Shell joins Kinder Morgan for Elba Island LNG export pact
Anglo-Dutch major Shell has taken the US liquefaction plunge and has agreed to partner with Houston-headquartered energy company Kinder Morgan to develop a 2.5mtpa capacity LNG export project at the Elba Island facility in Georgia.
Shell and Southern Liquefaction Company, a Kinder Morgan subsidiary and unit of Elba Island terminal operator El Paso, have established a joint venture company to advance and operate the liquefaction project, the companies said in a joint statement on Monday. The deal, subject to regulatory and corporate approvals, will see El Paso take a controlling 51% stake in the joint venture, with Shell holding the remaining equity.
While the Anglo-Dutch major has established itself as the pre-eminent LNG major, with an enviable portfolio based primarily on Australian LNG growth, its strategy for the next wave of growth post-Australia is still largely a work in progress.
The company has scoped out a series of potential export projects in Asia, which are all at the early stages of development, and is progressing a 12mtpa scheme in western Canada in partnership with South Korean monopoly KOGAS, Japanese trading company Mitsubishi as well as Chinese state-owned PetroChina.
Although the Anglo-Dutch major signed a preliminary agreement with the Freeport LNG project last year to lift an unspecified amount of LNG from the planned 21.25mtpa Texas-based project, plans to monetise its US assets as LNG had lagged behind other LNG portfolio suppliers, such as UK-based BG Group and Spain's Gas Natural Fenosa.
The Elba Island terminal received approval from the US Department of Energy (DOE) in June 2012 to export 500 million cubic feet (mcf)/day - approximately 4mtpa - to countries that have a free trade agreement (FTA) with the US.
El Paso then submitted another filing with the DOE in August 2012 to export up to 4mtpa of LNG to non-FTA countries.
The DOE is expected to start a review of the various planned projects that have filed to export to non-FTA countries from the end of next month.
The agency is expected to take up the consideration of the projects in the order in which they were filed, with preference given to projects in the Federal Energy Regulatory Commission (FERC) pre-filing stage.
This would theoretically leave Elba Island behind approximately nine other planned liquefaction projects.
However, Shell and El Paso said that they would develop the first phase of the project as a 1.5mtpa capacity plant, which would need no additional approval from the DOE.
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