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USA to release brakes on second LNG export project

Freeport LNG Expansion to get approval on H2 2013

2B1st_Project_Smart_Explorer_Sales_Pursuit_ToolAfter Cheniere Sabine Pass LNG in Louisiana, the Freeport LNG Expansion project in Texas could be the second export of liquefied natural gas (LNG) project to be approved by the US administration.

This Freeport LNG Expansion project stands on the second position in the application list at the Department of Energy for the export of LNG to non-Free Trade Agreement (non-FTA) countries.

Freeport LNG Expansion L.P. is a wholly-owned company of Freeport LNG Development L.P. ( Freeport LNG) with four stakeholders:

Freeport_LNG_Expansion_Quintana_Island_Texas_map. – Freeport LNG Investments, LLLP from Michael S. Smith

 – ZHA FLNG Purchaser, LLC., a Zachry subsidiary

 – Texas LNG Holdings LLC., belonging to The Dow Chemical Company

 – Turbo LNG, LLC., owned by Osaka Gas Co. Ltd

From operations perspective Freeport LNG is managed by Freeport LNG-GP, Inc. a 50/50 joint venture between ConocoPhillips and Michael S. Smith.  

In December 2010 and in December 2011, Freeport LNG Expansion had submitted applications to the Department of Energy for the export in two phases of 511 billion cubic feet (bcf) of natural gas per year.

In February 2011 and February 2012 respectively, Freeport LNG Expansion received the corresponding approval for export to Free Trade Agreement (FTA) countries.

The US administration has already approved 23 LNG projects to export to FTA countries.

But among the countries benefiting from a FTA with USA, South Korea is the largest LNG importing country.

All other major LNG consuming countries in Asia such as China and Japan or in Europe such as UK, Germany, Italy or France will require the non-FTA countries authorization from the US Department of Energy.

So far only the Cheniere Sabine Pass LNG project has received the license to export to non-FTA countries followed by a waiting list of 19 other LNG export projects.

Freeport_LNG_TerminalFreeport LNG Expansion project is the next on that list.

In parallel,Freeport LNG Expansion filled in applications to:

 – Federal Energy Regulatory Commission (FERC)

 – Texas Commission on Environmental Quality

 – US Environmental Protection Agency

 – US Fish and Wildlife Service

 – US Army Corps of Engineers 

Freeport LNG Expansion applied for the FERC under the Natural gas Act in August 2012 with approval to be issued on the third quarter 2013.

The construction work of the Freeport LNG Expansion project should start immediately in following.

CB&I and Zachry completed FEED for Freeport LNG

Freeport LNG  started the operations of its LNG terminal and regasification facilities in Freeport, Texas, in 2008.

Shortly after initiating the storage and importation of  natural gas in the USA, the shale gas development rang the bell to change the game.

In 2010, while submitting the first applications to convert the import terminal into an export LNG plant, Freeport LNG appointed CH-IV International to perform a pre-front end engineering and design (pre-FEED) study on the Freeport LNG Expansion project.

As a first result, Freeport LNG selected Air Products and Chemical Inc. to provide their proprietary license for the cryogenic liquefaction process.

Freeport_LNG_Expansion_ProjectIn 2012, Freeport LNG moved forward and awarded a contract for the front end engineering and design (FEED) work to the CB&I and Zachry joint venture.

From this FEED work, the Freeport LNG Expansion project should be installed on the Quintana Island with a capacity of 13.2 million t/y of LNG with three LNG Trains of 4.4 million each.

Freeport LNG Expansion project should be fed by 2 billion cf/d natural gas delivered by the Dow Pipeline Company, the Kinder Morgan Texas Pipeline and the Brazoria Interconnector Pipeline.

Then the natural gas will be treated at the Brazoria Interconnector Pipeline to remove carbon dioxide, sulfur, water and other contaminants before the compression and liquefaction phases.

The production of two of the three LNG Trains have now been contracted by Freeport LNG:

 – In July 2012 to Osaka Gas C., Ltd () and Chubu Electric Power Co. (Chubu) for  4.4 million of the first LNG Train through a Liquefaction Tolling Agreement (LTA)

 – In February 2013 to BP Energy Company for 4.4 million t/y of the second LNG Train with a 20 years binding LTA. 

With these LTA contracts signed with Osaka Gas, Chubu and BP, the partners of the $10 billion capital expenditure Freeport LNG Expansion project expect to get the FERC approval on third quarter 2013 for a final investment decision (FID) on the fourth quarter 2013 and commercial operations in 2017.

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