Kinder Morgan Inc. (NYSE: KMI) and Shell have reached an agreement for Kinder Morgan to purchase 100% of Shell's equity interest in Elba Liquefaction Co. LLC (ELC), the owner of 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 joint venture. Shell owns the remaining 49% and subscribes to 100% of the liquefaction capacity. Kinder Morgan will purchase the remaining 49% of the joint venture that it does not already own. Kinder Morgan's expected incremental investment resulting from this transaction is $630 million, bringing its total incremental investment in all the liquefaction and terminal facilities at Elba Island to $2.1 billion.
Permitting continues for the proposed Elba Liquefaction Project, which consists of 10 small-scale liquefaction units to be purchased from Shell. They will be integrated with the existing Elba Island facility and enable rapid construction compared to traditional large-scale plants.
The next step in the regulatory approval process is for the Federal Energy Regulatory Commission to issue a draft environmental assessment. Subject to regulatory approvals, construction could begin in the fourth quarter of 2015, with initial production expected to occur in late 2017.