNG, the CMS team discussed their part in the coming
electric restructuring in Michigan, where the company serves 3.2
million gas and electric customers through Consumers Energy. They
also provided insight into future expansion of its Powder
River-area pipeline as well as highlighting plans to expand
customer relations services and "rapidly grow its traditional
On LNG, McCormick admitted that the United States probably could
accommodate "three or four large facilities" but expects some
recent announcements to be "problematic."
"I think there's certainly room" for more facilities," he said
because the "economics" of LNG are "so attractive," and will
continue to be with the high cost of natural gas. "But some of the
proposed terminals announced are problematic, such as the
suggestion of a Florida pipeline," announced recently as a
potential Enron Corp. LNG facility site.
McCormick predicted the proposed Florida site would have
permitting problems because of its location, and other sites would
take time to develop. "I certainly do not think there will be any
more (facilities) anytime soon," because of the two-to-three year
delay in siting and regulatory approval. "Having said that, there
are opportunities to expand our (Lake Charles) facility,
particularly from a contract position. We're number one, and we're
going to aggressively maintain our leading position."
The Dearborn, MI-based company, which supplies energy and
services in 20 states across the Midwest, Gulf Coast and Rocky
Mountain region, will target growth in its regional U.S. businesses
and in selected global markets, but McCormick left the door open as
to future acquisitions or merger possibilities.
"We have excellent assets and there are a lot of attractive
opportunities," McCormick said. "The situation has changed from our
position since a year ago. The market has changed quite a bit. The
business we have is more attractive."
Among other things, CMS has seen more demand for its firm
capacity, and more long-term contracts. Tamela W. Pallas, COO of
CMS Marketing, Services and Trading Co. (MST) said that one of the
"positive" outcomes from the situation in California for CMS has
been a request for more long-term contracts.
"In California, the situation may have slowed down deregulation
(across the country), but on the positive side, we're seeing more
long-term contracting," Pallas said. She said CMS's renewed focus
on customer satisfaction also is paying off. "Integrity is more
important in the marketplace," and she said that a company couldn't
just talk about what it can provide. It has to follow through.
Earlier this month, MST was ranked first in customer
satisfaction among the 68 largest natural gas marketing companies
in the United States in an independent study by Mastio & Co.
For the fourth time, researchers surveyed 1,200 energy buyers on 39
different customer satisfaction attributes, placing MST ahead of
Along those lines, Pallas expects CMS Viron Energy Services
unit, which contracts with institutions to manage energy, to become
on of the company's faster growing segments. Just yesterday, the
Alameda County Board of Supervisors in California approved
installing several energy efficiency projects by Viron to reduce
and stabilize future energy costs.
"In the facility management area, we are looking for
acquisitions," Pallas said. "A lot more companies are outsourcing
their energy services and are concerned about energy consumption.
This is a great area for CMS because we cover the market." Energy
conservation services are a natural for CMS, she said, and as
utility bills rise, more companies will look for a trusted
CMS will leverage its gas pipeline business to grow across other
CMS businesses, including aggressively developing West Texas and
Powder River gas, McCormick said. That will mean actively marketing
its Panhandle/Trunkline/Guardian transportation capacity for new
gas-fueled power plants along the line. In the past 18 months,
5,650 MW of power plant load has committed to Panhandle and
Trunkline, about 25% of its maximum daily capacity.
The Guardian pipeline's final certification should be completed
"shortly," McCormick said. It received a favorable final
Environmental Impact Statement in January, and should be in service
by November 2002. The Centennial Pipeline, which extends from the
U.S. Gulf Coast to Illinois to carry refined petroleum products, is
expected to be in service January 2002.
The Fort Union gas gathering expansion in the Powder River
Basin, which CMS owns 33% interest in, is expected to be in service
by the fourth quarter of 2001. With that expansion, COO William J.
Haener said another expansion might be viable in three years.
Capacity will increase to 634 MMcf/d this year, a 200 MMcf/d
increase from current production.