With National Petroleum Council projections that liquefied natural gas (LNG) deliveries into the United States could grow to 15 Bcf/d by 2020 from about 2.5 Bcf/d currently, all of the majors are beginning to take significant positions in the domestic LNG market. ExxonMobil said last month that it is looking at four sites for U.S. LNG terminals (see NGI, Oct. 20), and last week Shell announced its own offshore Louisiana LNG terminal, which would be in direct competition with one already planned by ChevronTexaco.
Shell US Gas & Power LLC said its terminal would be about 38 miles from the coast in about 55 feet of water. The project, which would be developed for service in 2008-09 by Shell subsidiary Gulf Landing LLC, would have the capacity to deliver 1 Bcf/d into the U.S. interstate pipeline network.
Shell said it is filing an application under the Deepwater Port Act for a license authorizing the construction and operation of the proposed LNG storage and regasification facility to be located in West Cameron Block 213.
“Gulf Landing is our first application for a Shell-operated LNG terminal in the United States,” said Gus Noojin, president of Shell U.S. Gas & Power LLC. “The new terminal will supplement our sizable capacity positions at existing U.S. LNG terminals and will make an important contribution to long-term U.S. natural gas supply.”
As a concrete, gravity-based structure, Gulf Landing will be floated to the site and lowered to rest on the sea floor. The facility will include a berth for mooring LNG carriers, LNG storage and regasification facilities, and pipelines to connect with existing natural gas pipeline systems in the Gulf of Mexico.
Gas output from the facility will be delivered into as many as five major interstate pipelines serving Louisiana and parts of the U.S. Southeast, Midwest, Northeast and Mid-Atlantic.
“Locating an LNG terminal in the established Gulf of Mexico natural gas producing area optimizes the existing transportation network and offsets future production declines from natural gas fields,” said Noojin. “However, new LNG terminals are needed in other regions of the United States to meet natural gas demand growth. Shell, as the world’s largest private producer of LNG, is well-positioned to help meet these needs.”
Meanwhile, ExxonMobil said three weeks ago that its is looking at LNG terminal sites on the Gulf Coast, specifically two in Texas, one in Alabama and a potential offshore Gulf of Mexico project. The Sabine-Beaumont and Corpus Christi areas are being examined as sites in Texas, while Mobile has been highlighted in Alabama, a company spokesman said. Each proposed facility would be able to process a minimum of 1 Bcf/d of gas and cost $600 million.
“Right now, we are in discussions for property purchases in Alabama and the Sabine-Beaumont area,” said ExxonMobil spokesman Bob Davis. “We already have a purchase option for a site in Corpus Christi.” Davis said the company expects an 18- to 24-month permitting process on each terminal, followed by a three year construction process. In the meantime, the company has put together a world class LNG supply project in Qatar with more than 26 Tcf of reserves dedicated to LNG trains.
ChevronTexaco has plans of its own to match its rivals, including the Port Pelican project offshore Louisiana, which is much farther along in development. The project would be built in two phases. Phase One would be designed to process and deliver 800 MMcf/d into existing gas gathering systems in the Gulf of Mexico and southern Louisiana. Phase Two would expand the terminal to accommodate a total of 1,600 MMcf/d. The project also would be constructed as a freestanding concrete terminal. The project is currently undergoing permit review by U.S. government authorities and a decision is anticipated before year’s end.
In addition, ChevronTexaco announced plans last week for an LNG receiving terminal offshore Baja California Norte, Mexico and an LNG supply facility in Nigeria. ChevronTexaco’s Mexico project will consist of a $650 million offshore LNG receiving and regasification terminal. ChevronTexaco said it is currently working with Mexican authorities to secure permit approvals for the project.
The facility will be built as a GBS as well and will be designed to process 1,400 MMcf/d, with initial processing of 700 MMcf/d.
“Growing demand for natural gas in North America is widely projected to outstrip current supply capabilities,” said John Gass, president of ChevronTexaco Global Gas. “We believe ChevronTexaco’s proposed Baja California offshore LNG project will help fuel the development of a sustainable, future energy plan for Mexico and the United States and play an important part in meeting this demand.”
Upon receipt of all required approvals by Mexico’s federal, state and municipal authorities, the company said it anticipates beginning construction of the GBS in Baja California in 2004, with commercial operation projected for the fourth quarter of 2007. The Baja project is among several LNG terminals proposed for the peninsula (see NGI, Oct. 20; Sept. 15; Sept. 8; May 12).
In August, ChevronTexaco teamed with the Gorgon Joint Venture, an offshore natural gas project in Australia of which ChevronTexaco is a partner, for the supply of 2 million tonnes of LNG annually for delivery to North America over a 20-year period.
On the Nigerian facility, the company said it has teamed with the Nigerian National Petroleum Corp. (NNPC), ConocoPhillips and Eni to conduct the front end engineering and design (FEED) work for a new LNG supply facility to be constructed in Nigeria’s central Niger Delta.
The four partners have agreed to form an incorporated joint venture, to be known as Brass LNG Limited, to undertake the project. The move follows a positive viability study for the siting of an onshore LNG facility at the oil Brass Terminal operated by Nigerian Agip Oil Co. (NAOC).
The FEED will be for two trains, each nominally sized at 5 million metric tons per year. The companies said natural gas supplies for the facility will come from substantial gas reserves within oil and gas fields already operated by existing NAOC and ChevronTexaco joint ventures.
“This will be a world-class LNG facility and an important and strategic opportunity for the co-venturers to reduce gas flaring in Nigeria,” said Dr. J.E. Gaius-Obaseki, group managing director for the NNPC. “Furthermore, it will be an additional opportunity for Nigeria to monetize part of its vast natural gas reserves.”
The companies expect the FEED studies to be completed in 2004, with the facility targeted to be operational by the end of 2008. The primary market for the first train will be the United States, where average daily sales volumes from this project are estimated to be around 700 MMcf.
ChevronTexaco said it has awarded major contracts to Aker Kvaerner and Fluor for FEED and to perform engineering, procurement and construction management for its Port Pelican and Baja California offshore LNG terminals. The construction contract is expected to be awarded in the first half of 2004.
In addition to its operations in Baja California, Louisiana, the greater Gorgon-area in Australia and its Nigeria LNG project, ChevronTexaco’s global gas strategy also includes a proposed LNG project in Angola and a gas-to-liquids project through its Sasol Chevron joint venture. ChevronTexaco said additional LNG terminal projects also are under consideration for potential installation in California.
Shell’s other LNG holdings include one-third of the capacity at the Dominion Cove Point LNG terminal in Maryland, which has the capability to deliver 750 MMcf/d. In addition, the company holds the entire capacity of the expansion underway at Southern LNG Co.’s terminal in Elba Island, GA. The Southern LNG expansion is scheduled for completion in early 2006 with the capability to deliver an additional 360 MMcf/d.
Shell also is currently in the process of evaluating LNG import terminal sites in Costa Azul and Altamira, Mexico. The company canceled a joint venture with Bechtel on another proposed facility to be located on Mare Island in Northern California.
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