Shell Gas & Power said last week it has entered into a binding precedent agreement to acquire all of the new capacity offered by Southern LNG in its recently concluded open season to expand its Elba Island liquefied natural gas (LNG) terminal near Savannah, GA. The deal connects the dots for Shell, providing a market for its overseas LNG export activities.

As one of four bidders in the open season, Shell was awarded the full additional capacity of 3.3 Bcf of storage with a design send-out rate of 360 MMcf/d, or approximately 2.5 million tons per year of LNG, for a 30-year term. The planned in-service date for the expansion is June 2005, subject to receipt of necessary regulatory approvals.

In another action recently affecting the expanding LNG port, SCANA Corp. subsidiary SCG Pipeline Inc. filed an application with FERC recently to build an 18-mile gas pipeline in Georgia and South Carolina that would connect the Elba Island LNG terminal to a proposed power plant that would be built by SCANA subsidiary South Carolina Electric & Gas.

The new pipeline would transport up to 190,000 Dth/d of gas from interconnections with Southern Natural Gas and the Elba Island import terminal to the proposed 875 MW natural gas-fired generation station in Jasper County, SC. The in-service date for the pipeline is November 2003. The application also calls for SCANA to assume ownership of capacity on an existing Southern Natural pipeline that connects to the LNG facility, which resumed full operations this month after being out of service for about 20 years.

In announcing its claim on the new storage capacity, Shell Gas and Power said it would enable it to serve key markets in Georgia, Florida and South Carolina. “We are keen to secure greater LNG access to the U.S. gas market where we anticipate strong demand growth in the coming years. Access to this capacity will provide an outlet for LNG projects and prospects in which Shell has an interest in the Atlantic Basin, such as West Africa and South America,” said Jon Chadwick, director of Shell Gas & Power.

Last September Southern LNG, an El Paso Corp. subsidiary, announced plans to hold the open season to expand the Elba Island receiving terminal by approximately 80% (see NGI, Sept. 17, 2001). Volumes are expected to increase toward a design send-out rate of 440 MMcf/d by 2003. The Elba Island facility, inactive since 1982, began receiving LNG import shipments on Dec. 1, 2001. The expansion, which is projected to cost $145 million, will increase the facility’s storage volume to 7.3 Bcf and the design send-out rate to approximately 800 MMcf/d.

“The Elba expansion is another positive development in our commitment to help meet the growing demand for natural gas in the southeast U.S. by providing our customers with access to diversified supplies from around the world,” said John W. Somerhalder II, president of El Paso Pipeline Group.

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