Signaling that its policy on liquefied natural gas (LNG) is "unchanged" under the new FERC administration, the Commission on Thursday authorized Occidental Petroleum's Ingleside, TX, LNG terminal and associated San Patricio Pipeline. The agency said the 1 Bcf/d terminal, which would be located near Occidental's chemical plant on Corpus Christi Bay, was in the public interest and would have limited adverse impact on the environment given certain recommended mitigation by the company.

The $400 million project, to be sited in San Patricio and Nueces counties, TX, would include a new marine terminal basin connected to the La Quinta Channel with one protected berth to unload about 140 ships per year (two to three per week). It would include two 160,000 cubic meter storage tanks, LNG vaporization equipment capable of vaporizing 1 Bcf/d of LNG, and 26 miles of 26-inch diameter pipeline with nine interconnections with nine existing interstate and intrastate pipelines north of Sinton, TX.

San Patricio Pipeline expects to place its pipeline in service in 2008 to coincide with the completion of the Ingleside LNG terminal. The pipeline has executed a precedent agreement with Occidental Marketing for the entire capacity of the pipeline for a term of 15 years.

Occidental Petroleum said it plans to use only about 10% of the proposed send-out capacity from the terminal for its own operations, with the remainder of the LNG-sourced gas going directly into intrastate and interstate pipelines serving the southern, midwestern and eastern markets.

The project would be a massive undertaking, impacting nearly 490 acres of land and water. It also would be located about 1.2 miles west of existing residences in the City of Ingleside and two miles northwest of homes in the community of Ingleside on the Bay. The most prominent visual features would be the 178-foot above-ground storage tanks, which are 253 feet in diameter. The project also would be located within Texas' designated coastal zone management area.

FERC brought the LNG project up for discussion at its Thursday meeting to "highlight that the Commission's policy on LNG is unchanged, that our approach will remain consistent as it was under [former] Chairman Wood," said Chairman Joseph Kelliher. It also is an example of how quickly the agency can act on applications for LNG terminals, he noted.

FERC staff issued its final environmental impact statement on the Ingleside terminal project less than eight months after the company's application was filed, Kelliher said. "We are a very tough safety regulator, but we're also capable of making rapid decisions."

The order has 46 conditions involving design to ensure the safety and operability of the facilities, staff said. "It continues our policy," which was "made clear" when FERC rejected the proposed KeySpan LNG terminal in Rhode Island earlier this month, that "new facilities must meet or exceed the current highest safety standards," said Commissioner Suedeen Kelly.

"I would just encourage parties that are interested in read this order, look at the environmental conditions, look at the safety conditions," recommended Commissioner Nora Brownell. "I think people can begin to get more comfortable with why LNG plants are a part of our future and are, in fact, consistent with the safety and well-being of people in the neighborhood."

A key feature of the project has Occidental using waste heat from its chemical facility near Corpus Christi to vaporize the imported LNG, a process that will save an estimated 16,000 MMBtu of natural gas, Kelly pointed out. The siting of the proposed LNG facility near Occidental's plant also is "optimal," she said, adding that in a sense the LNG facility is a co-generation plant.

In addition, Ingleside intends to include a natural gas liquids recovery unit at the terminal in order to diversify the range of LNG sources available to the facility, mitigate gas compatibility problems, and provide additional feedstock for the petrochemical industry.

Currently there are two other LNG terminals planned for the La Quinta Channel in the Corpus Christi Bay area: Cheniere Energy's Corpus Christi LNG project, which was approved in April; and ExxonMobil's Vista del Sol LNG terminal, which was approved last month. Together the three LNG terminals will provide 5 Bcf/d of gas sendout capacity when they begin service in late 2008 or early 2009.

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