Christopher Helms, president of CMS Panhandle Pipe Line Co.,estimated that LNG use will swell to take up 3.5% of the predicted30 Tcf of gas demand by 2010. In an interview with NGI, Helms saidPanhandle is working toward building LNG trade to the same level ascrude oil trading, complete with a futures and financial market,with Lake Charles serving as the hub for all operations.

Helms said he is confident that LNG trade will grow by leaps andbounds from its current level of just under 1% of the U.S. gasdemand. LNG imports to the Lake Charles facility have increasedsizably since CMS bought Panhandle from Duke in 1998. Twenty eightcargoes are already scheduled this year, compared to 27 for theentire year 1999 and 17 delivered cargoes in 1998. Just last week,CMS Marketing Services & Trade announced an agreement to import10 LNG shipments (equal to 24 Bcf) from Qatar (see NGI, April 24).

And CMS has just started to tap the facility’s potential. Helmssaid Lake Charles could legitimately receive 150 cargoes per year,or one every other day.

“The challenge is to get a good baseload business, which we’reworking toward,” Helms said. “My job is to make that transition andto make sure that LNG is competitively priced so that it is aviable option. The demand is there. We have a large market in theMidwest. Our customers there consume 250 Bcf/year. Why shouldn’tLNG be a part of that?”

The time is right to be an LNG importer, Helms said, thanks tohigh domestic prices. “We have found a strong market for our spotcargoes. With $3 gas at the wellhead, LNG is very competitive. It’sa great environment right now to sell LNG.”

Despite the admission that the LNG tanker fleet is “getting longin the tooth,” Helms believes the transportation situation andspecifically LNG tanker construction is picking up. Manyinternational companies are beginning to construct new vessels.Tankers are selling for around $140 million each, whereas a coupleof years ago, the price was over $200 million. While Panhandle doesnot own any ships currently, Helms said the company is consideringit and would ideally like to own “a couple of vessels.”

More LNG players are on the horizon. El Paso Energy and ColumbiaEnergy (soon to be NiSource) are currently in the process ofreactivating LNG import facilities on the East Coast. Sonat, now anEl Paso subsidiary, successfully petitioned FERC to re-open theElba Island LNG facility in Georgia, and Columbia is working ongetting the go-ahead for the Maryland-based Cove Point plant (seeNGI, Jan. 17 and March 20). The long-running Massachusetts-basedDistrigas plant is the only other LNG import terminal in thecountry.

“Will Cove Point and Elba Island compete with Lake Charles?Yes,” said Helms. “But in the overall picture, these new plantssignal a more active LNG industry, which is good for Panhandle. Thefact is this market is growing.”

Helms said the Lake Charles facility is prepared to handle theincreased demand and he said the facility offers a wide range ofservices that LNG customers find useful. Chief among theseadvantages is the facility’s 6.3 Bcf of above-ground LNG storage.These storage facilities enable flexible withdrawal capabilitiesand can be almost completely refilled with only two cargoes. Healso said that there are some disadvantages to the facility, suchas its location. Based in Lake Charles, LA, the facility is fartheraway than its competitors from the LNG producing regions.

Projects are underway to add more value to the Lake Charlesplant. Helms said a good possibility in the near future is theaddition of a gas processing plant, so that the liquids producedthrough the fractionation process can be marketed. “We want todevelop and effectively sell a whole set of products and servicesthat the domestic industry as well as the producers will want totake advantage of,” he said. “With oil in the $25/barrel range, thevalue of liquids is key.” Also on the horizon is the launch of anelectronic bulletin board for the LNG facility. Helms said thatcould be available as early as this summer.

Overall, Helms said momentum is building within CMS andthroughout the industry for LNG trade. “LNG was once the red-headedstep-child. Our crew at Lake Charles used to see only a couple ofimports per year. Now, there is genuine excitement about the futureof the facility. Just recently, we imported five cargoes in oneweek. We look forward to this growth continuing.”

John Norris

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