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Elba Island
Beginning in 2004, BGLS established itself
as the marketer of regasified LNG at Elba
Island in Georgia after taking over contracted
capacity and long-term LNG supply from
El Paso in 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.
In 2007, approval was received to expand the
terminal and construct 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 south-eastern
and eastern USA. The facilities will be
constructed in two phases, with the initial
in-service date expected to be mid 2010.
Power
In 2006, BG Group entered the north-east
US power market, chosen because it is both
mature and transparent, with no dominant
incumbents. The assets selected have been
chosen to generate additional synergies from
BG Group’s existing integrated gas business.
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.
All three plants operate as merchant plants
selling energy, capacity and ancillary services
to the New England power market.
Storage
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 medium
to long-term basis to facilitate its
operational and commercial requirements.
GLOBAL LNG
BG Group’s successful LNG business has
been built around a portfolio of flexible LNG
supplies that can be deployed globally in
order to capture greater margin opportunities.
Central to this business model was the
Group’s decision to take 100% of the capacity
rights at the Lake Charles regasification
terminal in the USA. This means that
BG Group has a material point of access to
the US gas market – the largest and most
liquid in the world. This provides an economic
bedrock for the Group’s LNG business model,
giving the Group certainty that it can always
achieve the prevailing US market price for its
flexible volumes.
LNG supply
BG Group pursues a number of options to
create a diversified supply portfolio. 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
shipping arrangements.
In early 2009, BG Group completed the
acquisition of Queensland Gas Company.
The acquisition gives BG Group control of
the Queensland Curtis LNG (QCLNG) project.
BG Group expects to sanction a 7.4 mtpa,
two-train LNG project in 2010, with first
cargoes in 2014 (see page 36).
The Group’s current contracted LNG supply
is 12.6 mtpa, with a target of 20 mtpa to be
achieved when QCLNG comes onstream
from 2014. By 2015, excluding national oil
companies, it is estimated that BG Group
will be the second largest holder of
contracted LNG volumes.
Marketing
BG LNG Trading (BGLT) in conjunction with
the Group’s LNG shipping organisation is
engaged in marketing LNG to buyers
throughout the world. During 2008, BGLT
directed over three quarters of its cargoes
from their intended destinations in the
USA to global markets. The combination
of flexible supply, shipping capacity and
commercial capability contributes towards
a strategic advantage for BG Group.
In 2008/09, BG Group made its first
deliveries of LNG to Argentina, Brazil, Chile,
China, Greece, Portugal and Turkey. The
Group has now delivered to 19 of the 22
current LNG importing countries. BG Group
has also bought LNG from 11 of the 16 LNG
producing countries.
In 2008, BG Group was selected to source and
supply the EMA of Singapore on an exclusive
basis with up to 3 mtpa of LNG for up to
20 years (see page 22). In 2009, BG Group
signed a LNG Project Development
Agreement with China National Offshore
Oil Corporation (CNOOC), focused on
BG Group’s QCLNG Project in Australia.
The agreement sets out the basis on
which CNOOC will purchase 3.6 mtpa
of LNG for a period of 20 years from the
start-up of QCLNG (see page 37).
BGEM has a 3.5 bcfd US gas marketing
business which 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 US 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.
Shipping
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
shipping activities are primarily directed
towards meeting the needs of the Group’s
LNG trading. The Global Shipping
organisation also provides governance,
assurance and HSSE services to other
BG Group marine operations and projects.
Four new owned LNG ships have been
ordered for delivery in 2010. These new ships
will be larger (170 000 cubic metres) than
those currently owned, and will be powered
by tri-fuel diesel-electric engines that are
more efficient and produce fewer emissions
than conventional steam vessels.
BG Group’s shipping is a key enabler for the
LNG business to ensure delivery and provide
flexibility to market cargoes. BG Group has a
core fleet of ships that it owns or has under
long-term charter. In addition, it 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 page 52).
BG Group Data Book 2009
29
AMERICAS AND GLOBAL LNG