The Federal Energy Regulatory Commission last week awarded a preliminary determination (PD) on environmental issues to CMS Trunkline LNG Co. LLC to expand what already is the largest North American liquefied natural gas (LNG) terminal near Lake Charles, LA, by adding on a second marine unloading dock and enlarging its storage and sendout capabilities.

In its application filed last December, CMS Trunkline LNG proposed constructing a fourth storage tank, which would increase storage capacity to 9 Bcf from its current 6.3 Bcf; the near-doubling of its daily sendout capacity to 1.2 Bcf/d from 0.63 Bcf/d; and building a second unloading dock, giving it the ability to unload two ships simultaneously [CP02-60]. In a related proposal, it is seeking to increase the deliverability from its Lake Charles terminal into CMS Trunkline’s pipeline system to 1.2 Bcf/d from 1 Bcf/d [CP02-55].

CMS Trunkline LNG has estimated the cost of the proposed expansion at approximately $177.2 million, according to the FERC order. It has targeted the facilities for in-service in January 2005.

The Lake Charles LNG facilities were among the assets that parent company CMS Energy Corp. put on the auction block in early August (See NGI, Aug.12 ). Like a number of its competitors, CMS Energy has been forced to sell off assets to raise cash and boost its liquidity position as its stock value and credit rating take a beating. It also is the target of investigations for trading irregularities by several federal agencies, including FERC, the Department of Justice and the Securities and Exchange Commission.

CMS Trunkline LNG has entered into a precedent agreement with BG LNG Services Inc. to receive all of the expansion storage capacity (2.7 Bcf) and daily sendout capacity of 570,000 Dth/d under a 17-year deal beginning Jan. 1, 2005. This would be in addition to BG LNG’s current contract for 5.1 Bcf of uncommitted vaporization and storage capacity, which began last January. BG LNG’s capacity under the existing contract will increase to 6.3 Bcf when CMS Trunkline’s contract with Duke Energy LNG expires in August 2005, the order noted.

El Paso Merchant Energy protested the sale of CMS Trunkline LNG’s entire expansion capacity to one party, noting that it had a letter from CMS Trunkline LNG in which it agreed to provide terminal service to El Paso Merchant from Jan. 1, 2003 through Dec. 31, 2007. El Paso asked the Commission to consider this “apparent double sale” of Trunkline LNG’s terminal service when reviewing the certificate application.

But FERC said the letter was not a binding agreement for firm service. “Therefore, the letter’s contemplated service could not be degraded by Trunkline LNG’s firm service contracts with BG LNG for the currently existing capacity or the proposed expansion capacity,” it noted.

The Lake Charles Harbor and Terminal District, which has jurisdiction over the Calcasieu Ship Channel where Trunkline LNG’s facilities are located, raised concerns about the additional ship traffic that will occur as a result of the expansion. It urged the Commission to hold an evidentiary hearing to examine this aspect of Trunkline LNG’s application.

FERC noted that it examined the environmental and safety issues involved in the expansion, but “we find no need at this time to grant the District’s request for the appointment of a settlement judge or an evidentiary hearing proceeding.”

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