A consortium of producers led by Statoil ASA signed an agreement last week with a subsidiary of Houston-based El Paso Corp. to sell 1.8 million tons of liquefied natural gas (LNG) annually for 17-to-20 years — an agreement that will supply El Paso with LNG for storage at Williams’ Cove Point LNG terminal in Lusby, MD, as well as “other North American and European destinations” where it will be regasified and sold as natural gas. El Paso has leased capacity from Williams at Cove Point to deliver about 250 MMcf/d into the East Coast pipeline infrastructure.

Under the agreement, subsidiary El Paso Global LNG will purchase 2.4 billion cubic meters (Bcm) of gas, equivalent to an estimated 91 Bcf/year, from the consortium’s Snohvit Project in northern Norway, which is expected to be completed in 2006. The agreement, for more than 40% of the total capacity produced from Snohvit, requires the consortium to develop the proven reserves that support the project, construct the pipeline infrastructure and liquefaction facilities, and make all the necessary LNG shipping arrangements.

Williams’ Cove Point facility, one of four existing LNG facilities in the United States, earlier this month was given the go-ahead to expand its capacity and reopen its import terminal by the Federal Energy Regulatory Commission (see NGI, Oct. 15). However, on its own and in partnership with other companies, El Paso this year has proposed building six new LNG facilities in North America, including terminals that would be located along the West Coast and Mexico (see NGI, Feb. 12; March 12; July 2).

“We are extremely pleased to be a partner in Norway’s first LNG export project,” said William A. Smith, president of El Paso Global LNG. “This agreement will enable El Paso to supply an important new source of competitively priced natural gas for the growing eastern and mid-Atlantic markets. We also expect to market additional supply at such time as the consortium decides to expand the LNG facility.”

Iderdrola of Spain will purchase another 1.6 Bcm of the gas from the consortium, and volumes totaling 1.7 Bcm will be sold to partners Gaz de France and TotalFinaElf. The Snohvit Project is being developed as a subsea tie-back to onshore production facilities with the LNG plant near the city of Hammerfest, the world’s northernmost city.

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