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Two LNG Projects Ink Construction Contracts

Two LNG Projects Ink Construction Contracts

Construction contracts for two major LNG projects were awarded last week. Dominion Resources handed the 800 MMcf/d Cove Point expansion project to The Woodlands, TX-based CB&I, which built some of the existing facilities at Cove Point, MD, and Cheniere Energy awarded a contract to build its Sabine Pass LNG terminal to San Francisco-based Bechtel.

CB&I will handle the engineering, procurement, construction and commissioning of two 160,000 cubic meter LNG storage tanks, 800 MMcf/d of additional regasification capacity, gas turbine generation and new support facilities at the Cove Point, MD, LNG terminal. Once completed, the project will increase the facility's sendout capacity from 1 Bcf/d to 1.8 Bcf/d, and nearly double storage capacity from 7.8 Bcf to 14.6 Bcf of natural gas.

CB&I said has been released to begin engineering and procurement on the project. The company added that field construction is scheduled to begin upon receipt of required regulatory approvals, with completion expected in late 2008. CB&I built the original four LNG storage tanks at Cove Point, as well as a recently completed fifth LNG storage tank. Put into commercial operation earlier this month, the new 135,000 cubic meter tank increased the terminal's storage capacity from 5 Bcf to 7.8 Bcf.

In Cameron Parish, LA, Bechtel has been given limited notice to proceed on the 2.6 Bcf/d Sabine Pass LNG terminal. Off-site engineering and preparatory work will start later this month. Construction is expected to begin during the first quarter of 2005, and the terminal is due to be operational in early 2008.

On Dec. 15, FERC approved construction of the new terminal (see NGI, Dec. 20). It will consist of three 160,000 cubic meter storage tanks and two unloading docks capable of handling ships of up to 250,000 cubic meters.

The Sabine Pass LNG lump-sum turnkey agreement is valued at $647 million. In addition, Houston-based Cheniere has also budgeted $173 million of owner's costs and contingencies, bringing the total capital budget to $820 million before financing costs, changes in commodity prices and unanticipated change orders.

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