Shell Energy North America LP announced last week it would discuss potential supply sales from the proposed Broadwater offshore liquefied natural gas (LNG) terminal with large natural gas consumers and distribution companies in Long Island, New York City and southern Connecticut.

The Broadwater terminal would have an average sendout capacity of 1 Bcf/d and peak sendout of 1.25 Bcf/d. Broadwater Energy, a partnership of Shell Oil and TransCanada Corp., would operate the facility, while Shell would own the capacity and supply the LNG. The project, which is targeted for service in December 2010, would cost approximately $700 million to build.

Shell Energy North America is responsible for marketing all of the natural gas from the project, which will be delivered directly into Long Island, New York City and southern Connecticut through an interconnection with the existing Iroquois Gas Transmission system. Shell estimates that the supply could equal nearly 30% of current annual local demand.

“Broadwater may well change the dynamics of the gas supply in New York,” said Mark Hanafin, CEO of Shell Energy North America. “Instead of being last on the delivery system, New York will be first.

“Based on Broadwater’s continued progress, now is the right time to have further discussions with our potential customers regarding natural gas supply contracts from Broadwater,” Hanafin added. “To date, we have had preliminary inquiries from utilities, generation and energy companies, and other large commercial and industrial natural gas customers.”

Broadwater Energy LLC estimates that approximately half of the natural gas sendout from the offshore LNG terminal would be delivered to New York City, about 25-30% to Long Island and the remaining 20-25% to Connecticut. Currently, New York City, Long Island and Connecticut get about 85% of their natural gas via pipeline from the Gulf of Mexico and Canada, areas where production is expected to decline. Conversely, gas consumption is projected to increase in the region in the coming years, underscoring the need for LNG imports.

The Broadwater project received favorable final environmental review from the Federal Energy Regulatory Commission in January (see NGI, Jan. 14). The project has been the target of controversy since its inception, with most of the opposition coming from Connecticut’s congressional delegation, Attorney General Richard Blumenthal and other state officials (see NGI, Jan. 22, 2007, April 30, 2007).

When Shell International Trading and Shipping Co. Ltd. said last month that it was recruiting U.S. seafarers for the company’s growing portfolio of managed international LNG vessels, one Shell official said the move provided “an excellent opportunity for American mariners to enhance their careers through Shell’s international businesses and domestic joint ventures,” including Broadwater (see NGI, Feb. 11).

Shell Energy North America’s announcement comes less than two weeks after Atlantic Sea Island Group LLC sued to stay a November decision by the U.S. Maritime Administration (MARAD) granting New Jersey “adjacent coastal state” designation in the federal review of Safe Harbor Energy, a proposed LNG terminal in direct competition with the Broadwater LNG project (see NGI, Feb. 25). If the MARAD decision is allowed to stand, it would give New Jersey veto power over the construction of Safe Harbor Energy, which would serve the New York metropolitan region.

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