Kinder Morgan sells 49 pct stake in Elba liquefaction project

Investment funds managed by EIG Global Energy Partners acquired a 49 percent stake in the Kinder Morgan’s Elba Island LNG export project.

EIG acquired a stake in Elba Liquefaction Company that is developing the Elba liquefaction project at Kinder Morgan’s existing Southern LNG Company’s Elba Island LNG facility near Savannah, Georgia.

To acquire its membership interest, EIG has made an upfront cash payment of approximately $385 million and a payment of approximately $170 million in excess of capital expenditures in consideration of the value created by Kinder Morgan in developing the project to this stage.

EIG has agreed to fund its share of future capital expenditures necessary to complete construction and commissioning of the liquefaction facility, subject to the terms and conditions contained in the applicable agreements.

The total project cost is estimated to be approximately $1.3 billion.

“The project, which began construction on Nov. 1, 2016, is supported by a 20-year contract with Shell,” said Steve Kean, Kinder Morgan president and chief executive officer.

Initial liquefaction units are currently expected to be placed in service in mid-2018, with final units coming on line by early 2019.

In 2012, the Elba liquefaction project received authorization from the Department of Energy to export to Free Trade Agreement (FTA) countries, and in December last year the DOE issued non-FTA export authority.

The project is expected to have a total capacity of approximately 2.5 million tons per year of LNG for export, equivalent to approximately 350 million cubic feet per day of natural gas.

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