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Contract Signed to Build Storage Tanks for Sabine Pass LNG Project

Tulsa, OK-based Matrix Service Co. said last Thursday that it and a subsidiary of Mitsubishi Heavy Industries Ltd. have entered into an agreement with Bechtel Corp. to carry out the engineering and construction of three liquefied natural gas (LNG) storage tanks for Cheniere Energy Inc's LNG terminal that is under construction in Cameron Parish, LA.

Specifically, the agreement was executed between Matrix Service Inc., a wholly owned subsidiary of Matrix Service Co., and Mitsubishi subsidiary Diamond LNG LLC with Bechtel to build three 160,000 cubic meter tanks for Cheniere Energy's wholly owned limited partnership, Sabine Pass LNG LP, which is having the LNG facility constructed in Louisiana.

Construction currently is underway at the site, with tank construction expected to begin in July, according to Matrix Service. The LNG terminal is targeted for operation in 2008. The lump sum turnkey agreement is valued at approximately $126 million, of which Matrix estimates it will receive about $97 million.

In mid-March, FERC gave Sabine Pass LNG the green light to begin construction on what will be the largest LNG import terminal in North America when it begins commercial operations in 2008 (see NGI, March 14).

The $700 million Sabine Pass terminal in Cameron Parish will have a sendout capacity of 2.6 Bcf/d, with storage space for 480,000 cubic meters of LNG. Chevron, formerly ChevronTexaco, signed a 20-year agreement for 700 MMcf/d of the capacity. The agreement includes an option to reduce or expand the capacity to 500 MMcf/d or 1 Bcf/d, respectively. France's Total signed a 20-year agreement for 1 Bcf/d starting in 2009. Cheniere will retain the balance of the capacity.

The project includes a $350 million, 16-mile, 42-inch diameter pipeline that will carry up to 2.7 Bcf/d of gas from the terminal at the Texas-Louisiana border to interconnections with other pipelines in southwestern Louisiana.

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