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New US LNG project Brownsville targets FTA market

09 Oct 2013 15:36:08 | lmd

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A new company has proposed developing a mid-scale greenfield LNG export project in the US Gulf that aims to capture buyers within countries holding a free trade agreement (FTA) with the US.

Texas-based Annova LNG is requesting approval on 9 October from the US Department of Energy (DOE) to sell 7mtpa in long-term capacity from a proposed onshore liquefaction project in Brownsville, south Texas.

Annova LNG CEO David Chung told ICIS that the project will initially begin with a 2mtpa phase, comprising two 1mtpa trains, and then later phases could see the project expand to 4mtpa or 6mtpa.

Capacity will be marketed in tranches of 0.5mtpa to 1.0mtpa. Potential buyers are being considered in Central and South America and in Asia, Chung said.

“It’s sized perfectly for the smaller-consumption, FTA countries,” Chung said.

The company has secured a lease option on a 295-acre property from the Port of Brownsville. Three other proposals are also in close proximity: a site purchased by Freeport LNG CEO Michael Smith, and two floating LNG ventures known as Barca LNG and EOS LNG which are requesting to export up to 11.8mtpa to both FTA and non-FTA countries.

Annova LNG requires a newbuild, 60-mile (97km) header pipeline to connect up to four different pipelines: US-based Kinder Morgan’s Tennessee Gas Pipeline and Tejas route, Spectra’s Texas Eastern Pipeline (TETCO) and Enterprise.

Chung said Annova LNG’s site in Brownsville has greater advantage in gaining access to the pipeline gas, particularly with its close proximity to the Eagle Ford shale basin, in comparison with the multiple LNG export projects and petrochemical complexes proposed in Louisiana.

An in-service date is being targeted for mid-2018.


Targeting FTA market

The project’s FTA approval, which the US government must approve without undue modification or delay, is expected sometime at the end of 2013 or early 2014.

Nations holding an existing FTA with the USA that are also LNG buyers include South Korea, Chile and Dominican Republic, while FTA countries that are considering launching LNG import capability include Panama and Colombia.

Annova LNG plans on filing its non-FTA application with the US DOE as well, but intends on marketing to FTA nations first, Chung said.

Chung said Annova LNG is considering working closely with a US-based investment-grade company that could provide the credit reputation to offer capacity on a free on board (FOB) or delivered ex-ship (DES) basis.

Annova LNG will own, develop and operate the facility, while its investment-grade partner would jointly market the volumes, Chung said.

The project’s tolling fees would be comparable to existing US brownfield liquefaction projects. These have concluded long-term tolling agreements in the range of $3.00-3.15/MMBtu.


Site technology

The facility would utilise onshore liquefaction trains, with PRICO technology as a preferred choice. The initial 2mtpa phase is also considered ideal for a modular design, which will help offset costs. In addition, a barge-based or floating storage unit (FSU) concept is also being considered for the project’s storage tanks, Chung said.

A front-end engineering and design study is expected to be started by the first quarter of 2014, in partnership with US-based Black and Veatch.

The project also intends to initiate its US Federal Energy Regulatory Commission (FERC) pre-filing process in 2014.

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