Lake Charles |
Elba Island |
LNG Supply |
Marketing |
Shipping |
Storage |
Power |
Operations Map
BG Group has been the leading LNG importer to the USA in recent years with supply from both equity and third party projects. During 2007,
BG Group was responsible for importing around 55% of LNG delivered into the USA.
BG Group, through its subsidiary companies, has established this leading position through a combination of its capacity at the Lake Charles and Elba Island LNG receiving terminals, a portfolio of LNG supply contracts, its gas marketing capability and its access to shipping. BG Group has the potential to build on both its supply and marketing operations in the USA through expansion of existing facilities and the pursuit of new projects.
In 2006, BG Group initiated expansion into the US merchant power business as part of its integrated natural gas business, via the acquisition of the Dighton power plant in Massachusetts. With the acquisition of two additional facilities, Lake Road (Connecticut) and Masspower (Massachusetts) in early 2007, the US generation portfolio now has a capacity of 1 234 MW.
Key dates
2001
22 year lease signed for Lake Charles capacity
2003
Secured access to Elba Island terminal
2006
Two expansions of Lake Charles increasing capacity to 13.4 mtpa
Dighton power plant acquired
2007
Lake Road and Masspower power plants acquired
20 year SPA signed for 2.25 mtpa from Nigeria LNG Train 7
Cypress pipeline in service giving direct access from Elba Island to the Florida market
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BG Lake Charles LNG facilty |
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In 2001, BG LNG Services (BGLS), a wholly owned BG Group subsidiary, signed a 22 year LNG Terminalling Service Agreement to utilise the capacity of the LNG import facility at Lake Charles, Louisiana, USA.
The Agreement became effective in January 2002 and was extended in 2004 to cover 100% of the terminal capacity for the term of the Agreement. The terminal has access to 15 major intra-state and inter-state natural gas pipelines through the Trunkline Gas Pipeline system.
The Lake Charles facility has undergone two expansions, the latest of which was completed in 2006 and increased sustainable baseload capacity to 1.8 bcfd (with peak capacity of 2.1 bcfd) and added a second unloading berth. All of the capacity of the expansions is committed to BGLS.
BGLS entered into a long-term agreement with Trunkline Gas Company for pipeline capacity sufficient to meet its increasing throughput capability at Lake Charles from April 2004 onwards. The agreement provides for the addition of new pipeline facilities and upgrades of existing facilities. The installation of the upgrades in 2005 allows BGLS increased access to the US pipeline grid, providing enhanced access to diverse and deep markets.
In 2006, BGLS signed an agreement with Trunkline LNG, the owner of the Lake Charles terminal, for upgrades to the facility including an ambient air vapourisation system and a natural gas liquids (NGL) extraction plant to remove higher Btu products such as ethane, propane and butane from the LNG. The new system will reduce fuel gas consumption by up to 85%, thus enhancing margins, reducing emissions, and providing an additional revenue stream from NGL sales expected to start in second quarter 2009. As part of the agreement, Trunkline has also extended BGLS’s rights as the sole capacity holder by six years until 2029.
Beginning in 2004, BGLS established itself as the new marketer of regasified LNG at Elba Island in Georgia after taking over contracted capacity and long-term LNG supply from El Paso in late 2003. Additionally, BG Energy Merchants (BGEM) entered into a long-term transportation arrangement with Southern Natural Gas to construct the Cypress pipeline expansion of the Southern Natural Gas Pipeline system running from Elba Island to Jacksonville, Florida. Cypress Phases I and II are now up and running with the ability to supply approximately 336 000 mmbtud of natural gas to southern Georgia and Florida markets – the first time that Florida has had direct access to natural gas supplies other than from the Gulf of Mexico.
In 2005, Southern LNG, Inc., the terminal owner, announced it will expand the total terminal capacity. In September 2007, approval was received from the Federal Energy Regulatory Commission for the expansion of the terminal and construction of the new Elba Express Pipeline in eastern Georgia. After the Elba Island expansion, BG Group expects to have storage capacity of 8.2 bcf and send-out capacity of 1.2 bcfd. The Elba Express Pipeline, approximately 190 miles of pipeline with a capacity of 1.2 bcfd, will transport natural gas from Elba Island to markets in the south-eastern and eastern USA. The facilities will be constructed in two phases with the initial in-service date expected to be early 2010.
BG Group is pursuing a number of options to create a diversified supply portfolio for its LNG regasification capacity. These options include buying LNG from third parties as well as from BG Group equity LNG liquefaction projects. The portfolio has a variety of contract periods and comprises a mixture of free on board (FOB) – where the buyer arranges carriage – and carriage, insurance and freight (CIF) deals.
In 2007, BG Group started receiving LNG cargoes under a 17 year 3.4 mtpa supply contract with Equatorial Guinea LNG.
In February 2008, BG Group announced an alliance with Queensland Gas Company Limited to explore and develop the coal seam gas resources in the Surat Basin, south-west Queensland, Australia. The alliance includes pursuing an initial 3 to 4 mtpa LNG facility in Queensland to supply Asia Pacific markets.
BG LNG Trading (BGLT) in conjunction with the Group’s LNG shipping organisation is engaged in marketing LNG to buyers throughout the world. During 2007, BGLT remarketed 81 cargoes from their intended destinations in the USA to higher value markets. The combination of flexible supply, shipping capacity and commercial capability contributes towards a strategic advantage for
BG Group.
In 2008, BG Group made its first deliveries of LNG to Argentina, Brazil and China. The Group has now delivered to 16 of the 19 current LNG importing countries.
BGEM markets regasified LNG from Lake Charles and Elba Island, along with indigenous gas supplies, to multiple intermediary and end-use customers via delivery through the USA natural gas pipeline infrastructure. Sales are made under various short-, medium- and long-term arrangements. BGEM’s customers include leading gas and electric utilities, as well as industrial and wholesale gas merchants.
BG Group has a long history in LNG shipping, having been involved in the development of both the prototype and the first working LNG carriers in the industry. BG Group’s activities in this area are primarily directed towards meeting the needs of BG Group projects.
In 2007, BG Group took delivery of four new ships – the Methane Alison Victoria, the Methane Heather Sally, the Methane Shirley Elisabeth and the Methane Nile Eagle. Four new owned ships have been ordered for delivery over 2009 and 2010. These new ships will be larger (170 000 cubic metres) than those currently owned, and will be powered by dual-fuel diesel-electric engines which are more efficient and produce fewer emissions.
BG Group contracts additional shipping as required on a short-, medium- and long-term basis in order to capture business opportunities and maintain a balanced shipping position (see Data Book 2008 page 52 for further details).
In addition to the significant inherent storage facilities at Lake Charles and Elba Island, BG Group will from time to time contract for natural gas storage capacity on a seasonal and/or mediumto long-term basis to facilitate its operational and commercial requirements.
BG Group entered the north-east US power market in 2006, chosen because it is both mature and transparent, with no dominant incumbents. The first power station purchased was Dighton, followed by Lake Road and then Masspower.
The acquisitions, all 100% owned by BG Group, represent an important step in the implementation of the Group’s integrated US gas marketing strategy. The assets selected have been chosen to generate additional synergies from BG Group’s existing integrated gas business. This will be via gas supply, plant operations and power marketing.
Dighton (165 MW) is located in Massachusetts and is designed to run on natural gas, which can be supplied by BG Group through the Algonquin pipeline system.
Both Lake Road (805 MW) in Connecticut and Masspower (264 MW) in Massachusetts are dual-fuel capable plants designed to run on natural gas or distillate oil. Fuel to Lake Road is supplied through the Algonquin pipeline system while Masspower is supplied through the Tennessee Gas pipeline system. With both plants the primary fuel is natural gas with distillate as the back-up fuel. The ability to switch fuels gives the plants a commercial advantage over gas-only plants in the region.
All three plants' output is sold into the competitive New England power market.