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Freeport LNG Gets FERC Go-Ahead to Begin Operations

FERC last Tuesday gave Freeport LNG Development LP the green light to begin service at its liquefied natural gas (LNG) terminal on Quintana Island, about 70 miles south of Houston. The terminal comes on-line about four years to the date from when the Federal Energy Regulatory Commission (FERC) approved the project (see NGI, June 28, 2004).

The Freeport facility received two tanker shipments in April and May from Trinidad, with a combined load of 6 Bcf, to commission and cool down the LNG plant. "We're prepared to take ships in...We're ready to go," said Freeport LNG Vice President Bill Henry. He noted, however, that the terminal is not scheduled to receive any tanker shipments this month. The next incoming shipment will depend on natural gas prices in the United States versus gas prices in Japan and Europe, according to Henry.

The Phase 1 facilities have a sendout capacity of up to 1.5 Bcf/d, with the ability to meet 1.75 Bcf/d of peak demand. It also includes two 160,000-cubic-meter LNG storage tanks and one piled dock capable of handling LNG tankers in excess of 200,000 cubic meters. The marine terminal has the capability of unloading 200 ships per year.

The Freeport terminal is located near two large gas trading hubs (Katy and the Houston Ship Channel) and is adjacent to large local industrial gas consumers. The terminal's capacity is fully contracted under three separate long-term use agreements with ConocoPhillips (0.9 Bcf/d), Dow Chemical Co. (0.5 Bcf/d) and Mitsubishi Global Gas Corp. (0.15 Bcf/d), Henry said.

The project also includes 10 miles of 36-inch diameter pipeline extending from the import terminal to a meter station at Stratton Ridge storage hub in Brazoria County, where the company says there is adequate takeaway capacity on intrastate pipelines.

In September 2006 FERC approved Freeport LNG's request to raise the sendout capacity of the terminal to 4 Bcf/d. The company has targeted these Phase II facilities for completion in September 2009 (see NGI, Sept. 25, 2006). The expansion of the facility will include an additional LNG vessel berth, LNG tank storage and vaporization capacity. Freeport LNG also is planning to construct a 7.5 Bcf underground storage cavern at Stratton Ridge that will be integrated into the operations of the terminal.

Freeport LNG is a Delaware limited partnership whose sole general partner is owned by CEO Michael Smith (50%) and ConocoPhillips (50%). The limited partners are Freeport LNG Investments LLLP (45%), Cheniere FLNG LP (30%), Texas LNG Holdings LLC (15%), and Turbo LNG LLC (10%).

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