Annova LNG LLC has filed with the U.S. Department of Energy (DOE) for authorization to export domestically produced liquefied natural gas (LNG) to customers that are too small to buy from larger liquefaction and export projects.

The facility is to be developed at the Port of Brownsville, at the tip of South Texas. In its initial stages, the facility would produce 2.0 million of tons per annum (mtpa), or about 300,000 MMBtu/d, and is expected to be in-service by mid-2018. The facility has been designed to be small enough to sell 100% of its volume in long-term tolling agreements to buyers in free trade agreement (FTA) countries, with the scalability in place to support up to 6 mtpa.

“With our proximity to the Eagle Ford Shale and multiple interstate and intrastate pipelines, we are poised to be the ideal provider to those customers looking to buy in the range of 0.5 mtpa to 1.0 mtpa,” said Annova CEO David Chung.

The smaller-scale facility will also be visited by tankers that are smaller than the ones serving larger projects, Chung said.

FTA markets being targeted include Korea, Chile and the Dominican Republic. “One of the things that we found is that there is a large number of customers that want LNG that are unable to participate at the larger facilities,” Chung said. “The larger facilities are looking for someone who can take 4 mtpa or 2 mtpa. We’re targeting customers that are anywhere between 0.5 and 1 [mtpa]. And those types of companies tend to be power gen and industrial.”

Chung said Annova is working to form a partnership with an energy company that would provide a credit wrap to allow for the aggregation of customers that would receive LNG delivered at the terminal as opposed to entering into tolling agreements for supply.

Houston-based Annova is working with Black and Veatch and is nearing the completion of initial engineering estimates for the project. Next year Annova plans to begin front-end engineering and design and to initiate the Federal Energy Regulatory Commission’s National Environmental Policy Act pre-filing process.

“There has been a big need for a smaller facility because of the fact that there are so many customers out there that have been turned away from the larger facilities,” Chung told NGI. “The odd thing is that when you develop a mid-scale facility, most people are trying to figure out whether they are missing out on economies of scale because the more MMBtus you have, the more you can space out the costs…Surprisingly, when you go to smaller technology, the costs are a lot cheaper. In the end, my toll is going to be very competitive with the much larger brownfield projects.”

Separately last month, two companies filed with DOE seeking authorization for containerized LNG export to FTA countries (see Daily GPI, Sept. 11).