Liquefied natural gas for the U.S. market is becoming more viable with each passing week, and now, a Houston-based company has firmed up its plans to build the first of three Gulf Coast receiving terminals, while an international company announced it is negotiating with several U.S. buyers for its future Egyptian LNG supplies.

Last week, Houston-based Cheniere Energy Inc., after announcing earlier this month that it would build three liquefied natural gas terminals along the Texas coast (see NGI, June 18), acquired Freeport LNG LLC from Crest Investment for $250,000. The deal gives Cheniere a three-year option that it may convert into a long-term lease within the port of Freeport, TX.

As part of the announced Cheniere transaction, Crest received 500,000 shares of Cheniere common stock and will become Cheniere’s strategic partner in the LNG activities. Crest also will receive an additional 750,000 shares when Cheniere receives all of the necessary permits to begin construction of the first LNG terminal.

“We have been working with Crest for several months to develop our LNG strategy,” said Cheniere Chairman Charif Souki. “Crest has been active in the oil and gas industry, and LNG in particular for several years. We are delighted to formalize our relationship with them and look forward to their advice and support in this venture.”

Cheniere wants to acquire sites along the Gulf Coast because in the next 10 years, the company believes LNG could supply the U.S. market with 15 Bcf/d or more of natural gas. Current capacity in existing domestic terminals, including expansion, is limited now to less than 5 Bcf/d.

With a two-to-three-year permitting process, Cheniere expects to begin construction on its terminals in 2003 and be operational by late 2006. Already, environmental impact work and engineering work at the Freeport site has begun. Souki said Cheniere would receive its LNG imports from Trinidad, Venezuela and Nigeria, among other places.

“Freeport is an excellent location for our first site,” said Cheniere CEO Charles Reimer. “It provides good access to the existing pipeline infrastructure, excellent harbor facilities and close access to open waters. We think we will make a very positive contribution to the local economy and look forward to cooperating with the port authority to develop a successful venture for the benefit of all parties.”

Also last week, London-based BG plc said it was negotiating contracts with several U.S. buyers for supplies of LNG from Egypt when its first shipment is ready in mid-2005. Import locations include the largest operating LNG terminal in the United States, CMS Trunkline, based in Lake Charles, LA. BG Group inked a 22-year leasing deal with CMS in May (see NGI, May 21).

BP Egypt President Peter Dranfield said that his company’s LNG supplies would be viable in the U.S. marketplace, despite the 5,000-plus mile distance. BG holds 80% of the capacity at the CMS terminal in Lake Charles beginning in January 2002, and will have total capacity from September 2005 when its Egyptian LNG project is onstream. The Lake Charles terminal has a daily capacity of 630 MMcf, and has applied this year to expand its terminal services.

Construction on the Egyptian project, the first for the country, is set to begin in the second quarter of 2002. Partners include Italian Edison and the Egyptian General Petroleum Corp.

These LNG announcements follow a steady stream of projects announced recently. CMS Energy CEO William McCormick said last week his company plans to build two terminals in Mexico and another offshore in the Gulf of Mexico.

Chevron said in March that it was studying a plan to begin shipping LNG to the U.S. West Coast from its Australian LNG holdings, and Shell International Gas Ltd. and a joint project by El Paso Corp. and Phillips Petroleum Co. also announced plans to bring LNG to the United States from Australia (see NGI, March 26).

El Paso also announced earlier this year it would build up to six new terminals in Mexico, the Bahamas and the United States (see NGI, Feb.12). Texaco, meanwhile, plans an offshore LNG plant off the Louisiana coast. Other majors, including BP, also are involved in LNG proposals. Site locations have been speculated upon, but no official announcements have been finalized.

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