FERC has awarded Southern LNG Inc. a preliminary determination(PD) on the non-environmental aspects of its proposal to build newfacilities and reactivate its liquefied natural gas terminalfacility on Elba Island in Georgia.

The Commission said the project was consistent with its newpolicy statement on new facility construction. It “concludes thatSouthern LNG’s project can proceed without subsidies from, ordegradation in service to, its existing customers and expect it toprovide public benefits without adverse impacts. Therefore…..wefind Southern LNG’s proposal to be in the public convenience andnecessity.”

The PD issued by the Commission Wednesday was good news not onlyfor Southern LNG, whose Elba Island facilities have been mothballedsince the 1980s, but for Atlantic LNG of Trinidad and Tobago, whichowns the liquefaction plant in Trinidad that would supply LNG[CP99-579].

Based on the favorable PD from FERC, Atlantic LNG plans toproceed with an expansion of its Trinidad LNG facility, while anoverseas consortium — known as the NCMA Developers — plans todevelop offshore gas reserves to be liquefied by Atlantic LNG andshipped to the Southern LNG terminal facility.

Southern LNG held an open season last June, after which itexecuted a binding contract with its affiliate, Sonat EnergyServices Co. (SES), for 100% of the capacity of the Elba Islandterminal. The contract, which has a term of 22 years, will enableSES to store up to 4 Bcf of natural gas in LNG form, and receive upto 330,000 Mcf/d of gas in vaporized form.

In November, SES asked the Department of Energy (DOE) forpermission to import up to 82 Bcf/year for 22 years from theAtlantic LNG project in Trinidad. SES said the largest increase indemand is forecasted for the southeastern section of the U.S.Furthermore, it said the interconnection of Southern LNG’sfacilities with Southern Natural’s pipeline and other pipelineswould potentially open up markets for the imported gas in otherparts of the nation. The DOE granted SES the authority earlier thismonth.

Southern LNG said initial rates for the project would be basedon recommissioning costs of $26 million and an annualcost-of-service of about $23 million.

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