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Neptune LNG Wins Deepwater Port License

Neptune LNG LLC, a subsidiary of Houston-based SUEZ Energy North America, announced Tuesday that it received a deepwater port license from the U.S. Maritime Administration (MARAD) to build and operate the Neptune offshore liquefied natural gas (LNG) delivery system in Massachusetts Bay, making it the first LNG project on the East Coast to receive approval.

The Neptune project would deliver between 400 and 750 MMcf/d of natural gas to New England -- enough to serve 1.5 million to 3 million homes daily, the company estimated. The port would be located off the coast of Massachusetts' North Shore. It will operate by mooring specially designed LNG ships equipped to store, transport and vaporize LNG into natural gas that can be sent to customers using the existing HubLine subsea pipeline, which brings gas to the Algonquin pipeline system from the Maritimes & Northeast pipeline.

LNG carriers will moor at Neptune's proposed deepwater port by means of a submerged unloading buoy system consisting of two buoys. An LNG ship will typically moor for four to eight days, depending on market demand. The two separate buoys will ensure that natural gas can be delivered in a continuous flow by having a brief overlap between arriving and departing LNG carriers.

Neptune said it anticipates the entire project will be operational in 2009. In addition to the port, the project includes the construction of a pipeline connecting to the existing subsea pipeline HubLine; specially designed ships; and the LNG supply to serve customers in Massachusetts and the rest of New England. SUEZ Energy estimated the cost of the project at approximately $1 billion.

In the MARAD record of decision, Administrator Sean T. Connaughton wrote "it is clear to me that Neptune will fill a vital role in meeting our national energy requirements for many years to come."

SUEZ Energy called the decision a major step forward. "We are extremely encouraged by the Maritimes Administration's decision and look forward to having Neptune supplement our onshore LNG import terminal in Everett, MA, to meet the growing demand for natural gas from consumers in the region," said Zin Smati, president and CEO SUEZ Energy North America.

Demand for natural gas from power generation and residential consumers in New England is expected to increase by 1-2% annually over the next two decades, with Massachusetts alone accounting for half of the region's gas consumption, the company said. At this rate of growth, it noted the region could face a shortage of gas supply approaching 500 MMcf/d in the year 2010.

The Neptune deepwater port is not the only deepwater port that has been proposed for Massachusetts Bay. The other is the Northeast Gateway project planned by Excelerate Energy LLC, which already has a similar LNG import terminal operating in the Gulf of Mexico (see Daily GPI, June 8, 2004). Every aspect of the Neptune project mirrors Northeast Gateway, down to Neptune's location.

In December, Massachusetts Gov. Mitt Romney approved both the Northeast Gateway and Neptune offshore import terminals (see Daily GPI, Dec. 20. 2006). Excelerate Energy's Northeast Gateway, however, is still awaiting a license from MARAD.

"We anticipate that MARAD will consider our application [for a deepwater port license] early next month," said Doug Pizzi, a spokesman for Northeast Gateway. He noted that the deepwater port, which will be constructed between May and November, will be in operation in December. Prizzi said the company can meet the early in-service date because "we already have the ships" constructed that will transport the LNG. Typically, construction of tankers takes anywhere from two to three years, he said.

Northeast Gateway would be located 13 miles south-southeast of Gloucester, MA. It also would consist of two submerged buoys that would attach to specialized ships capable of regasifying LNG on board and sending it into a subsea pipeline system. Algonquin Gas Transmission plans to build a 16-mile, 24-inch diameter pipeline to the Northeast Gateway project. The proposed offshore LNG facility would provide up to 800 MMcf/d of peak day sendout. Average sendout would be 400 MMcf/d.

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