As it raised the roof on the second LNG storage tank of its proposed 1.75 Bcf/d LNG import terminal 70 miles south of Houston, TX, on Quintana Island, Freeport LNG Development LP also received final authorization from FERC on Thursday to increase the sendout capacity of the terminal to 4 Bcf/d.

The first phase of the project is expected to begin commercial operation in February 2008. The second phase is scheduled for completion in September 2009.

The company said Friday that it reached a significant milestone in the construction of the full-containment tanks, and for the project in general. Construction of the terminal began on Jan. 17, 2005. The first phase of the project includes two 160,000 cubic meter storage tanks, one berth capable of handling LNG vessels up to 260,000 cubic meters, 1.75 Bcf/d of vaporization (including 0.25 Bcf/d of peaking capacity) and a 9.4-mile pipeline to Stratton Ridge.

“Lifting the second tank roof represents a significant milestone for our project and confirms our commitment to be the first new land-based LNG terminal completed in the United States in nearly 30 years,” said CEO Michael Smith.

The terminal is being constructed under a lump-sum turnkey EPC contract with a consortium comprised of Technip USA, Zachry Construction, and Saipem SpA. The capacity of the first phase of the project has been sold out on a long-term basis to ConocoPhillips (1 Bcf/d) and Dow Chemical (0.5 Bcf/d).

“Our construction continues both on-time and on budget, which is particularly impressive in light of the significantly increasing capital costs for LNG projects both in the US Gulf Coast and around the world,” Smith said. “With detailed engineering over 95% complete, and cumulative construction progress nearing 60%, we are well on track to begin testing the facility in the fourth quarter of 2007 and commence commercial operations in early 2008.”

In May 2005, Freeport submitted an application to the Federal Energy Regulatory Commission for authorization to expand the terminal’s capacity to 4 Bcf/d. The expansion of the facility will include an additional LNG vessel berth, LNG tank storage, and vaporization capacity. Freeport LNG also is planning to construct a 7.5 Bcf underground storage cavern at Stratton Ridge which will be integrated into the operations of the terminal.

Freeport LNG has already sold a portion of the expansion capacity. In January 2005 it signed a 17 year terminal use agreement with Mitsubishi Global Gas Corp. for 0.15 Bcf/d plus an option on an addition 0.1 Bcf/d.

Freeport LNG Development is a Delaware limited partnership whose sole general partner is owned by Smith (50%) and ConocoPhillips (50%). The limited partners are Smith (45%), Cheniere Energy Inc. (30%), Dow Chemical subsidiary Texas LNG Holdings LLC (15%) and Contango Oil & Gas (10%).

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