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Tankers Make First Shipments to Sabine Pass, Freeport LNG Plants

Two new liquefied natural gas (LNG) terminals along the Gulf Coast have received their initial commissioning cargoes, setting the stage for the facilities to go into operation within a few months.

The Freeport LNG terminal on Quintana Island near Freeport, TX, about 70 miles south of Houston, received its first cargo last Tuesday from Trinidad. Cheniere Energy Inc.'s Sabine Pass LNG terminal in Cameron Parish, LA, received its first shipment on April 11, according to the U.S. Coast Guard in Port Arthur, TX. The initial cargo came more than three years after the Federal Energy Regulatory Commission (FERC) approved the Sabine Pass project (see Daily GPI, Dec. 16, 2004).

On the Northeast coast, Excelerate Energy reported that the initial LNG shipment for its Northeast Gateway offshore system in Massachusetts Bay has been delayed until May. The shipment initially was scheduled for delivery this month.

The Celestine River tanker carried 145,000 cubic meters of LNG from Nigeria up the Sabine-Neches Channel near Port Arthur to the Sabine Pass terminal. Four tugboats escorted the mammoth LNG tanker up the channel on its maiden voyage, the Beaumont Enterprise reported. In smaller boats, the Coast Guard, Jefferson County and Cameron Parish sheriff's deputies and Sabine Pilots held a security perimeter around the vessel, it said.

The LNG shipment will be used in the terminal's "cooldown" process, which cools the facility to its normal operating temperature. In March the Commission granted Cheniere's request to accept cargoes for testing. Cheniere also received authorization for commissioning activities at Sabine Pass and to put its Sabine Pass pipeline segment into service in advance of the rest of the new Creole Trail pipeline (see NGI, March 31). In October 2007 FERC approved the merger of affiliates Cheniere Creole Trail Pipeline and Cheniere Sabine Pass Pipeline into a single line that would serve two LNG terminals in Cameron Parish, including the Sabine Pass LNG terminal and Cheniere Energy's Creole Trail LNG terminal.

"After several years of development and construction, we are very excited to receive our cooldown cargo on our own ship," said Cheniere CEO Charif Souki. "We hope this marks the beginning of a long relationship with Nigeria LNG, a dominant LNG producer in the Atlantic Basin."

Sabine Pass LNG will be the largest LNG receiving terminal in North America by regasification capacity at 4 Bcf/d and will have 16.8 Bcf of LNG storage capacity with two berths capable of handling the largest LNG vessels. It is located on 853 acres of land remote from dense population and 3.7 miles from the open waters of the Gulf of Mexico.

The Sabine Pass LNG receiving terminal is owned by Cheniere Energy Partners, LP, in which Cheniere Energy, Inc. has a 90.6% interest through its ownership of common units, general partner units and subordinated units. The Celestine River is a new 145,000-cubic-meter capacity LNG vessel owned and operated by K-Line LNG shipping and chartered by Cheniere. The Nigeria LNG terminal is located in Bonny Island, Nigeria and operated by Nigeria LNG Ltd.

Sabine Pass is one of three LNG receiving terminals that Cheniere is currently developing as part of an LNG network in the South. Creole Trail and Corpus Christi are the two other LNG terminals currently under construction.

The Freeport LNG terminal received a 130,000-cubic-meter shipment last week, which will be used to commission the LNG plant on Quintana Island, said company spokesman Bill Henry. He noted that the shipment came from Trinidad, and that the terminal is expected to be fully operational on June 1. The facility will be operated by Freeport LNG Development LNG.

FERC last week approved Freeport LNG's acceptance of the cargo to cool down the vapor handling system and LNG storage tank T-1. "The cooldown of LNG storage tank T-2 and the LNG sendout system will require additional approvals. Also this authorization does not grant commencement of service of the project," the Commission said [CP03-75].

Freeport's terminal, which FERC approved in June 2004, includes 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/d.

As for Excelerate Energy, the original plans called for the initial cargo to be delivered to the Northeast Gateway offshore terminal by the end of April, but the company "had an opportunity to sell part of it [the cargo] to South America," said spokesman Doug Pizzi. After South America, the tanker Excellence, which originated in Trinidad, will make its way to Northeast Gateway, dropping off 138,000 cubic meters of LNG sometime in May.

"The plan was to do this in reverse," first coming to Northeast Gateway and then to South America, but scheduling problems prompted the change, Pizzi said. The scheduling revision "[was] necessary to maintain fleet and terminal schedules and coincides with the start of the South American heating season," noted Excelerate Energy COO Jonathan Cook.

The Northeast Gateway project, which was completed in December, consists of two submerged buoys that will attach to specialized ships capable of regasifying LNG on board and sending it into a subsea pipeline system. Algonquin Gas Transmission has built a 16-mile pipeline that will tie the Northeast Gateway system to its existing HubLine system, which runs under the ocean floor across Massachusetts Bay and connects to the New England natural gas grid (see NGI, Feb. 12, 2007).

The LNG tanker will tie up to the buoy system in Massachusetts Bay about 18 miles east of Boston. About a month and a half ago, Pizzi said the company tested the buoy system with an empty vessel. The new offshore LNG system, the first of its kind in the Northeast, has the potential to meet 20% of the average natural gas demand of New England, he noted.

Northeast Gateway said the system has the capacity to deliver up to 800 MMcf/d of natural gas into Algonquin's HubLine.

Cheniere Energy Inc. said last Wednesday that its marketing subsidiary was in advanced negotiations to reach an outsourcing deal with a major North American natural gas marketing firm to manage the throughput of LNG and the downstream gas market for LNG cargoes delivered for Cheniere Marketing's account at the Sabine Pass LNG terminal (see related story).

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