ConocoPhillips, CITGO won't oppose Dynegy LNG plant

www.forbes.com Reuters, 03.10.03, 2:04 PM ET   WASHINGTON, March 10 (Reuters) - ConocoPhillips (nyse: COP - news - people) and CITGO Petroleum Corp. told federal energy markets regulator they longer opposed Dynegy Inc's (nyse: COP - news - people) plan to build a liquefied natural gas terminal in Louisiana after the company agreed to take steps to limit shipping traffic congestion near the facility. ConocoPhillips and CITGO had protested the Federal Energy Regulatory Commission's decision last December to give preliminary approval to Dynegy's proposal to build the first LNG terminal in the United States in almost 25 years. CITGO is owned by Venezuela's state oil company. The companies were worried that the LNG plant, which would be located in Hackberry, Louisiana, would impact shipping traffic on the Calcasieu ship channel. The companies told FERC last Friday that they were withdrawing their protest, because Dynegy agreed to have a dedicated tug service to handle tankers delivering LNG, improve navigation aids in the channel and adopt procedures for LNG deliveries at night. The steps to ease shipping traffic are similar to what CMSEnergy (nyse: CMS - news - people) has adopted for expanding its LNG facility. Dynegy's terminal would receive and process 1.5 billion cubic feet of natural gas per day from tankers, then transport the vaporized LNG to the natural gas pipeline grid. FERC must still review the environmental impact of Dynegy's terminal before deciding whether to give final approval. Dynegy hopes to have the terminal operating by the end of 2006. ConocoPhillips and CITGO said they hoped that by withdrawing their protest FERC would speed up its review of Dynegy's plant. U.S. demand for natural gas is forecast to soar to 30 trillion cubic feet by 2015, up from 22.8 Tcf in 2000, according to the Energy Information Administration. LNG, a super-cooled and compressed form of natural gas, is used to fuel electricity generating plants. It would take 600 ships carrying natural gas in its conventional form to equal the cargo contained on just one LNG tanker, which makes it practical and economical to import natural gas from overseas. LNG, which begins as natural gas in a vapor form, is kept at ultra-cold temperatures and compressed for transport aboard special tankers. The manufacturing process cools the gas to minus-259 degrees Fahrenheit, changing the gas into liquid and shrinking it to less than 1/600 of its original volume.