Kinder Morgan Plans One Of Largest Economic Development Investments In Mississippi History

A joint venture group led by Houston-based pipeline giant Kinder Morgan has filed an application with the Federal Energy Regulatory Commission (FERC) seeking approval to construct and operate a new $8 billion natural gas liquefaction (LNG) and export facility near Pascagoula, Miss.

In addition to helping the U.S. trade balance, project officials said the LNG facility will be one of the largest economic development investments in Mississippi history, creating hundreds of jobs during construction, boosting local-regional construction spending and provide significant economic value to Jackson County and the Port of Pascagoula.

“The proposed Gulf LNG Liquefaction Project will be a world-class facility within an existing world-class deep water port and, importantly, be located in an energy friendly state and benefit from a supportive community,” said Kinder Morgan East Region Natural Gas Pipeline President Kimberly Watson. “In addition, it will have a number of other distinct advantages, including: the ability to utilize existing infrastructure, minimizing typical new LNG construction risks; it will be built and operated by a seasoned LNG operations team; the facility will have abundant and diverse natural gas supply options and easy access to international shipping lanes.”

LNG PROJECTS ON THE RISE WITH SHALE GAS PRODUCTION
According to the U.S. Department of Energy, the number of permits for LNG export and import terminals in the U.S. has dramatically increased with the emergence of shale gas basins across the U.S. Some facilities export natural gas from the U.S., some provide natural gas supply to the interstate pipeline system or local distribution companies, while others are used to store natural gas for periods of peak demand.

Currently, FERC regulates 24 operational LNG facilities. As of June 18, there are another 22 projects that have been proposed for construction, FERC records show. Out of that total, 12 have received FERC approval to begin construction.

Gulf LNG Liquefaction Co. (GLLC) and Gulf LNG Energy (GLE) collectively filed the FERC application for the Pascagoula project last week, requesting authority to build new natural gas liquefaction and export facilities at an existing liquefied natural gas (LNG) re-gasification terminal owned by the Kinder Morgan-led partnership.

In addition, Gulf LNG Pipeline (GLP) notified the FERC that minor modifications will be made to the existing pipeline facilities that currently interconnect with the terminal under GLP’s blanket authorization from the FERC. The venture partners have requested that the FERC grant authorization of the requests no later than June 17, 2016.

The project, which will be divided into two phases, will include the installation of natural gas pre-treatment, liquefaction and export facilities at the terminal with a total peak capacity of up to 11.5 million tonnes per annum (MTPA) of LNG. These facilities will allow the terminal to liquefy domestic natural gas delivered by pipeline, store the LNG in the terminal’s existing LNG storage tanks and load it into LNG vessels via the terminal’s existing marine jetty.

The terminal will retain its current capability to receive, store, re-gasify and deliver natural gas into the interstate pipeline system as originally constructed, thereby making the Gulf LNG Terminal bi-directional, officials said.

According to Kinder Morgan, capital expenditures for the project at full development will amount to nearly $8 billion, subject to obtaining sufficient long-term customer commitments. Anticipated capital for a single LNG train in phase one amounts to $5 billion, while an additional $3 billion will be spent in phase two. Phase one of the project is expected to be operation in the fourth quarter of 2020, and phase two would come on line a year later, officials said.

The project has already received U.S. Department of Energy (DOE) Free Trade Agreement (FTA) export authority and non-FTA authority is pending. On June 15, 2012, GLLC received approval from the DOE to export up to 11.5 million MTPA of liquefied natural gas.

Since emerging last year from a $70 billion deal to bring all of its energy assets under one umbrella, Kinder Morgan has kept its promise of seeking growth and acquisition opportunities from income tax savings after it acquired all of the outstanding stock of its former master limited partnerships — Kinder Morgan Energy Partners (KMP), Kinder Morgan Management, LLC (KMR) and El Paso Pipeline Partners, L.P. (EPB).

Currently, Kinder Morgan owns or has an interest in two major natural gas pipelines that originate or transport product through Arkansas. The midstream energy giant also operates two product terminal facilities in Pine Bluff and Blytheville that employ 337 active local workers.

In addition, Kinder Morgan is the largest energy infrastructure company in North America and the third largest energy company overall with an estimated enterprise value of nearly $140 billion, behind only ExxonMobil and Chevron.