KMI to buy Shell’s stake in Elba LNG project for $630 million

Kinder Morgan Inc., Houston, has reached a deal with Royal Dutch Shell PLC to purchase 100% of Shell’s equity interest in Elba Liquefaction Co. LLC (ELC). The ELC joint venture serves as owner of the Elba Liquefaction Project, which is proposed to be built and operated at the existing Elba Island LNG terminal near Savannah, Ga.

KMI’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.

KMI currently owns 51% of the ELC JV. Shell owns the remaining 49% and subscribes to 100% of the liquefaction capacity. KMI will purchase the remaining 49% of the JV that it does not already own.

Permitting continues for the proposed Elba 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 US Federal Energy Regulatory Commission to issue a draft environmental assessment. Subject to regulatory approvals, construction could begin in this year’s fourth quarter, with initial production expected to occur in late 2017.

In 2012, the project received authorization from the US Department of Energy to export to free-trade agreement countries. An application to export to non-FTA countries is pending. Under full development, the Elba project is expected to have a total capacity of 2.5 million tonnes/year of LNG for export.

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