The birth of a New England power plant will spawn more importsof LNG to the United States. Last week it was announced that SitheEnergies Inc. will feed its 1,600 MW Mystic Station in Everett, MA,with LNG imported by nearby Cabot LNG Corp.

Sithe and Cabot LNG, a wholly owned subsidiary of Cabot Corp.,made a 20-year gas sales and purchase agreement valued at more than$4 billion. Cabot LNG subsidiary Distrigas of Massachusetts will bethe principal supplier of gas to fuel Mystic Station. Cabot willsupply Mystic with 70 Bcf/year, which is equivalent to 25 LNGcargoes per year. “This agreement provides our Mystic Stationfacility with a reliable, long-term energy source at an attractiveand preferential price. As a result, Sithe will be the lowest-cost,most environmentally sound power generator in Boston and NewEngland,” said Sithe CEO William Kriegel.

Mystic Station is expected to begin commercial operation in2002. Cabot LNG will make the necessary infrastructure upgrades atits LNG import terminal, also in Everett, to accommodate therequirements of the new customer. Cabot will bring in LNG fromAlgeria, which has proven gas reserves of more than 130 Tcf, andfrom the world’s newest LNG export facility in Point Fortin,Trinidad, a location with proven gas reserves exceeding 20 Tcf.

Cabot LNG CEO Gordon Shearer said the price of the LNG isindexed to market prices. The deal benefits from the Cabot facilityand the power plant being so close that pipeline transportation isunnecessary. Shearer said the Mystic volumes represent about 55% to60% of what Cabot is running through its terminal currently.However, plans call for expansion of the terminal and additionalLNG supply commitments.

Cabot LNG is a 10% shareholder in the Trinidad LNG plant, andcurrently contracts for 60% of the plant’s supply. In addition, theowners of the Trinidad plant are considering a proposal that wouldtriple the Trinidad facility’s capacity to convert gas produced offthe country’s coast into LNG for export to the United States andEurope.

LNG imports to the United States have been on the rise (see NGI Jan. 17). Last year’s third quarter 1999’s saw a significant percentage jump in LNG imports. According to the U.S. Department of Energy’s Office of Natural Gas & Petroleum Import and Export Activities, total gas imports grew by 15% over the third quarter of 1998 while LNG imports were up a strong 221% over the same period.

Shearer attributed the continuing rise in LNG importation to anabundance of LNG in the Atlantic now that a number of LNGdevelopments have come on line. Also, the U.S. market is attractiveto LNG sellers relative to Europe and Asia. Shearer said he expectsLNG import growth to continue. Within five to seven years he saidthe United States could be importing 2 Bcf/d of LNG, up from about1 Bcf/d currently.

Cabot LNG is wholly owned by Boston-based Cabot Corp., a global specialty chemicals manufacturer. Cabot LNG is also the parent company of Distrigas of Massachusetts Corp., which imports and resells LNG to gas utilities, independent power producers, marketers and others in the northeastern United States. Last August it was announced that Cabot LNG would be separated from Cabot Corp. through the issuance of a targeted stock as a value-enhancement initiative (see NGI Aug. 23). Joe Fisher, Houston

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