Kinder Morgan, Cheniere Agree to 15-Year LNG Deal

By Brad Kramer December 15, 2014 View Profile

Kinder Morgan Inc. and Cheniere Energy Inc. have come to terms on a transportation and storage deal that will expand natural gas capacity in southern Texas.

Kinder Morgan subsidiaries Kinder Morgan Texas Pipeline, Kinder Morgan Tejas Pipeline and Tennessee Gas Pipeline Co. (TGP) have entered into 15-year firm transportation agreements and a multi-year storage agreement with Cheniere Energy Inc. through its subsidiary, Corpus Christi Liquefaction LLC. Under the agreements, Kinder Morgan will provide 550 million cubic feet per day (MMcf/d) of firm natural gas transportation service and 3 billion cubic feet (Bcf) of natural gas storage capacity to serve the liquefied natural gas (LNG) export facility being developed near Corpus Christi, Texas.

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The project is being designed and permitted for up to three trains, with aggregate design production capacity of approximately 13.5 million metric tons per year of LNG. The natural gas transportation service can be increased to 800 MMcf/d upon the completion of certain conditions in the Kinder Morgan Texas Pipeline agreement.

Kinder Morgan will expand its existing Texas intrastate pipeline system in South Texas to provide 250 MMcf/d of firm transportation and 100 percent of the storage services, and expand its TGP pipeline to provide 300 MMcf/d of firm transportation from various Zone 1 receipt points near its Station 87 Pool located in Portland, Tennessee. The construction of the facilities necessary to support these services will be coordinated with the startup of the LNG export facility, which is expected in 2018-2019. Kinder Morgan expects to invest approximately $187 million for this project.

“We are pleased to provide transportation and storage services that access diverse supply basins to Corpus Christi Liquefaction for this LNG export opportunity,” said Tom Martin, Kinder Morgan’s president of natural gas pipelines. “The need for additional natural gas transportation services continues to increase, and Kinder Morgan’s portfolio of natural gas assets across the United States is well positioned to serve infrastructure expansion opportunities and meet increasing market demand.”

The agreements are subject to, among other things, Corpus Christi Liquefaction making a final investment decision to construct the Corpus Christi Liquefaction Project.

“This agreement builds on our existing relationship with Kinder Morgan, which will also service a portion of our Sabine Pass Liquefaction terminal in Louisiana, and moves us closer to securing the supply infrastructure needed to provide natural gas to our Corpus Christi LNG export facility,” said Corey Grindal, vice president of supply and marketing for Cheniere. “Access to multiple and diverse supply basins and an extensive pipeline network are both important factors for securing the natural gas required to meet our customers’ needs.”