Dow and Freeport LNG Development Reach 20-year LNG Terminal Use Agreement
HOUSTON, Feb. 26 /PRNewswire/ -- Freeport LNG Development, L.P. announced today
that it reached a 20-year terminal use agreement, (TUA) with The Dow Chemical
Company . The agreement is for up to 500 million cubic feet per day (mmcf/d) of
throughput capacity at Freeport LNG's proposed liquefied natural gas (LNG)
receiving terminal located in Quintana, Texas.
Under the terms of the TUA, Dow has made a firm commitment to reserve throughput
capacity for 1.8 million tons of LNG per year (250 mmcf/d), and has until August
31, 2004 to exercise an option on the remaining 250 mmcf/d.
A portion of the anticipated LNG supply would be used to partially satisfy Dow's
demand for natural gas at its petrochemical facilities located along the Texas
Gulf Coast. Dow facilities in Texas and Louisiana consume nearly 600 million
cubic feet per day of natural gas. Portions of the natural gas resulting from
the LNG supply will be marketed to other industrial consumers and to key Gulf
Coast natural gas hubs in Texas.
Dow is the first industrial energy user in the U.S. to commit to LNG terminal
capacity on a long-term basis, according to Jody Sumrall, Dow business manager
for LNG and Texas Gas. "This is an important commitment for Dow, a step we need
to take due to the ever-increasing demand for natural gas in the U.S. Importing
LNG from other regions, such as South America, Africa and the Middle East, is a
small part of a larger energy solution," said Sumrall. "This development in no
way reduces the need for the U.S. to develop new additional sources of domestic
natural gas. If we are to restore the domestic chemical industry to a globally
competitive position and keep manufacturing jobs in America, the U.S. must
further diversify its sources of energy for generating electrical power and all
of us will be required to promote and participate in national programs for
energy efficiency and conservation." According to Michael S. Smith, chief executive of Freeport LNG Development,
L.P., reaching a long-term contract with Dow marks an important milestone in the
realization of the receiving terminal initiative. "Based on this agreement,
assuming Dow exercises its option to take the full 500 million cubic feet per
day, and with our previously announced transaction with ConocoPhillips, we
believe that the entire first phase of our facility is now sold out. We expect
final approval from the Federal Energy Regulatory Commission in the next couple
of months, which will keep us on target to begin construction in mid-2004. LNG
deliveries would begin in mid-2007." Overview of the Freeport LNG Terminal Project Dow has elected to finalize the TUA with Freeport LNG pursuant to the rights
granted Dow under the heads of agreement entered by the parties in June, 2003.
It is anticipated that the first phase of the LNG terminal facility will be
designed with storage capacity of 320,000 cubic meters (6.9 billion cubic feet)
with a vaporization send-out rate of 1.5 billion cubic feet per day. The
natural gas would be transported through a 9.4-mile pipeline that will extend to
Stratton Ridge, Texas, which is a major point of interconnection for a number of
Texas intrastate systems.
The proposed LNG marine terminal facility and natural gas pipeline will be
located entirely in Brazoria County, Texas. The LNG marine terminal facility,
transfer lines, and the storage and vaporization units will be located on
Quintana Island, southeast of Freeport.
The Parties Dow is a leader in science and technology, providing innovative chemical,
plastic and agricultural products and services to many essential consumer
markets. With annual sales of $33 billion, Dow serves customers in more than
180 countries and a wide range of markets that are vital to human progress,
including food, transportation, health and medicine, personal and home care, and
building and construction, among others. Committed to the principles of
sustainable development, Dow and its approximately 46,000 employees seek to
balance economic, environmental and social responsibilities. References to
"Dow" or the "Company" mean The Dow Chemical Company and its consolidated
subsidiaries unless otherwise expressly noted. For further information, visit
http://www.dow.com/ .
Freeport LNG Development, L.P. is a Delaware limited partnership formed to
develop a 1.5 billion cubic feet per day LNG receiving terminal on Quintana
Island near Freeport, Texas. The partnership, whose sole general partner is
controlled 100% by Michael S. Smith, is responsible for all regulatory,
technical and commercial functions of developing and operating the proposed
facility. The limited partners owning an economic interest in the project are
Michael S. Smith (60 percent), Cheniere Energy, Inc. (30 percent) (AMEX:LNG),
and Contango Oil & Gas Company (10 percent) (AMEX:MCF). DATASOURCE: The Dow Chemical Company CONTACT: Jody Sumrall, Hydrocarbons & Energy, +1-713-978-3603, , or Doug Brinklow, Hydrocarbons & Energy, +1-989-636-2320, , both of The Dow Chemical Company; or Charles M. Reimer of Freeport LNG Development, L.P., +1-713-980-2895, Web site: http://www.dow.com/ Company News On-Call: http://www.prnewswire.com/comp/252850.html
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