The results are in from Southern LNG Inc.’s open season for arevitalization of the mothballed Elba Island LNG terminal, and thewinner of all 4 Bcf of capacity is Sonat Energy Services, aSouthern LNG affiliate and an affiliate of Southern Natural Gaspipeline. The winning bid was for a 22-year term at fullcost-of-service rates.

“I have a hard time believing someone won’t protest this,” saidone LNG veteran, who wished to remain anonymous. “If Elba Islandwas a pipeline, there would be riots at FERC over the way this openseason was carried out.”

Southern LNG launched the open season June 1 to test marketdemand and to “explore the economic feasibility of recommissioningthe [terminal].” The Elba Island LNG facility has been dormantsince 1982. The open season ended June 15 and the results wereposted to the bulletin board last week. A Sonat spokesman said thecompany will issue a release soon, but would not be more specific.

The company posted the open season announcement to its Web-sitebulletin board, but did not issue a press release. “They posted theannouncement only a few hours before the open season started,” thesource said. “Does that sound like a company that wants a lot ofcompanies competing in an open season? Of course not. It wasdesigned to keep the offer as quiet as possible.

“Look at it another way. Sonat also recently held an open seasonfor their Palmetto Pipeline (See Daily GPI,April 13). There were press releases all over the place aboutthat. Why didn’t they do the same thing for Elba Island?”

The maximum rate for firm service will be “established torecover an annual cost-of-service of approximately $23 million,”the open season notice said.

Despite the way in which the open season was promoted, sourcessaid there were still many bidders vying for capacity at ElbaIsland. “It all could fire up in a hurry,” one source said. “Thespecifications were very strict, and they eliminated 99% of the LNGindustry. If somebody steps up and says something, they have apretty strong case. Many of the specifications had nothing to dowith bidding for capacity at Elba Island.”

If nothing else, the source said Sonat’s practices have set abad precedent. “I know Columbia is thinking about holding an openseason for its Cove Point LNG facility. If Sonat can get away withrunning an open season the way they did, why won’t Columbia? It’sto their advantage.”

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