Occidental Petroleum Corp. (OXY) is planning to build a liquefied natural gas (LNG) import terminal on the Gulf Coast of Texas where it has a large chemical manufacturing presence and significant natural gas demand. The LNG terminal would be built at its chemical plant in Ingleside.

The plant brings the number of planned Texas LNG facilities to six, including two planned for Corpus Christi, one in Freeport, one at Sabine Pass and another proposed in Brownsville.

Dow Chemical, one of Occidental’s peers in the major chemicals business, already has signed agreements to take substantial capacity at the proposed Freeport LNG terminal (see Daily GPI, Feb. 27). Providing a long term source of less expensive feedstock for chemical’s operations has become a major concern of chemicals makers since the cost of domestic natural gas has soared above $5/MMBtu. However, OXY said it plans to utilize only about 10% of the proposed LNG sendout capacity from its terminal. The remaining 90% would go directly into the wholesale pipeline grid in South Texas.

Occidental said it plans to seek U.S. regulatory approval for its terminal later this year. The Los Angeles-based producer said construction of the 1 Bcf/d plant probably would begin in 2006 or 2007.

The $400 million terminal, which is among about 35 proposed in North America, would be used to provide relatively inexpensive international gas supply to Occidental’s chemical plant. A total of about 8 Bcf/d of LNG capacity is proposed for the Gulf Coast of Texas. All of the proposed capacity is expected to come online in 2007-2009.

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