Shell US Gas & Power LLC, a subsidiary of Royal Dutch Shell Plc (NYSE: RDS), and Southern Liquefaction Co. LLC, a Kinder Morgan (NYSE: KMI) company and unit of El Paso Pipeline Partners LP (NYSE: EPB), will form a limited liability company to develop a natural gas liquefaction plant in two phases at Southern LNG Co. LLC’s existing Elba Island LNG Terminal located near Savannah, Ga.
Subject to various corporate and regulatory approvals, Shell and Kinder Morgan affiliates have agreed to modify EPB’s Elba Express Pipeline and Elba Island LNG Terminal to physically transport natural gas to the terminal and to load the LNG onto ships for export.
Once finalized, EPB, through its affiliates, will own 51% of the entity and operate the facility. Shell, through its affiliates, will own the remaining 49% and subscribe to 100% of the liquefaction capacity. The project will use Shell’s small-scale liquefaction unit, which will be integrated with the existing Elba Island facility and enable rapid construction compared to traditional large-scale plants.
The total project is expected to have liquefaction capacity of 2.5 million ton per year of LNG or 350 million cubic feet of gas per day. In June 2012, the Elba Island terminal received approval from the US Department of Energy (DOE) to export up to 4 million ton per year (500 million cubic feet) of LNG to Free Trade Agreement countries. In August 2012, the terminal submitted a filing to the DOE seeking approval to export up to 4 million ton per year (500 million cubic feet) of LNG to non-Free Trade Agreement countries. Phase I of the project, approximately 1.5 million ton per year (210 million cubic feet), requires no additional DOE approval.