Shell US Gas & Power, a subsidiarity of Royal Dutch Shell along with Southern Liquefaction Company, a Kinder Morgan affiliate and a unit of El Paso Pipeline Partners have announced yesterday, that they are planning to develop a natural gas liquefaction plant at El Paso’s existing Elba Island LNG Terminal near Savannah, Georgia. EPB’s Elba Express Pipeline and Elba Island LNG Terminal are to be modified to physically transport natural gas to the terminal and to load the liquefied natural gas (LNG) onto ships for export.

“Kinder Morgan is delighted to be working with Shell at Elba Island on this project, which has already received Free Trade Agreement approval,” said Kinder Morgan Chairman and CEO Richard D. Kinder. “This project will facilitate further development of the abundant natural gas resources in the United States and will be a positive factor in the overall balance of trade between the U.S. and other countries.” Kinder added that the facility anticipates receiving non-Free Trade Agreement approval in due course.

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“This announcement underscores how the abundance of natural gas in the U.S. is changing the energy landscape,” said Marvin Odum, President of Shell Oil Company. “With a measured, phased approach, exports of cleaner burning natural gas can help meet the world’s rising energy needs while also giving a boost to the U.S. economy.”

Once finalized, EPB, through its affiliates, will own 51 percent of the entity and operate the facility. Shell, through its affiliates, will own the remaining 49 percent and subscribe to 100 percent of the liquefaction capacity. The project will use Shell’s innovative small-scale liquefaction unit, which will be integrated with the existing Elba Island facility and enable rapid construction compared to traditional large-scale plants.

The total project is expected to have liquefaction capacity of approximately 2.5 million tonnes per year (mtpa) of LNG or 350 million cubic feet of gas per day (Mmcfd). In June 2012, the Elba Island terminal received approval from the U.S. Department of Energy (DOE) to export up to 4 mtpa (500 Mmcfd) of LNG to Free Trade Agreement (FTA) countries. In August 2012, the terminal submitted a filing to the DOE seeking approval to export up to 4 mtpa (500 Mmcfd) of LNG to non-FTA countries. Phase I of the project, approximately 1.5 mtpa (210 Mmcfd), requires no additional DOE approval.

This project combines Shell’s LNG leadership – from innovative technology to a vast global LNG portfolio and unrivaled access to strategic markets around the world – with Kinder Morgan’s unparalleled portfolio of U.S. natural gas assets and industry expertise.

As an integrated energy company, Shell has an array of long-term options for natural gas that will broaden the energy mix. This includes extracting ethane and other natural gas liquids for petrochemicals production; shipping solutions for LNG; and proprietary gas-to-liquids technology to produce fuels, lubricants and chemicals.