FERC has awarded Freeport LNG Development LP authorization under Section 3 of the Natural Gas Act to site, construct and operate a proposed liquefied natural gas (LNG) import terminal and natural gas pipelines facilities on Quintana Island in Brazoria County, TX.

With the June 18 order, Freeport LNG becomes the second new LNG terminal project approved for construction in the United States in a little more than 25 years. In September 2003, FERC approved Sempra Energy’s $700 million Cameron LNG facility in Hackberry, LA, making it the first new LNG terminal to win construction approval in the past quarter century.

In approving the Freeport LNG project, the FERC order said “the record shows that the intrastate market for natural gas continues to grow in Texas, that Freeport’s proposed project will provide additional supplies of natural gas to customers in Texas, and that the capacity of the project is fully subscribed.” Thus, “we find that approval of Freeport’s LNG terminal, send-out pipeline and meter facilities will be consistent with the public interest,” the June 18 order noted [CP03-75].

Freeport’s proposed terminal will include a marine terminal, LNG transfer lines, and LNG storage and vaporization units. The marine terminal will have the capability to unload 200 ships per year. The send-out capacity of the facility will be up to 1.5 Bcf/d. The proposed two LNG storage tanks each will have the capacity to hold 3.5 Bcf/d.

The project also calls for the construction of nearly 10 miles of 36-inch diameter pipeline extending from the import terminal to a proposed meter station at Stratton Ridge storage hub in Brazoria County, where the company says there is adequate takeaway capacity on intrastate pipelines. At Stratton Ridge, Freeport said it is considering connections with five intrastate pipelines: Dow Pipeline Co., Kinder Morgan Texas Pipeline Co. LP, Houston Pipeline Co., Texas Utilities Pipeline Co. and Enterprise Pipeline LP.

Freeport said its proposed project will not be used to provide interstate transportation service because it will not interconnect with any interstate pipelines, according to the FERC order.

The Freeport facility is expected to be constructed and placed into service for the 2006-2007 winter heating season. 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.

The FERC order approved Freeport’s proposed service for ConocoPhillips and Dow Chemical at the rates, terms and conditions agreed to by the parties.

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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