Dynegy's Gulf Coast LNG Terminal to Be Ready in 2003

Houston-based energy marketer Dynegy Inc. is joining an impressive list of companies poised to build U.S.-based liquefied natural gas (LNG) facilities, announcing Thursday it will construct a plant at its existing liquefied petroleum gas terminal site in Hackberry, LA. Because the Gulf Coast site is already developed, the facility could be operational two to three years sooner than a greenfield project, with the first phase of commercial operation set for the end of 2003.

Just along the Gulf Coast, Dynegy's announcement follows two others in the past six months. Houston-based Cheniere Energy Inc. announced in June that it wants to build three LNG terminals, and has already selected a site in Freeport, TX, for one of them (see NGI, June 25). A month earlier, White Plains, NY-based Texaco announced it would build an LNG receiving and regasification terminal offshore Louisiana that would connect to its offshore infrastructure (see NGI, May 21).

"Demand for natural gas in the United States and around the globe is growing steadily due to our increased reliance on natural gas as the preferred fuel," said Dynegy CEO Chuck Watson. "This terminal will be an important addition to our ever-expanding energy delivery network in the United States and will allow us to participate in a growing global LNG trade to meet our customers' energy needs."

Dynegy also would join the only currently operating facility along the Gulf Coast, CMS Energy Corp.'s Lake Charles, LA, terminal, the largest operating terminal in the country. In April, CMS received final approval to boost its LNG capacity at the terminal by 40% to 1 Bcf/d, and could expand even more as demand grows (see NGI, April 9).

Dynegy, which did not release financial details, expects to begin the first phase of commercial operation by the end of 2003, which would give it an 18-24-month time-to-market savings. Full capacity would be available by 2004, it said, and the plant would be capable of receiving and processing 750 MMcf/d of LNG, expandable to 1.5 Bcf/d. Dynegy plans to add one LNG tank and vaporization facilities to the site during the construction phase.

Noting that the 2003 operational date was key, COO Steve Bergstrom said Dynegy would be "positioned to bring the first incremental LNG capacity to support the nation's gas supply needs."

The Hackberry LPG terminal was acquired in 1995 by Dynegy from Trident. It offers access to the Gulf of Mexico and the Atlantic Basin, and would have the ability to connect to several natural gas pipelines reaching major gas markets throughout the United States. Without divulging details, Bergstrom said several potential gas suppliers, tankers and shippers have already talked with Dynegy about the project.

"Siting the new terminal and gasification plant at the Hackberry site with key infrastructure already in place, including a jetty, dock and ship berthing structure, is a tremendous advantage," said Bergstrom. A feasibility study has been completed as well as a detailed engineering analysis of the Hackberry facility, and Dynegy is already working on permits from Louisiana and federal officials.

While construction will create about 650 new jobs, Dynegy said when full commercial operation begins, the facility will employ 16 to 20 full-time employees.

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