LNG

Elba Island LNG, the small US export facility near Savannah in Georgia, was been given permission by regulators to start commercial services from the fifth Train in its Moveable Modular Liquefaction System pioneered by Royal Dutch Shell.

The Federal Energy Regulatory Commission granted a request by US pipeline company Kinder Morgan to start exporting from Train 5 of the 10 completed small-scale Trains.

Elba Island has nameplate output of 2.5 million tonnes per annum and is the smallest of the six US export plants currently on stream. 

The fifth export plant at Cove Point in Maryland, owned by Dominion Energy, and like the Georgia plant located on the Atlantic Coast, is the next smallest with 5.2 MTPA of output.

The other four liquefaction facilities are on the Gulf Coast and are on a larger commcerial scale of up to 27 MTPA. Two are owned by Cheniere Energy at Sabine Pass in Louisiana and Corpus Christi in Texas.

There is also the Sempra Energy-owned Cameron plant in Louisiana and the Freeport plant at Quintana Island in Texas.

Kinder Morgan had initially expected the first Train at Elba Island to come on stream by the end of March 2019 and the remaining Trains following during the year.

However, the project was hit by construction delays and the original start-up day was gradually pushed back with the first cargo being shipped in December 2019.

Using Shell's Movable Modular Liquefaction System meant that the Trains were largely assembled off-site and delivered to Elba Island.

The Georgia project is supported by a 20-year supply contract with Shell, which was one of the original investors.

Kinder Morgan is also building a second LNG export plant at an existing terminal in Mississippi called Gulf LNG in partnership with several equity funds.

That project near Pascagoula has received all FERC approvals.

The existing Gulf import terminal has storage and jetty infrastructure and is to be transformed into a liquefaction plant to produce an initial 11.5 MTPA of LNG for export.

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

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.