By Angel Gonzalez
HOUSTON--A Royal Dutch Shell PLC (RDSA) unit struck a deal with
a Kinder Morgan Inc (KMI) 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 U.S. 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. Exxon Mobil Corp. (XOM) last year
announced it wanted to turn an existing import terminal in Texas
into a facility than can also export, and Chevron Corp. (CVX) last
month partnered with Apache Corp. (APA) 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 U.S. permission to export to countries with which the
U.S. 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 Inc. (LNG)'s Louisiana terminal,
is authorized for exports and is under construction.
The companies said that they would seek to modify El Paso
Pipeline Partners LP (EPB)'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
of gas per day.
"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 U.S.
and other countries," said Kinder Morgan Chief Executive Richard
Kinder in a statement.
Write to Angel Gonzalez at angel.gonzalez@dowjones.com
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