Kinder Morgan Inc. (NYSE: KMI) announced Dec. 10 that Kinder Morgan Texas Pipeline, Kinder Morgan Tejas Pipeline and Tennessee Gas Pipeline Co. (TGP) have done 15-year firm transportation agreements and a multi-year storage agreement with Cheniere Energy Inc. (NYSE MKT: LNG) through its subsidiary, Corpus Christi Liquefaction LLC.
Under the agreements, KMI will provide 550,000 dekatherms per day (Dth/d) of firm natural gas transportation service, as well as 3 billion cubic feet (Bcf) of natural gas storage capacity to serve an LNG export facility being developed near Corpus Christi. The project is being designed and permitted for up to three trains, with total design production capacity of about 13.5 million tonnes per annum (mtpa) of LNG. The natural gas transportation service can be increased to 800,000 Dth/d upon the completion of certain conditions in the Kinder Morgan Texas Pipeline agreement.
KMI said it will expand its existing Texas intrastate pipeline system in South Texas to provide 250,000 Dth/d of firm transportation and 100 percent of the storage services, and expand its TGP Pipeline to provide 300,000 Dth/d of firm transportation from various Zone 1 receipt points near its Station 87 Pool located in Portland, Tennessee. The construction of the facilities necessary to support these services will be coordinated with the startup of the LNG export facility, which is expected in 2018/2019. KMI expects to invest about $187m for this project.
“We are pleased to provide transportation and storage services that access diverse supply basins to Corpus Christi Liquefaction for this LNG export opportunity,” said Tom Martin, KMI’s president of Natural Gas Pipelines. “The need for additional natural gas transportation services continues to increase, and Kinder Morgan’s portfolio of natural gas assets across the United States is well positioned to serve infrastructure expansion opportunities and meet increasing market demand.”
“This agreement builds on our existing relationship with Kinder Morgan, which will also service a portion of our Sabine Pass Liquefaction terminal in Louisiana, and moves us closer to securing the supply infrastructure needed to provide natural gas to our Corpus Christi LNG export facility,” said Corey Grindal, vice president of Supply and Marketing for Cheniere. “Access to multiple and diverse supply basins and an extensive pipeline network are both important factors for securing the natural gas required to meet our customers’ needs.”
The agreements are subject to, among other things, Corpus Christi Liquefaction making a final investment decision to construct the Corpus Christi Liquefaction Project.
Kinder Morgan Inc. is the largest energy infrastructure company in North America. It owns an interest in or operates approximately 80,000 miles of pipelines and 180 terminals. Kinder Morgan is the largest midstream and third largest energy company in North America with an enterprise value of more than $125bn.
Cheniere Energy is a Houston-based company primarily engaged in LNG-related businesses. Its subsidiary, Cheniere Energy Partners LP (NYSE MKT: CQP), is developing a liquefaction project adjacent to the existing regasification facilities at the Sabine Pass LNG terminal, and will include up to six LNG trains with aggregate design production capacity of up to 27 million tons per year. Construction has begun on the first four LNG trains. Cheniere has also initiated a project to develop liquefaction facilities near Corpus Christi that will include up to three LNG trains with aggregate design production capacity of up to 13.5 million tons per year. Upon completion of certain conditions, construction is expected to start on the Corpus Christi liquefaction project in early 2015.