Monday, January 28, 2013

Royal Dutch Shell & Exxon Mobil LNG Export Plans

Royal Dutch Shell PLC has struck a deal with a unit of U.S. pipeline giant Kinder Morgan to export liquefied natural gas from an existing import terminal near Savannah, Georgia. The bid adds to energy-sector efforts to capitalize on North America's newly found abundance of natural gas from shale and comes in the wake of a recent report commissioned by the U.S. Department of Energy that came out in favor of LNG exports.

Exxon Mobil Corp.  last year announced plans to turn an import terminal in Texas into a facility that can also export, and Chevron Corp. last month partnered with Apache Corp.  in order to liquefy and export natural gas out of western Canada. Shell is also working on a competing western Canada LNG export project.

The Georgia export project would need U.S. permission to export to countries with which the U.S. doesn't have free-trade agreements, and the companies must finalize investment decisions. But due to Shell's deep pockets and its experience in the LNG business, the effort could stand out amid 20 or so different projects awaiting for permits to sell LNG to non-FTA countries. So far only one project, Cheniere Energy Inc.'s Louisiana terminal, is authorized for exports and is under construction.

Shell and Houston-based Kinder Morgan said that they would seek to modify El Paso Pipeline Partners LP's  Elba Express Pipeline unit and the Elba Island LNG Terminal to move natural gas to the terminal, liquefy it and ship it. El Paso, a Kinder Morgan unit, will own 51% of the partnership and run the facility, and Shell will own 49% and have rights to 100% of the liquefaction capacity of the terminal. The project is expected to be able to ship 350 million cubic feet of gas per day. (WSJ, 1/28/2013)

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