FERC on Friday issued final environmental clearance to Freeport LNG Development LP’s proposed liquefied natural gas (LNG) import terminal and natural gas pipeline facilities on Quintana Island in Brazoria County, TX, putting the project on track to become the second new LNG terminal approved for construction in the United States in the last 25 years.

“Approval of the Freeport LNG project, with appropriate mitigating measures as recommended, would have limited adverse environmental impact,” FERC staff concluded in its final environmental impact statement (FEIS) on the proposed Texas LNG facility [CP03-75].

In December 2002, the Federal Energy Regulatory Commission approved Dynegy’s Hackberry LNG terminal project in Louisiana, making it the first new LNG terminal to win construction approval in the past quarter century. The project has since been acquired by Sempra Energy and re-named Cameron LNG.

With a favorable FEIS in hand, Freeport LNG Development can expect the Commission to act on a certificate possibly within a few weeks. FERC awarded a preliminary determination for the Freeport LNG terminal project last November.

The project would have revaporization and sendout capacity of up to 1.5 Bcf/d. In addition, construction plans call for two LNG storage tanks, each with the capacity to hold 3.5 Bcf/d of gas, and nearly 10 miles of 36-inch diameter pipeline extending from the import terminal to a proposed meter station at the Stratton Ridge storage hub in Brazoria County, where the company says there is adequate takeaway capacity on intrastate pipelines.

The proposed Freeport facility is expected to begin providing gas to intrastate shippers at the Stratton Ridge meter station beginning in the second half of 2007. Dow Chemical already has signed a 20-year agreement to reserve 500 MMcf/d of the plant’s capacity. ConocoPhillips has entered into an agreement to fund the construction of the LNG facility (more than $500 million) in exchange for the remaining 1 Bcf/d of capacity, the company said..

Freeport LNG will operate the facility, but it will not import LNG from foreign suppliers. That responsibility will fall to the individual customers.

Freeport LNG, which is 60% owned by privately held Freeport Investment, also is partially owned by two Houston-based independents, Cheniere Energy Inc., with a 30% interest, and Contango Oil & Gas, which has a 10% stake.

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