Kinder Morgan is set to purchase 100% of Shell’s equity interest in Elba Liquefaction Company, which plans to develop an LNG facility in Georgia.
The Elba Liquefaction Project, which is proposed to be constructed and operated at the existing Elba Island LNG Terminal near Savannah, Georgia. Kinder Morgan currently owns 51% of the ELC Venture while Shell owns 49% and has 100% of the liquefaction capacity.
Kinder Morgan will buy the remaining 49% and its incremental investment from the transaction will be around $630 million (€580 million) bringing its total investment in all the liquefaction and terminal facilities at Elba Island to around $2.1 billion.
The project will consist of 10 small-scale liquefaction units to be bought from Shell. They will be integrated with the existing Elba Island facility and enable rapid construction compared to traditional large-scale plants.
The next phase of the regulatory approval of the project is for the Federal Energy Regulatory Commission to issue a draft environmental assessment. Subject to these approvals, construction could start in the fourth quarter of 2015, with initial production expected to occur in late 2017.
Ton Ten Have, Shell’s upstream Americas VP LNG operations and growth says: ‘This is a good opportunity to leverage the proven track record of both companies to deliver an innovative LNG export project in the US. Shell and Kinder Morgan have successful relationships in North America based on Kinder Morgan ownership with Shell as a customer and we believe this will be a successful model at Elba as well.’
When fully complete, the project is expected to have a total capacity of around 2.5 million tonnes per year of LNG for export.