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WILKES-BARRE, Pa., Feb. 2, 2004 -- Southern Union Co., through its subsidiary Trunkline LNG Company, has entered into an agreement with BG LNG Services, LLC, a subsidiary of BG Group of the United Kingdom, for a Phase II modification of Trunkline LNG's Lake Charles, La., liquefied natural gas (LNG) terminal.
Through its Trunkline Gas Company subsidiary, Southern Union has also contracted with BG LNG for the construction of a 23-mile pipeline from the LNG terminal to the mainline of Trunkline Gas. Trunkline LNG and Trunkline Gas expect to invest a total of approximately $125 million in the projects.
Trunkline LNG operates North America's largest LNG terminal. With the Phase II modification, sendout capacity from the LNG terminal will increase by an incremental 50 percent to 1.8 billion cubic feet per day (Bcf/d), with a peak sendout capacity of 2.1 Bcf/d. The additional capacity will be fully contracted to BG LNG under an agreement expiring in 2023. Phase II is designed to meet the growing requirements of BG LNG. Construction includes additional pumps and vaporizers along with unloading facilities added to a second dock.
Trunkline Gas will also build a second 30-inch-diameter, 23-mile natural gas pipeline from the LNG terminal to its mainline, which will run parallel to its existing pipeline. The second pipeline will transport additional capacity created by the expansion, increasing pipeline capacity from the terminal to 2.1 Bcf/d from 1.3 Bcf/d. BG LNG and Trunkline Gas have signed a 19-year transportation agreement for the capacity on the new pipeline - also expiring in 2023.
In accordance with approval from the Federal Energy Regulatory Commission ("FERC") received in March 2003, Trunkline LNG is currently building the Phase I expansion of the Lake Charles LNG terminal that will increase sendout capacity to 1.2 Bcf/d from its current 630 million cubic feet per day and increase terminal storage capacity to 9 Bcf from its current 6.3 Bcf. Phase I is expected to be completed and in service by December 31, 2005. Phase II is expected to be completed and in service by early to mid-2006. Upon completion of both phases, BG LNG will have 100 percent of the storage and sendout capacity of the terminal.
Trunkline LNG and Trunkline Gas plan to file pipeline construction and LNG expansion plans with the FERC later this month. Construction will begin after approval from the FERC is received. Much of the Phase II construction is expected to be performed simultaneously with Phase I construction.
Thomas F. Karam, President and Chief Operating Officer of Southern Union, stated, "LNG is an increasingly important part of America's natural gas supply portfolio and is a key component of our nation's fuel security. With this agreement, we will have effectively tripled the size of Trunkline LNG by 2006. These projects will ensure that Southern Union, together with BG LNG, continues to provide America with a significant source of natural gas - now and long into the future."
"BG LNG is delighted to be working with Trunkline LNG and Trunkline Gas," said Betsy Spomer, BG Vice President - Business Development, North America, Caribbean and Global LNG. "The agreement is another step in the development of our LNG strategy, and underlines our ability to increase LNG deliveries into the United States in response to the country's growing energy demand."
Southern Union Company is engaged primarily in the transportation and distribution of natural gas. Panhandle Eastern Pipe Line Company, Trunkline Gas Company, Trunkline LNG Company and Sea Robin Pipeline Company, operating as Panhandle Energy, are units of Southern Union Company. Panhandle Energy operates more than 10,000 miles of mainline natural gas pipeline extending from the Gulf of Mexico to the Midwest and Canada.
These pipelines access the major natural gas supply regions of the Louisiana and Texas Gulf Coasts as well as the Midcontinent. The pipelines have a combined peak day delivery capacity of 5.3 billion cubic feet per day and 90 billion cubic feet of underground storage. Through its local distribution companies, Southern Union also serves approximately one million natural gas end-user customers in Missouri, Pennsylvania, Massachusetts and Rhode Island. For further information, visit www.southernunionco.com.
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