North America’s largest liquefied natural gas terminal isgetting bigger — CMS Energy officials confirmed yesterday theywill expand the Lake Charles, LA, terminal within a few months iffederal approval is received. The LNG facility, which now producesup to 700 MMcf/d could eventually increase its daily production to1.25 Bcf/d, CEO William McCormick said during a morning pressbriefing.

Just this week, McCormick said CMS had received a record 20 majorbids to provide long-term capacity from its Lake Charles facility,which eventually could transport up to 120 cargoes a year, accordingto McCormick. The CMS news follows recent news by other major energyproducers, including El Paso Corp. and Enron Corp., which both haveannounced 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 andMcCormick said he expects LNG business there “to do at least thatwell, probably more” this year. At thebriefing, McCormick and hisexecutive team outlined plans where they expect to see the mostgrowth for the entire company in the near term.

Besides LNG, the CMS team discussed their part in the comingelectric restructuring in Michigan, where the company serves 3.2million gas and electric customers through Consumers Energy. Theyalso provided insight into future expansion of its PowderRiver-area pipeline as well as highlighting plans to expandcustomer relations services and “rapidly grow its traditionalbusinesses.”

On LNG, McCormick admitted that the United States probably couldaccommodate “three or four large facilities” but expects somerecent announcements to be “problematic.”

“I think there’s certainly room” for more facilities,” he saidbecause the “economics” of LNG are “so attractive,” and willcontinue to be with the high cost of natural gas. “But some of theproposed terminals announced are problematic, such as thesuggestion of a Florida pipeline,” announced recently as apotential Enron Corp. LNG facility site.

McCormick predicted the proposed Florida site would havepermitting problems because of its location, and other sites wouldtake time to develop. “I certainly do not think there will be anymore (facilities) anytime soon,” because of the two-to-three yeardelay in siting and regulatory approval. “Having said that, thereare opportunities to expand our (Lake Charles) facility,particularly from a contract position. We’re number one, and we’regoing to aggressively maintain our leading position.”

The Dearborn, MI-based company, which supplies energy andservices in 20 states across the Midwest, Gulf Coast and RockyMountain region, will target growth in its regional U.S. businessesand in selected global markets, but McCormick left the door open asto future acquisitions or merger possibilities.

“We have excellent assets and there are a lot of attractiveopportunities,” McCormick said. “The situation has changed from ourposition since a year ago. The market has changed quite a bit. Thebusiness we have is more attractive.”

Among other things, CMS has seen more demand for its firmcapacity, and more long-term contracts. Tamela W. Pallas, COO ofCMS Marketing, Services and Trading Co. (MST) said that one of the”positive” outcomes from the situation in California for CMS hasbeen 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 morelong-term contracting,” Pallas said. She said CMS’s renewed focuson customer satisfaction also is paying off. “Integrity is moreimportant in the marketplace,” and she said that a company couldn’tjust talk about what it can provide. It has to follow through.

Earlier this month, MST was ranked first in customersatisfaction among the 68 largest natural gas marketing companiesin the United States in an independent study by Mastio & Co.For the fourth time, researchers surveyed 1,200 energy buyers on 39different customer satisfaction attributes, placing MST ahead ofthe pack.

Along those lines, Pallas expects CMS Viron Energy Servicesunit, which contracts with institutions to manage energy, to becomeon of the company’s faster growing segments. Just yesterday, theAlameda County Board of Supervisors in California approvedinstalling several energy efficiency projects by Viron to reduceand stabilize future energy costs.

“In the facility management area, we are looking foracquisitions,” Pallas said. “A lot more companies are outsourcingtheir energy services and are concerned about energy consumption.This is a great area for CMS because we cover the market.” Energyconservation services are a natural for CMS, she said, and asutility bills rise, more companies will look for a trustedprovider.

CMS will leverage its gas pipeline business to grow across otherCMS businesses, including aggressively developing West Texas andPowder River gas, McCormick said. That will mean actively marketingits Panhandle/Trunkline/Guardian transportation capacity for newgas-fueled power plants along the line. In the past 18 months,5,650 MW of power plant load has committed to Panhandle andTrunkline, about 25% of its maximum daily capacity.

The Guardian pipeline’s final certification should be completed”shortly,” McCormick said. It received a favorable finalEnvironmental Impact Statement in January, and should be in serviceby November 2002. The Centennial Pipeline, which extends from theU.S. Gulf Coast to Illinois to carry refined petroleum products, isexpected to be in service January 2002.

The Fort Union gas gathering expansion in the Powder RiverBasin, which CMS owns 33% interest in, is expected to be in serviceby 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/dincrease from current production.

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