Ending a record year for LNG imports, CMS Trunkline LNG Co.announced plans for a possible deliverability expansion at its LNGimport terminal in Lake Charles, LA. The company is conducting anopen season to offer firm, long-term LNG terminal services startingin January 2002.

“The outcome of this open season will help CMS Trunkline LNGplan for the future use and potential expansion of its LNG terminalin Lake Charles, LA. This terminal will be an important contributorin helping to satisfy the growing natural gas demand in the U.S.market,” said Christopher A. Helms, president of CMS Panhandle PipeLine Companies. Helms said the open season would determine the sizeof the expansion but he noted that the company would like to add300 MMcf/d of deliverability, bringing the facilities totaldelivery capacity to 1 Bcf/d, which is equal to the capacity ofdownstream pipeline partner Trunkline Gas.

In contrast to the tight economics of the past, record highdomestic gas prices have preserved favorable economics for LNGimports for years to come. Helms said overseas LNG producers likelywould get $5/MMBtu netbacks in the current U.S. market.

“The LNG is priced at the Henry Hub price and is sold by any oneof the eight shippers that have used the terminal,” said Helms.”Today about 60% of the LNG has gone up Trunkline’s longhaulpipeline so that means 40% of what has come through the terminalhas gone into [Louisiana pipeline grid] and probably to theNortheast [Florida or Texas].” Maximum rates for CMS Trunkline LNGservice are about $1.20/MMBtu and transportation rates to the HenryHub via Trunkline range between 7 and 12 cents, said Helms.

“A number of the people we are talking to include importers,marketing companies and producers who are developing LNG projects.As these producers are looking at bringing new LNG projects on linein 2002, 2003 or 2005, they want to be assured that they have anoutlet to the North American market and we are to the point rightnow where demand will soon exceed deliverability.”

CMS is not alone in the LNG boom in the United States this year.There has been a frenzy of activity in the relatively small U.S.LNG sector, including plans to recommission two mothballedterminals: Cove Point LNG in Maryland and Southern LNG’s terminalat Elba Island, GA. In addition, Columbia Gas sold its ownershipstake in the Cove Point facility to Williams, and Cabot LNG soldits LNG facility in Boston — the only other active importterminal besides CMS’s Lake Charles facility — to Belgium’sTractebel.

The CMS LNG facility has an existing capacity to receive 90 shipcargoes per year at 2.8 Bcf of gas per ship on average, and isexpected to receive a record 55 ship cargoes with a total of 135Bcf of gas by year-end.

The open season for the expansion extends from Dec. 15 throughFeb. 15. Requests for service should have a minimum length of 10years.

Rocco Canonica

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