To capitalize on the growing liquefied natural gas market,Houston-based El Paso Energy Corp. said it would spend $1.5 billionover the next five years to build six LNG terminals for NorthAmerican markets. The six proposed projects include three in theUnited States, two in Mexico and one in the Bahamas, with fiveserving the U.S. marketplace.

Ralph Eads, El Paso Merchant Energy president, said the companypredicts that LNG will grow at a rate between 10% and 15% for thenext 10 years — a faster rate than any other energy business. Tobe worth the expense, however, Eads said that natural gas priceswould have to stay above $3/Mcf for the next 10 years as well,something analysts predict will occur.

As if to underscore how important it thinks the LNG market isbecoming, El Paso’s Tennessee Gas Pipeline yesterday announced anopen season for firm natural gas transportation service from CMSTrunkline LNG’s terminal in Lake Charles, LA into Tennessee’ssystem, coinciding with a planned deliverability expansion at theTrunkline plant, which would add up to 300 MMcf/d.

Sites for the new projects now include a proposed plant in aremote region of Baja California to feed the San Diego and Mexicangas markets, and another in Florida. El Paso also has options onland in the Bahamas and is finalizing its options on a site in theCarolinas. Other potential sites include Baja, San Diego and SanFrancisco. A terminal already is scheduled to be built in Altamira,Mexico for the Mexican market.

The terminals would cost between $250 million and $350 millioneach, according to El Paso. The announcement comes just days afteranother Houston marketer, Enron Corp. said it would spend more than$300 million to build an LNG facility in the Bahamas along with a90-mile gas pipeline to serve the Florida market (see Daily GPI, Feb. 2). However, El Paso plans to have itsBahamas LNG facility on line six months before Enron’s proposed plant.

Last April, El Paso and Enron announced plans to jointly constructa pipeline from Savannah, GA to a point of interconnection withFlorida Gas Transmission (FGT) near Jacksonville, FL (see Daily GPI,April 26, 2000). El Paso’s Elba Island,GA LNG terminal, which is being reactivated, will feed thepipe. Construction is expected to begin in the third quarter of 2002,and the pipeline’s projected in-service date is April 2003.

The open season for Tennessee Gas Pipeline from CMS Trunklinebegan Monday and closes at 2 p.m. CST on Feb. 16. The open seasonis concurrent with the final two weeks of CMS Energy’s current openseason for LNG terminal services at the facility. Service isscheduled to begin in the fall of 2002.

“This project demonstrates our continuing commitment to attractdependable incremental supplies to the Tennessee system,” saidStephen C. Beasley, president of Tennessee Gas Pipeline Co. “Werecognize the importance of providing our existing and emergingmarkets with access to an array of gas supply sources. This openseason fits our strategy of attaching new supplies to the system tofeed the growth in all of our markets-from South Texas to theNortheast.”

The final design of the project may include a directinterconnection with the LNG facility, newly constructed capacity,existing capacity, leased capacity and/or capacity that may becomeavailable in the future.

Interested parties may obtain a detailed information package,which includes guidelines and subscription forms, by contacting BobFleming at (713) 420-3740 or by sending a fax request to (713)420-5225. The guidelines are also available on the Internet atwww.tennesseeadvantage.com.

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