Responding to a March 6 letter from Rep. Ron Paul (R-TX) seeking swift approval of the proposed Calhoun LNG terminal and associated pipeline, FERC Chairman Joseph Kelliher said there were "problems" with the company's application that were largely related to Calhoun's failure to participate in the agency's pre-filing process.

Because it did not take advantage of FERC's pre-filing process, "the application filed by Calhoun included several issues going to project safety that had to be resolved during the authorization period," Kelliher said in a March 28 response to Paul. Calhoun LNG is a subsidiary of Houston-based Gulf Coast LNG Partners LP.

"There are other important deficiencies in Calhoun's application. For example, the original application did not propose the pipeline connection to the interstate pipeline grid; there were flaws in the start-up process design; Calhoun failed to provide the U.S. Coast Guard with the information necessary for a coordinated review of the suitability of the waterway...; and, based on Commission staff's engineering conclusion in the draft environmental impact statement [DEIS], the tanks as proposed failed to meet federal safety standards, as mandated by the U.S. Department of Transportation...Later, the revised tank designs provided by Calhoun in August and November 2006 still did not adequately address the concerns raised by Commission staff," Kelliher said.

Calhoun's latest tank design, which was filed in February, is currently being reviewed by Commission engineers, he noted. Kelliher said FERC staff would complete its preparation of the final environmental impact statement on the Calhoun project as soon as the agency finishes its review of the tank design. The Commission issued a favorable DEIS on the Calhoun LNG and associated pipeline project last July (see Daily GPI, July 5, 2006).

"The Commission is being efficient but thorough...in its review of this proposed project," Kelliher assured Paul.

The Calhoun LNG terminal project calls for the construction of facilities to vaporize about 1 Bcf/d of LNG to provide natural gas to local industrial customers, such as Formosa Hydrocarbons Co. and Formosa Plastics Corp, as well as deliver gas into existing interstate and intrastate gas pipeline systems near Edna, TX. The terminal would include an LNG ship berth and unloading facilities on the southeastern shoreline of Lavaca Bay in Calhoun County in Southeast Texas. The terminal would unload up to 120 LNG ships annually [CP05-91].

Calhoun LNG also seeks to build two 160,000 cubic meter single-containment LNG storage tanks and vaporization and processing equipment.

Affiliate Point Comfort Pipeline Co. proposes to build a 27-mile, 36-inch diameter pipeline, along with a small lateral, that would extend northward from the proposed LNG terminal to gas pipeline interconnects southwest of Edna in Jackson County, TX. It plans to interconnect with nine intrastate and interstate pipeline systems [CP05-380].

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