LNG

Kinder Morgan, the US pipeline and infrastructure company, has encountered minor issues relating to the commissioning of equipment at the facility near Savannah in the state of Georgia vying to enter the start-up phase ahead of the Cameron LNG plant in Louisiana.

Elba Island is an existing import terminal that has been transformed into an export plant to produce an initial 2.5 million tonnes per annum of LNG from 10 small liquefaction Trains.

Kinder had previously expected the first liquefaction Train to come on stream in April and the remaining Trains following in sequence.

However, the project has been hit by minor construction delays. The start-up had previously been expected by the end of 2018.

According to the Federal Energy Regulatory Commission, the mini liquefaction Trains 1-6 at Elba Island are expected to start entering service at one-month intervals.

Elba Island’s Trains 7-10 are then scheduled to come on stream in the third quarter of 2019.

The 10 units being installed at Elba mark the first time this specific technology is being deployed in the US.

The Elba plant is using Royal Dutch Shell’s Movable Modular Liquefaction System. These small-scale liquefaction Trains are mostly pre-assembled then brought to the site.

“Since this is the first project using this specific configuration of liquefaction technology, we have experienced some minor issues that are being resolved as part of the process,” said Kinder.

The Georgia project is supported by a 20-year supply contract with Shell and is the smallest of the three US plants being completed in 2019. Shell was a stakeholder in the Elba Island plant when it operated as an import terminal.

Start-ups for Elba Island, Sempra Energy’s Cameron LNG in Louisiana and the Freeport plant in Texas will double the number of US LNG export terminals in operation.

The Cameron facility is also set for production, ahead of Freeport, though both have suffered various holds ups and problems in construction.

Kinder and several equity fund partners are also developing the Gulf LNG export project proposed at the site of the existing import terminal at Pascagoula in Mississippi.

Kinder Morgan said it expected to provide about 40 percent of the volumes for current and future LNG and pipeline exports as it remained on schedule to brings its own small-scale liquefaction facility on stream in the first quarter at Elba Island in Georgia and eventually a second plant in Mississippi.

Elba Island is an existing import terminal being transformed into an export plant to produce an initial 2.5 million tonnes per annum of LNG.

Kinder Morgan, based in Houston, had earlier given a start-up date for Elba Island as the fourth quarter of 2018.

The Elba Liquefaction Project is being built at a cost of just $2 billion and will have feed-gas needs equivalent to around 350 million cubic feet per day.

“The project is supported by a 20-year contract with Shell,” said Kinder in a presentation to investors following its fourth-quarter results.

“The first of 10 units is expected to be placed in service at the end of the first quarter of 2019, with the remaining nine units to come online throughout 2019,” it added.

Kinder’s partner in the joint venture, called Elba Liquefaction, is the US equity fund EIG Global Energy Partners, which holds 49 percent. Elba Liquefaction will own the liquefaction units and other ancillary equipment.

“Certain other facilities associated with the project are 100 percent owned by Kinder Morgan,” said the company.

“The newly constructed Elba Express Modification Project is now in service, adding upstream compression facilities on the Elba Express pipeline to provide feed gas for liquefaction,” explained Kinder.

The company stated that natural gas is critical to the American economy and to meeting the world’s evolving energy needs.

“Objective analysts project US natural gas demand, including net exports of LNG and exports to Mexico, will increase from 2018 levels by 32 percent to nearly 119 Bcf/d by 2030,” it said.

“Of the natural gas consumed in the US, about 40 percent moves on Kinder Morgan pipelines, and roughly the same percentage holds true for US natural gas exports,” added Kinder.

“Kinder expects future natural gas infrastructure opportunities through 2030 will be driven by greater demand for gas-fired power generation across the country (forecast to increase by 15 percent), net LNG exports (forecast to increase almost five-fold), exports to Mexico (forecast to rise by 39 percent), and continued industrial development, particularly in the petrochemical industry,” it said.

The existing LNG terminal on Elba Island is about eight miles upstream from the mouth of the Savannah River. It was first authorized by the Federal Energy Regulatory Commission in 1972 as an import facility.

The transformation project to turn the terminal into a liquefaction plant began in November 2016.

Kinder and two equity funds are also making progress on receiving FERC permits to transform the existing Gulf LNG import terminal in Pascagoula in Mississippi into an export plant.

The proposed Gulf LNG export facility would consist of two Trains, each with capacity of about 5 MTPA.

“The Gulf Liquefaction Company, Gulf LNG Energy and Gulf LNG Pipeline units are scheduled to have their final Environmental Impact Statement in April 2019, and the final decision for issuance of the FERC certificate is expected in July 2019,” said Kinder.

Natural gas transport volumes on Kinder’s pipeline system for the fourth quarter were up 4.5 Bcf/d compared with the same three months in the previous year.

“The group’s success mirrors the record-breaking year enjoyed by the natural gas sector as a whole. US natural gas demand rose to 90 Bcf/d from 81 Bcf/d in 2017, an 11 percent increase,” it said.

“This increase was driven by higher throughput on El Paso Natural Gas due to additional Permian capacity sales, on Colorado Interstate Gas due to growing Denver-Julesburg Basin production, and on Tennessee Gas Pipeline due to power demand and projects placed in service,” said the company.

Kinder said its Texas intrastate networks also contributed to a rise in transport volumes due to higher demand from shippers serving Mexico and the Texas Gulf Coast industrial markets, and on Natural Gas Pipeline Company of America due to cold weather early in the quarter, increased Permian Basin receipts and power demand.

Kinder Morgan, one of the main US pipeline operators and owner of two LNG facilities, said it could now move forward with modifying its Gulf LNG import facility in Mississippi to handle exports as it is already doing with its Elba Island plant near Savannah, Georgia.