Acknowledging the expanding role for liquefied natural gas (LNG) in the U.S. gas supply mix, the Federal Energy Regulatory Commission on Wednesday gave a major boost to three LNG projects — Southern LNG Inc.’s expansion of its Elba Island facilities in Georgia, AES Ocean Express LLC’s Bahamian import terminal and Tractebel’s Bahamian terminal — and expressed its support for the gas industry’s continued thrust in this direction.

“The math doesn’t add up for reasonably priced natural gas” 10 years from now, without LNG and north-of-the-border gas, FERC Chairman Pat Wood said during a press briefing following the agency’s regular meeting. “If we want to achieve our country’s environmental goals, if we want to achieve our reliance on domestic resources…, which I think we do…then it is very critical to have new natural gas in the mix. While there are, I think, some abilities to get this onshore, those are challenging.”

As the onus shifts toward LNG to bridge the supply-demand gap in the years ahead, FERC staff said it expected existing, expanding and pending LNG facilities and projects to eventually contribute as much as 9.2 Bcf/d of imported LNG vaporization capacity in the United States. Staff further noted that 10 companies are studying 20 different sites in North America for more LNG facilities, and that this could add another 9 Bcf/d of vaporization capacity for a total of 18 Bcf/d, or 10-15% of all U.S. gas supply.

The LNG-friendly Commission awarded El Paso Corp. subsidiary Southern LNG a certificate to expand by 80% the storage capacity and design sendout rate of its Elba Island LNG receiving terminal near Savannah, GA. The expansion of Elba Island, which was reactivated in December 2001, would add 3.3 Bcf of storage capacity and boost the design sendout rate of the terminal by 360 MMcf/d, bringing total storage capacity to 7.3 Bcf and the send-out rate to about 800 MMcf/d [CP02-379].

The $148 million project has been targeted for completion in September 2005. Shell Gas & Power has entered into a binding precedent agreement with Southern LNG to acquire all of the expansion capacity for a 30-year term. Shell has indicated it plans to use the LNG to serve key markets in Georgia, Florida and South Carolina.

AES Ocean won a preliminary determination (PD) on non-environmental issues to build a pipeline to bring vaporized gas from its proposed LNG terminal in the Bahamas to Florida. The 52-mile pipeline, 46 miles of which would be subsea facilities, would transport gas to Broward County, FL, from the proposed terminus of a 40-mile non-jurisdictional line at the Exclusive Economic Zone boundary between the United States and the Bahamas [CP02-90].

The $440 million pipeline would extend to interconnections with Florida Gas Transmission (FGT) and Florida Power & Light’s distribution system near the Fort Lauderdale power plant. The 24-inch diameter line, which could be in service by the summer of 2004, is expected to transport 842,000 Dth/d of gas, the majority of which has been contracted by affiliate AES LNG Marketing.

AES previously said construction of the Bahamian import terminal and vaporization facilities in Ocean Cay, Bahamas, was expected to be completed during the first half of 2004, assuming it obtained financing and FERC acted quickly.

FERC also issued letters seeking presidential permit authorizations for the Bahamas-to-Florida Tractebel Calypso Pipeline project to transport regasified LNG from its proposed LNG import terminal in Freeport, Grand Bahama. The project closely mirrors that of AES Ocean. Tractebel purchased the combined terminal-pipeline project from bankrupt Enron Corp. in September 2002.

Tractebel, a subsidiary of the French water and energy company Suez and owner of the Cabot LNG import terminal in Everett, MA, plans to build a 54-mile pipeline to transport up to 832,000 MMBtu/d from its import terminal in the Bahamas to a connection with FGT in central Broward County. The pipeline would include 36 miles of 24-inch diameter offshore pipe and 5.8 miles of 24-inch onshore pipe, connecting to FGT’s Fort Lauderdale system [CP01-444].

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