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Freeport LNG Gets Green Light to Enlarge Pipeline Project in Texas

FERC last Wednesday gave Freeport LNG Development LP the go-ahead to increase the size of the pipeline that will accommodate deliveries from its proposed liquefied natural gas (LNG) import terminal on Quintana Island in Brazoria County, TX.

The decision, which amends a June 2004 order approving the LNG project and pipeline, gives Houston-based Freeport LNG the authorization to modify the project's nearly 10-mile sendout pipeline by increasing its diameter to 42 inches from 36 inches.

Freeport LNG said the larger diameter "will increase system pressure and thus improve the deliverability at Freeport LNG's Stratton Ridge delivery point, where there would otherwise be a pressure drop between the delivery point and interconnected pipeline systems," according to the order [CP03-75].

In addition, it said "the higher delivery pressure would increase the sendout pipeline's capacity and operational flexibility, thereby enabling Freeport LNG to satisfy peak natural gas demand without adding costly compression facilities."

In making its case for a larger diameter pipeline, Freeport LNG said its project currently is fully subscribed, and it has received additional requests for deliveries of gas when the authorized facilities go into service. It further noted that it anticipates more requests to meet future market demand.

Freeport LNG's project will include a marine terminal, LNG transfer lines and LNG storage and vaporization units. The marine terminal will have the capability to unload 200 ships per year. The sendout capacity of the facility will be up to 1.5 Bcf/d. The proposed two LNG storage tanks each will have the capacity to hold 3.5 Bcf.

The proposed pipeline would extend from the import terminal to a proposed meter station at Stratton Ridge storage hub in Brazoria County, where the company says there is adequate takeaway capacity on intrastate pipelines. At Stratton Ridge, Freeport said it is considering connections with five intrastate pipelines: Dow Pipeline Co., Kinder Morgan Texas Pipeline Co. LP, Houston Pipeline Co., Texas Utilities Pipeline Co. and Enterprise Pipeline LP.

The Freeport LNG facility is expected to be constructed and placed into services for the 2006-2007 winter heating season. Dow Chemical already has signed a 20-year agreement to reserve 500 MMcf/d of the plant's capacity. ConocoPhillips has entered into an agreement to fund the construction of the LNG facility (more than $500 million) in exchange for the remaining 1 Bcf/d of capacity, the company said.

Freeport LNG, which is 60% owned by privately held Freeport Investment, also is partially owned by two Houston-based independents, Cheniere Energy Inc., with a 30% interest, and Contango Oil & Gas, which has a 10% stake.

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