LNG

Kinder Morgan Inc (KMI), the leading US pipeline feed-gas company for liquefied natural gas plants and a key energy infrastructure developer, reported third-quarter net income of $576 million, up from $495M in the prior-year quarter, as the executive team forecast a continuing and deepening LNG boom on the Gulf Coast.

Kinder Morgan Inc., the US natural gas pipeline giant and a shareholder in the Elba Island LNG export plant in Georgia, has sold part of its stake in the liquefaction plant.

KMI said it sold a 25.5 percent equity interest in Elba Liquefaction Company (ELC) to “an undisclosed financial buyer” for around $565 million.

After the close of the transaction the Houston, Texas-based company would own 25.5 percent of Elba Island, the same as the mystery buyer.

New York-based Blackstone Credit, a hedge fund and investment arm of the Blackstone Group, would continue to hold a 49 percent interest in ELC, which is now the majority holding.

KMI said the proceeds from the sale would reduce short-term debt and create additional capacity for “attractive investments” including “opportunistic” share repurchases.

It added that the value of the equity interest implied an enterprise value of ELC amounting to $2.3 billion, which is approximately 13 times 2022 gross earnings.

The ELC joint venture was formed in 2017 to construct and own the 10 modular liquefaction units in operation at Elba Island and KMI would continue to operate the facility.

The export plant is supported by a 20-year contract with Shell LNG North America for 100 percent of the liquefaction capacity.

Critical asset

“We are pleased to welcome a new partner into the ELC joint venture,” said KMI’s Interstate Natural Gas President Kimberly Watson.

“Recent geopolitical events have proven how critical liquefied natural gas infrastructure is to meeting global energy demand,” added Watson.

“We believe this investment further shows the value of LNG and demonstrates the important role it will play for decades to come,” she stated.

The Elba Liquefaction facility is in Chatham County in Georgia, near the city of Savannah, and produces around 2.5 million tonnes per annum of LNG from its 10 Trains using Shell processing technology.

In the operational plan, ELC then delivers the LNG to Southern LNG Co. (SLNG) for export.

KMI owns 100 percent of SLNG, which owns and operates the Elba Island LNG Terminal, including the LNG storage tanks and the ship dock for import and export.

The statement added that Bracewell LLP served as legal advisor to KMI for the transaction.

The US Department of Energy has just published its latest liquefied natural gas monthly export data showing rising prices for the six plants and with China and Brazil being the top destinations, while the number of receiving nations increased to 40 as the Central American state of Nicaragua joined the list.

Kinder Morgan Inc., the leading US pipeline company and LNG export plant stakeholder, has agreed to acquire the Kinetrex company, a leading supplier of liquefied natural gas in the Midwest and a growing player in producing and supplying renewable natural gas (RNG) made from waste.

Kinder Morgan Inc., the US pipelines company and owner of the US Elba Island LNG export plant, confirmed that three liquefaction units were still shutdown after a fire last week in a mixed-refrigerant compressor at the LNG facility near Savannah in Georgia.

The Royal Dutch Shell LNG carrier “Gemmata” with 138,100 cubic metres capacity was moored at the Elba Island LNG export plant near Savannah in the state of Georgia, the sixth US export plant to come on stream since 2016.

US pipeline company Kinder Morgan said it was still delaying the start-up of its Elba Island LNG export plant in Georgia after receiving regulatory permission in early March to introduce feed-gas into its systems comprising 10 small-scale liquefaction Trains.

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.

The Georgia terminal is among three US liquefaction facilities that are expected to begin service in 2019, adding to the country's growing energy export industry.

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

However, the project had also been hit by minor construction delays and the original start-up day was gradually pushed back from the end of 2018.

“The start-up of Elba has been delayed due to additional common commissioning issues that are systematically being addressed on the first of the 10 liquefaction units,” said the company.

“We will issue a press release when we have resolved the issues and are in service,” it added. Kinder did not say how long the delay would last.

Kinder’s project near Savannah is utilizing Shell's Movable Modular Liquefaction System. The small-scale liquefaction trains were largely assembled off-site.

Kinder, based in Houston, will have feed-gas needs equivalent to around 350 million cubic feet per day.

Of the three plants set for start-up in 2019, only Sempra Energy’s Cameron LNG facility at Hackberry in Louisiana has shipped its first cargo after a series of delays.

When Elba Island begins commercial operations soon followed by the Freeport plant in Texas, the US will double the number of export plants in operation.

According to the Federal Energy Regulatory Commission, the 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 Georgia project is supported by a 20-year supply contract with Royal Dutch Shell.

The coming on stream of Elba Island on the East Coast would follow the shipping of the first cargo more than a year ago from the Cove Point in Maryland on Chesapeake Bay, operated by Dominion Energy.

The two Cheniere Energy plants on the Gulf Coast at Sabine Pass in Louisiana and Corpus Christi in Texas and Sempra’s Cameron plant give the US a current total of four plants in operation.