UPDATE 3-Excelerate to build first floating US LNG export plant

Tue May 15, 2012 12:03pm EDT

* Plant could be ready by 2017

* Export capacity of 0.4-0.5 bcfd

* Latest in a string of U.S. export proposals

* Politicians mull whether to allow more exports

By Edward McAllister

NEW YORK, May 15 (Reuters) - Excelerate Energy, the U.S. liquefied natural gas company founded by Oklahoma billionaire George Kaiser, said on Tu esday it will develop the country's first floating LNG export plant off the Gulf Coast, joining a queue of projects awaiting government approval to ship out surplus gas.

The Lavaca Bay LNG project off Texas, expected to start exporting by 2017, would initially have the capacity to ship 3 million to 4 million tonnes per year (mtpa) of LNG, Excelerate said in a statement. It could be expanded to 8 mtpa, or about 1 percent of daily U.S. supply.

The relatively small size of the floating liquefaction project compared to an onshore site could speed up construction, which is expected to take just 44 months, according to Excelerate. Most LNG projects take at least four years to build.

Privately-held Excelerate will become the eighth company awaiting approval from the Department of Energy to ship cheap U.S. natural gas to higher-priced markets across the globe. Record domestic gas production from newly developed shale deposits has pushed prices far below levels in Europe and Asia, reversing a rush to import LNG into projects to export the gas over the last five years.

The Obama administration said on Monday that it does not oppose LNG export, though it will depend on an official analysis to guide its decision on whether to allow more gas projects to proceed. Only Cheniere Energy has so far been granted license to sell gas to major buyers, like Chin a, wh ich do not have free trade pacts with the United States.

The plans, if all were approved, could together export about 16 percent of U.S. daily production, raising concern from consumer groups and politicians about the effect that exporting might have on domestic prices.

LNG is natural gas cooled to a liquid for transport overseas.

MOORED VESSEL IN LAVACA BAY

The plan announced by Excelerate, which is 50-percent owned by German utility RWE, would include a liquefaction vessel parked in Lavaca Bay that will cool natural gas delivered from the South Texas pipeline network and transfer it to other LNG vessels for export.

Excelerate has a history of quickly completing LNG import projects, which its website says take about 18 months to build -- though export projects are more complex and generally take longer.

The company said engineering and design for Lavaca LNG was in an advanced phase and it was in talks with potential buyers, natural gas suppliers and investors.

Other proposed U.S. LNG projects have received strong interest from importers across the globe as U.S. gas prices sink to 10-year lows. U.S. prices are at $2 per million British thermal units, while Asian LNG prices are at four-year highs around $18.

Cheniere Energy, which is about to start construction on its LNG plant in Sabine Pass, Louisiana, has already signed firm supply deals with buyers in Spain, Britain, India and South Korea.

Excelerate said it expects to file for an environmental permit from the U.S. Federal Energy Regulatory Commission (FERC) immediately. FERC has already approved the Port Lavaca location as an LNG import facility, which Excelerate said should facilitate its permitting process.

The company will also need approval from the Department of Energy which is closely considering U.S. LNG projects and their potential affect on prices at home.

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