Shell, Kinder Morgan announce plans to export LNG from Georgia terminal


HOUSTON -- A Royal Dutch Shell unit struck a deal with a Kinder Morgan company to export liquefied natural gas out of an existing import terminal near Savannah, Ga., the companies said Monday.

The move, which comes in the wake of a recent report commissioned by the US Department of Energy that came out in favor of LNG exports, is the latest among major energy companies seeking to capitalize on North America's the newly found abundance of natural gas from shale.

ExxonMobil last year announced it wanted to turn an existing import terminal in Texas into a facility than can also export, and Chevron last month partnered with Apache to liquefy and export natural gas out of western Canada. Shell is also working on a competing Western Canada LNG export project.

To be sure, the Georgia export project faces hurdles: it still must receive US permission to export to countries with which the US doesn't have free trade agreements, and the companies must finalize investment decisions.

But it is likely to strengthen the project's chances of standing out amid 20 or so different projects awaiting for permits to sell LNG to non-FTA countries, due to Shell's big pockets and its experience in the LNG business. So far only one project, Cheniere Energy's Louisiana terminal, is authorized for exports and is under construction.

The companies said that they would seek to modify El Paso Pipeline Partners'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/day of gas.

"This project will facilitate further development of the abundant natural gas resources in the United States and will be a positive factor in the overall balance of trade between the US and other countries," said Kinder Morgan CEO Richard Kinder in a statement.

Dow Jones Newswires

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