Freeport Liquefied Natural Gas (LNG) Terminal

Liquefied Natural Gas (LNG) is becoming increasingly important as a prime energy source for both commercial and domestic customers all around the world.

One of the newest LNG terminal projects is in Freeport, Texas, USA (70 miles south of Houston on Quintana Island), where Freeport LNG Development LP, 50% owned by financier Michael Smith and 50% by ConocoPhilips, is developing the new facility.

There are additional partners who will be involved in running the facility, including Michael Smith (60%), Cheniere Energy (30%) and Contango Oil & Gas (10%).

ConocoPhilips will receive 1.5 billion cubic feet of terminal capacity a day for its own use.

The two sole customers of the terminal for the next 20 years will be ConocoPhilips and Dow Chemical (250 million cubic feet initially with an option to accommodate an additional 250 million cubic feet – a total of 3.6 million tonnes).

The total send out capacity of the terminal will be two billion cubic feet a day with storage facilities capable of storing 6.9 billion cubic feet (320,000m³).

The investment in the new facility is estimated at $500m, a substantial proportion of which will be provided by ConocoPhilips, including a non-refundable capacity reservation fee of $10m.

ConocoPhilips will also be responsible for project management during the construction phase of the project. The facility capacity will represent 3% of the total US gas production based upon 2004 figures.

The facility is scheduled to begin delivering gas in early 2008 (following commissioning which is underway in December 2007 (permits for commissioning were obtained in July 2007) to provide a reliable source of energy and feedstock for the local petrochemical industry.

Construction will require an initial workforce of 400 personnel which will grow to over 900 during the course of the project. Just 40 staff are expected to run the terminal when it is completed and in use.

CONTRACTORS, CONSTRUCTION AND APPROVALS

The Front-End Engineering and Design (FEED) contract was awarded to Technip USA by Contango Oil & Gas in 2003. The FEED contract was completed in late 2003 and the required federal approvals were applied for. Federal Energy Regulation Commission
(FERC) approval for the new terminal and attendant facilities was received in June 2004.

Ecology and Environment Inc was responsible for environmental assessment. Technip USA, in addition to the site design, is also responsible for engineering of service facilities. Project Technical Liaison Associates (PTL) is also responsible for safety and permitting.

Shiner Moseley & Associates Inc is responsible for marine design of the terminal and pipelines. Mustang Engineering Inc is responsible for pipeline design and permitting on-shore.

Brown, Williams, Moorhead & Quinn Inc (BWMQ) was responsible for FERC permitting procedures.

Fugro South is responsible for general overall site engineering. King & Spalding LLP is responsible for legal services to the project.

Enviance is supplying a system to the project for the management and automation of Environmental Health and Safety (EHS) compliance. The Enviance system is run from the internet and will allow the facility to manage its regulatory activities.

Energy Solutions International Inc has been chosen to supply the project with applications for the efficient management of LNG supply and the business processes involved in it.

The system will handle scheduling, nominations, contract management, administration and operations. This will allow the LNG to be stored regasified and distributed in an efficient manner (knowing how many shipments have arrived and where they have been distributed to).

FREEPORT LNG FACILITIES

The site placement of LNG facilities in the US is not as easy as first thought. The location is crucial because the site must have a 45ft draft channel to open water and a port facility sufficient to service the large LNG carriers. It must also be located in a supportive state and local environment and be near existing pipeline capacity.

The Freeport, Texas, site is an excellent location for siting and constructing an LNG receiving terminal. The main channel to the open water is a relatively short distance of six miles (one hour sailing time) and is dredged to 45ft; marine traffic into and out of the port is moderate.

Dow Chemical Company and ConocoPhillips, the two sole customers of the terminal, are the major users of the port facilities, as well as major consumers of natural gas for their petrochemical and refining facilities nearby.

The Freeport terminal will also be sited very near to the Texas Intrastate gas pipeline facility, which could take up any over capacity if required (especially if the facility expands, as is likely). In addition, in this area the residential impact is minimal. The site for the terminal is on a 30-year lease basis with six ten-year extensions available.

LNG TERMINAL FACILITIES

Facilities at the port will comprise LNG ship docking and unloading facilities with a protected single berth equipped with mooring and breasting dolphins, three liquid unloading arms and one vapour return arm.

Around the port area there will be a reconfiguration of storm protection levee and a new permanent access road will be constructed to facilitate construction traffic during the course of the project.

There will be two 26in-diameter (32in outside diameter) LNG transfer lines, one 16in-diameter vapour return line and service lines (instrument air, nitrogen, potable water and firewater). The terminal will have two double-walled LNG storage tanks each with a usable volume of 1,006,000 barrels (3.5 billion cubic feet of gas equivalent).

Additional terminal plant will include six 3,240 gallon-per-minute (gpm) in-tank pumps, seven 2,315gpm high-pressure LNG booster pumps and three boil-off gas compressors and a condensing system.

Also, there will be six high-pressure LNG vaporisers using a primary closed circuit water / glycol solution heated with 12 water / glycol boilers during cold weather and a set of intermediate heat exchangers using a secondary circulating water system heated by an air tower during warm weather, as well as primary circulation pumps for both systems.

The air tower is 80ft high and 650ft long and was constructed by SPX Cooling Technologies. The tower is equipped with 12 side-mounted, 10m fibreglass fans. The tower uses warm air to heat water that circulates through a series of heat exchangers, and converts the LNG from liquid into a gas.

The cold water return from the LNG heat exchangers is then recirculated back to the heating tower to start the process again. The fans themselves project cold air toward the beach (in hot weather this will be a form of outside air conditioning).

Other construction projects include ancillary utilities, buildings and service facilities at the LNG terminal, two natural gas super-heaters and two fuel gas heaters.

There will be 9.6 miles of 36in-diameter natural gas pipeline extending from the LNG import terminal to the proposed Stratton Ridge Meter Station. Here the system will interconnect with the intrastate gas pipeline system. This will allow the delivery of LNG to intrastate shippers when required. The Stratton Ridge facility will also include an integrated underground storage facility.

The marine terminal, storage units and vaporisation facility, which are to be built on Quintana Island itself, will have a vaporisation capacity of 1.75 billion cubic feet a day.