Shell Gas & Power said Thursday 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.

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.

“The planned expansion capacity at Elba Island will enable gas supply to 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 Daily GPI, Sept. 12, 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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