Houston, TX - Magnolia LNG LLC on Wednesday announced that it has reached an agreement with Kinder Morgan Louisiana Pipeline LLC for firm gas transportation service rights.
The Precedent Agreement secures sufficient rights for the full 8 million tonnes per annum (mtpa) capacity of the Magnolia LNG Project (the MLNG Project) in Lake Charles.
The execution of the PA is the fourth major milestone for the MLNG Project, following on from:
* A lease option agreement with the Lake Charles Harbor and Terminal District, securing the 115 acre MLNG Project site for up to 70 years;
* LNG export approval from the Department of Energy, Office of Fossil Energy, for up to 4 mtpa (with an application submitted to increase this to 8 mtpa) over 25 years to all existing, and any future, countries that have, or enter into, a Free Trade Agreement with the Government of the United States; and
* Equity commitment agreement with Stonepeak Partners LP, underwriting the full equity requirement of US$660 million for the construction and commissioning of the MLNG Project's initial two LNG trains, each of 2 mtpa.
The PA provides firm gas transportation rights for each of the four LNG trains proposed for the MLNG Project, from various receipt points along the existing KMLP pipeline to the MLNG Project site (refer to attached maps).
Upon satisfaction of the conditions precedent in the PA, KMLP will execute multiple Firm Transportation Service Agreements (FTS Agreement) for the MLNG Project, substantially in the form attached to the PA. One such condition precedent is respective Board approvals within 70 days from the execution of the PA.
KMLP will now proceed to file its application with the Federal Energy Regulatory Commission to install new pipeline compression facilities and additional pipeline and interconnect facilities to provide such new transportation service. Importantly, KMLP's FERC approval process will run in parallel with FERC's regulatory review of the MLNG Project, with the expectation that MLNG will file its formal application with FERC in March or April this year upon the completion of the FERC pre-filing process. This is the normal next step in the FERC approval process.