CMS to Expand LNG Terminal, Customer Services
North America's largest liquefied natural gas terminal is getting bigger
--- CMS Energy officials confirmed last week they will expand the Lake
Charles, LA terminal within a few months if federal approval is received.
The LNG facility, which now produces up to 700 MMcf/d could eventually
increase its daily production to 1.25 Bcf/d, CEO William McCormick said.
Just last week, McCormick said CMS had received a record 20 major bids
to provide long-term capacity from its Lake Charles facility, which eventually
could transport up to 120 cargoes a year. The CMS news follows recent announcements
by other major energy producers, including El Paso Corp. and Enron Corp.,
which both have announced plans to build LNG facilities for U.S. use (see
NGI, Feb. 12).
The CMS terminal received a record 55 cargoes in 2000 and McCormick
said he expects LNG business there "to do at least that well, probably
more" this year. At the briefing, McCormick and his executive team
also outlined plans where they expect to see the most growth for the entire
company in the near term.
Besides LNG, the CMS team discussed its part in the coming electric
restructuring in Michigan, where the company serves 3.2 million gas and
electric customers through Consumers Energy. They also provided insight
into future expansion of its Powder River-area pipeline as well as highlighting
plans to expand customer relations services and "rapidly grow its
On LNG, McCormick admitted that the United States probably could accommodate
"three or four large facilities" but expects some recent announcements
to be "problematic."
"I think there's certainly room" for more facilities,"
he said because the "economics" of LNG are "so attractive,"
and will continue to be with the high cost of natural gas. "But some
of the proposed terminals announced are problematic, such as the suggestion
of a Florida pipeline," announced recently as a potential Enron Corp.
LNG facility site.
McCormick predicted the proposed Florida site would have permitting
problems because of its location, and other sites would take time to develop.
"I certainly do not think there will be any more (facilities) anytime
soon," because of the two-to-three year delay in siting and regulatory
approval. "Having said that, there are opportunities to expand our
(Lake Charles) facility, particularly from a contract position. We're number
one, and we're going to aggressively maintain our leading position."
The Dearborn, MI-based company, which supplies energy and services in
20 states across the Midwest, Gulf Coast and Rocky Mountain region, will
target growth in its regional U.S. businesses and in selected global markets,
but McCormick left the door open as to future acquisitions or merger possibilities.
"We have excellent assets and there are a lot of attractive opportunities,"
McCormick said. "The situation has changed from our position since
a year ago. The market has changed quite a bit. The business we have is
Among other things, CMS has seen more demand for its firm capacity,
and more long-term contracts. Tamela W. Pallas, COO of CMS Marketing, Services
and Trading Co. (MST) said that one of the "positive" outcomes
from the situation in California for CMS has been a request for more long-term
"In California, the situation may have slowed down deregulation
(across the country), but on the positive side, we're seeing more long-term
contracting," Pallas said. She said CMS's renewed focus on customer
satisfaction also is paying off. "Integrity is more important in the
marketplace," and she said that a company couldn't just talk about
what it can provide. It has to follow through.
Earlier this month, MST was ranked first in customer satisfaction among
the 68 largest natural gas marketing companies in the United States in
an independent study by Mastio & Co. For the fourth time, researchers
surveyed 1,200 energy buyers on 39 different customer satisfaction attributes,
placing MST ahead of the pack.
Along those lines, Pallas expects CMS Viron Energy Services unit, which
contracts with institutions to manage energy, to become on of the company's
faster growing segments. Just yesterday, the Alameda County Board of Supervisors
in California approved installing several energy efficiency projects by
Viron to reduce and stabilize future energy costs.
"In the facility management area, we are looking for acquisitions,"
Pallas said. "A lot more companies are outsourcing their energy services
and are concerned about energy consumption. This is a great area for CMS
because we cover the market." Energy conservation services are a natural
for CMS, she said, and as utility bills rise, more companies will look
for a trusted provider.
CMS will leverage its gas pipeline business to grow across other CMS
businesses, including aggressively developing West Texas and Powder River
gas, McCormick said. That will mean actively marketing its Panhandle/Trunkline/Guardian
transportation capacity for new gas-fueled power plants along the line.
In the past 18 months, 5,650 MW of power plant load has committed to Panhandle
and Trunkline, about 25% of its maximum daily capacity.
The Guardian pipeline's final certification should be completed "shortly,"
McCormick said. It received a favorable final Environmental Impact Statement
in January, and should be in service by November 2002. The Centennial Pipeline,
which extends from the U.S. Gulf Coast to Illinois to carry refined petroleum
products, is expected to be in service January 2002.
The Fort Union gathering expansion in the Powder River Basin, which
CMS owns 33% interest in, is expected to be in service by the fourth quarter.
With that, COO William J. Haener said another expansion might be viable
in three years. Capacity will increase to 634 MMcf/d this year, a 200 MMcf/d
increase from current production.
Carolyn Davis, Houston