Excelerate Energy CEO Kathleen Eisbrenner said this week that she expects LNG deliveries to begin sometime in 2005 to the first new LNG terminal in the United States in 20 years and the first offshore LNG terminal in the world. However, the company still has not lined up any long-term supply or market agreements.

While Excelerate expects its new offshore Louisiana LNG terminal/buoy system to be operational by next January, it may not begin market deliveries until later in the year. “No, we have not lined up supply and market yet,” Eisbrenner said in an interview with NGI. “We are really doing this to create an enhanced spot market for the importation of LNG, and we feel very comfortable and confident in our ability to secure LNG supplies, but we have not done so yet.

“Right now there is a constraint on the supply end, and that’s because each of these upstream liquefaction projects take between 36 and 40 months to build,” she said. “There are almost 10 liquefaction projects under construction, five of which will come into service next year and so it is our expectation that we will secure supply from one or more of the liquefaction trains that will come on stream next year.” She noted that two liquefaction trains are being built in Egypt, two are being built in Nigeria and one is being added in Trinidad.

“Our first ship will [be built] a couple months ahead of the new liquefaction trains. We’re still confident in our ability to secure supply for our first ship. We’re working on supply; it won’t be long.” She noted that the company has three specialized 138,000 cubic meter LNG cargo ships being built with unique and untested onboard regasification systems.

The three ships will be used to bring regassified LNG to specialized buoys that will be connected to pipelines offshore Louisiana and Massachusetts. Earlier this week, information about Excelerate’s proposed offshore Massachusetts terminal was leaked to the Boston Globe, and the company had to scramble to fully inform local and state officials about the project (see Daily GPI, June 8).

Excelerate is planning a $200 million LNG terminal 10 miles offshore Gloucester, MA, which is about 50 miles northeast of the existing Everett, MA, LNG terminal operated by Distrigas. Excelerate, which is backed by Oklahoma oil billionaire and philanthropist George B. Kaiser, expects to have the Northeast Gateway Project operating and connected to Duke Energy’s HubLine pipeline in Massachusetts Bay through a 12 mile 24-inch diameter pipeline by the end of 2006. It will deliver about 400 MMcf/d of gas into the Northeast pipeline grid.

The $60 million Louisiana terminal received a record of decision last December from the U.S. Coast Guard and is on schedule and on budget, said Eisbrenner.

“We have tremendous interest in buying our LNG. We’re not worried about that side at all,” she said. “We view ourselves as intermediaries between supply and market and we’re confident that we’ll be able to secure both.”

She said Excelerate probably will match spot supply purchases with spot market sales initially. “When we lock up longer term supply, we’ll lock up longer term markets.”

Excelerate believes it has the safest and most secure method of LNG delivery for the United States. Because the terminals are more than 10 miles offshore, there is no danger to the population or onshore structures in the event of a terrorist attack or an accident. Even in the event of a hurricane or extremely high seas, Eisbrenner said a moored ship can unhook from the buoy system and get underway in about 15 minutes.

Political officials in Boston had a favorable reaction to the Excelerate plan earlier this week. In fact, Boston Mayor Thomas Menino hopes the Excelerate terminal will mean that the existing onshore Distrigas terminal in Everett can be phased out eventually, according to a spokesman. Eisbrenner said that was never the company’s intention. Excelerate believes that increasing gas demand requires additional incremental LNG supply in the Northeast and elsewhere across the United States.

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