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Southern LNG Applies for Elba Island Export License

Southern LNG Co., a subsidiary of El Paso Corp., has thrown its hat into the liquefied natural gas (LNG) export ring, applying to the Department of Energy (DOE) for authorization to export up to 0.5 Bcf/d from its Elba Island terminal in Savannah, GA, to countries that have free trade agreements (FTA) with the United States, according to an application filed with DOE. The company is seeking a 25-year export license.

Birmingham, AL-based Southern LNG also plans to file a separate application to export LNG to non FTA countries, according to the application.

The Elba Island terminal currently includes berthing and accommodations for two LNG vessels and unloading facilities, an LNG storage and vaporization facility, including five storage tanks capable of storing a total of 550,000 cubic meters, and associated facilities. The terminal connects with the interstate pipelines of Southern Natural Gas Co., Elba Express Co. and Carolina Gas Transmission, and indirectly connects with Transcontinental Gas Pipe Line Co. and Florida Gas Transmission.

Southern LNG is proposing new pre-treatment, liquefaction and export facilities, plus enhancements to the existing equipment and additional utilities. The project is designed to allow Southern LNG to be capable of providing bi-directional service.

The Federal Energy Regulatory Commission (FERC) this week granted Southern LNG authorization to install and operate a new 2,500 hp electric motor-driven compressor and related facilities at Elba Island. Southern LNG said that due to changes in the global LNG market, the amount of LNG it receives for terminaling service has decreased and periods of low send-out from the terminal to downstream pipelines have increased. During periods of low send-out the volume of boil-off gas (BOG) generated can exceed the terminal's design levels. Southern LNG said it will use the new compressor to capture and compress natural gas that boils off from LNG storage tanks and inject it into downstream interstate pipelines.

Southern LNG currently captures, compresses and injects the excess BOG into downstream interstate pipelines using a single 1,500 hp compressor unit, but "when the volume of BOG generated exceeds the capabilities of the single existing compressor unit, Southern LNG...is forced to use the terminal's recondensers to process the remaining BOG to pipeline pressure, a process which in turn requires the vaporization of additional LNG, significantly increasing the amount of gas that must be sent out from the terminal each day," according to the FERC order. The new compressor will allow Southern LNG to compress all of the BOG -- up to 21 MMcf/d -- to the downstream pipelines without using the recondensers. FERC said Southern LNG should have the new facilities operational within a year.

The Elba Island terminal's current storage capacity is 11.5 Bcf, with 1,755 MMcf/d of peak vaporization and send-out capacity.

Southern LNG opened LNG import facilities at Elba Island in 1978 but ceased operations during a supply dispute from 1982 to 2000. After FERC authorized the company to recommission its facilities and modify the terminal to provide terminalling service on an open-access basis, Southern LNG placed Elba Island back in service in late 2001. Since then FERC has authorized two expansions of the facilities.

Southern LNG's export application follows the unveiling in the past week of plans by Excelerate Energy LP, which is seeking to develop a floating liquefaction facility in Port Lavaca on the Texas Gulf Coast (see Daily GPI, May 16a), and Shell Canada Ltd. and three Asian energy giants who are looking to develop a 12 million ton/year LNG export facility near Kitimat, British Columbia (see Daily GPI, May 16b).

Cheniere Energy Partners LP has concluded agreements to sell $2 billion in equity securities to finance Sabine Pass LNG, which is the only LNG export project yet approved by FERC (see Daily GPI, May 16c; May 8; April 17).

According to Pan EurAsian Enterprises, a management advisory firm, the total nameplate capacity for proposed LNG export projects from the United States alone is above 130 million metric tons per year, or about one-third of current U.S. production.

The Energy Information Administration estimates that LNG imports will fall by 0.3 Bcf/d (28%) this year. It expects that an average of about 0.7 Bcf/d will arrive in the United States this year and in 2013, mainly at Elba Island and the Everett LNG terminal in New England, either to fulfill long-term contract obligations or to take advantage of temporarily high local prices due to cold snaps and disruptions (see Daily GPI, April 16).

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