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The Brownsville Herald

Houston-based Texas LNG, one of four firm that have announced plans to build Liquefied Natural Gas export terminals at the Port of Brownsville, announced Dec. 4 that Third Point LLC, a New York investment fund with $17 billion in assets, had signed on to provide development capital. Third Point will take an equity interest in the project and also join Texas LNG’s board. The project envisions an LNG liquefaction and export facility capable of processing 2 million tons of natural gas per year on a deepwater frontage site at the port.

The gas would by piped from the Eagle Ford Shale play in Texas via an as-yet-to-be-built pipeline, liquefied by super cooling it to minus 260 degrees Fahrenheit, which shrinks it to 1/600 the volume of its gaseous state, then exported to Asian markets on LNG carrier ships.

Vivek Chandra, CEO of Texas LNG, said Third Point’s involvement substantially lowers the risk for all the stakeholders involved in the project, including feed gas suppliers, LNG purchasers and future investors.

“The ability of Texas LNG to attract investment from a leading financial institution such as Third Point is a testament to the experience of the project management team and its strategies,” he said.

In late October, Texas LNG and Samsung Engineering completed a pre-Front End Engineering Design (FEED) study before launching the 12-month FEED stage of the project, employing a team at Samsung’s Global Engineering Center in Seoul, South Korea, supported by other Samsung engineering operations in South Korea, the United States, India and Thailand.

These studies have to be complete before the process of applying to the Federal Energy Regulatory Commission for permission can begin. That process is expected to begin early next year, according to Texas LNG.

The company plans to have its liquefaction plant constructed at an overseas shipyard then floated to the Port of Brownsville and moved to the bank of the shipping channel.

Developing a liquefaction terminal requires a massive investment. Although no engineering, procurement, construction and project-management contract yet exists that would set the value of project, Texas LNG said similar facilities have been valued at more than $1 billion.

Also, the permitting process has gotten more stringent as the federal government has tightened the rules governing such projects. Eddie Campirano, port director and CEO, said in October that the FERC process requires a “serious commitment” in terms of money. “Even if you got (Department of Energy) approval you still have to go through FERC,” he said.Campirano said none of the port’s four wouldbe LNG developers have started the FERC process, though Texas LNG and another firm, NextDecade, say they’re getting close. “If you get one that goes through that process, they’re pretty much going to move forward,” he said.

Still, the FERC process alone takes 18 to 24 months, Campirano said.

“We’re not going to be seeing LNG at the port next year or the following year,” he said. “You still have a stiff regulatory process. I keep telling people, yes, we have this interest. What is the likelihood we’re going to see five to seven LNG terminals at the port? Not very likely. It might just be one or maybe even two. It remains to be seen, but even one is a significant investment.”

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