LNG

Chart Industries, the US LNG equipment-maker and industrial gases and clean energy company, reported a record backlog for an eighth consecutive quarter, surpassing $2 billion for the first time in its history.

Kinder Morgan, the US pipeline giant and key shareholder in the LNG export plant in Georgia and the Gulf LNG project in Mississippi, has agreed on the $1.22 billion acquisition of Stagecoach Gas Services, a natural gas pipeline and storage joint venture with assets serving the Marcellus Shale basin and northeast utilities.

US pipeline operator Kinder Morgan said a minority stake of 25 percent had been sold in the 9,000-mile Natural Gas Pipeline Company of America, which supplies city gas to Chicago and feed gas to LNG plants on the Gulf Coast of Texas and Louisiana.

Kinder Morgan Inc., the US pipeline company, reported a small decline in fourth-quarter net income as revenues were underpinned by the growing LNG feed-gas requirements on the Gulf Coast and praised the performance of the Texas Intrastate systems, Natural Gas Pipeline of America (NGPL) and Elba Island LNG.

The Elba Island LNG liquefaction plant in the state of Georgia, the sixth US export facility to start up, was expected to load its first cargo after coming on stream in October.

US pipeline company Kinder Morgan and its equity fund partners have made more regulatory progress in their development of the Gulf LNG export project proposed at the site of the existing import terminal at Pascagoula in Mississippi.

The US Gulf LNG export project proposed by pipeline company Kinder Morgan for Pascagoula in Mississippi is moving forward on the regulatory front with the Federal Energy Regulatory Commission and other agencies.

Gulf LNG is an existing import terminal that is being transformed into a liquefaction plant to produce around 11.5 million tonnes per annum of LNG for export.

The Pascagoula terminal had originally been constructed to import LNG cargoes from Angola in southwest Africa from a production plant developed by international oil companies, including Chevron Corp.

However, the US shale-gas boom made LNG imports into the US uneconomic and Kinder later decided to consider the export option.

Gulf LNG, co-owned by Kinder Morgan and several US equity funds, has just notified the FERC about the progress of the project and the issue of the final environmental impact statement.

The company said that on March 15, 2019, the Pipeline and Hazardous Materials Safety Administration, now playing a more active part of the FERC process, issued its letter of determination.

This stated that it had reviewed the company’s application and determined that it had demonstrated that the siting of the project complies with Federal Pipeline Safety Standards.

In addition, the company had submitted three replies through March 4, 2019, to data requests from FERC staff on the Draft Environmental Impact Statement (DEIS).

Gulf LNG added that it was working on an update to the Mississippi Department of Environmental Quality’s Permit to Construct and Operate Air Emissions Equipment and an update to the US Army Corps of Engineers certification in relation to the Rivers and Harbors Act.

“The comment period on the DEIS closed on February 25, 2019 and FERC is presently engaged in drafting the Final Environmental Impact Statement,” said Gulf LNG.

The Gulf terminal was originally owned by US pipeline company El Paso and later acquired by Kinder, which has sold 50 percent of the project to US equity funds.

The Pascagoula terminal is located next to the Bayou Casotte Navigation Channel and already includes a five-mile send-out pipeline and two LNG storage tanks, each with a capacity of 160,000 cubic metres.

It is interconnected to several downstream pipelines, including Transco, Florida Gas Transmission, the Destin Pipeline and the Gulfstream Natural Gas Pipeline from where feed-gas can be transported for processing and export from Pascagoula.

This is Kinder's second LNG export project and it is currently completing the Elba Island export plant near Savannah in the state of Georgia.

In addition to the storage tanks and pipeline, the terminal has a single dock facility that is currently permitted to receive LNG carriers of up to 170,000 cubic metres capacity and is designed to handle even larger vessels.

An earthen berm would also be constructed extending from the northeast to the southeast boundaries of the terminal expansion site. This would be connected to new segments of the storm surge protection wall on the coast.

The project is 50 percent owned by Kinder Morgan subsidiary Southern Gulf LNG Company, while 30 percent is held by Thunderbird LNG, a unit of the Blackstone Group fund managers.

The remaining 20 percent is held by Gulf LNG Holdings, comprising Arc Logistics Partners and Lightfoot Capital Partners equity funds.

US regulators are moving forward with the Pointe LNG project proposed for the East Bank of the Mississippi River, which would be the second riverbank export facility planned for south of New Orleans.

The Federal Energy Regulatory Commission said it was preparing an environmental impact statement (EIS) that would discuss the effects of the Pointe LNG plant and associated pipelines to be sited near river mile 46 of the Mississippi in Plaquemines Parish, Louisiana.

Pointe LNG had asked the FERC for permits in September 2018 for a site comprising about 600 acres of leased property with more than 6,500 feet of river frontage.

The project has a proposed in-service date of the second quarter of 2025 and would consist of three LNG liquefaction Trains, each with a nameplate capacity of 2 million tonnes per annum, and with connections to major regional pipelines.

The project calls for the construction of two 36-inch-diameter gas supply laterals to interconnect with the nearby existing pipeline infrastructure.

One pipeline is proposed to be built to enter the facility from the north, connecting with High Point Gas Transmission's system.

The second pipeline would enter the facility from the south and connect with the Tennessee Gas Pipeline system.

The people behind the Pointe venture are two US Gulf Coast energy veterans, former Duke Energy executive Jim Lindsay and former tanker captain Tom Burgess.

The project site includes a 250-acre area where Parallax Energy, a company started by former BG Group executive Martin Houston, had proposed in 2015 to build a riverbank project.

As founding partners in an original Mississippi River LNG venture, Lindsay and Burgess had sold the project to Houston and his then partner Cheniere Energy, whose Chief Executive at the time had been Charif Souki.

A second export project is currently planned by another company, Venture Global, for the same area of Louisiana but on the opposite bank of the Mississippi.

Venture Global is proposing that its Plaquemines LNG plant is constructed on 630 acres near river mile-marker 55 on the West Side of the Mississippi, 30 miles south of New Orleans.

The FERC said it issued a notice on February 5 to open up the scoping process for Pointe LNG when Commission staff will gather input from the public and interested state and federal agencies.

“By this notice, the Commission requests public comments on the scope of the issues to address. To ensure that your comments are timely and properly recorded, please submit them so that the Commission receives them in Washington, DC on or before 5:00pm Eastern Time on March 7, 2019,” said the FERC.

“You can make a difference by submitting your specific comments or concerns about the project. Your comments should focus on the potential environmental effects, reasonable alternatives and measures to avoid or lessen environmental impacts,” stated the regulator.

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.

US pipeline and storage company Kinder Morgan said it expected the first Train of its Elba Island LNG export plant near Savannah in Georgia to come on stream in the first quarter of 2019 while the company was also benefitting from the feed-gas needs at other liquefaction ventures.