Royal Dutch Shell Plc (NYSE: RDS.A) and Kinder Morgan Inc. (NYSE: KMI) are going to jointly export liquefied natural gas from a Georgia terminal. The two will set up a company dedicated to this purpose.
The project is expected to be situated at the El Paso Pipeline Partners LP (NYSE: EPB) import terminal located on Elba Island. Kinder Morgan controls El Paso and will own 51 percent of the new company. Shell will control the rest.
Kinder Morgan will also undertake all operations, while Shell will buy up the final product.
All of this comes as a result of the ongoing shale boom, which has allowed the U.S. to turn its attention from importing gas to seeing out ways to become a net exporter. Many major companies like Shell, Exxon Mobil Co. (NYSE: XOM), and others have applied for permission to export U.S. gas abroad.
In this case, the U.S. Department of Energy approved the Elba Island proposal back in June last year. Up to 4 million tons of LNG per year can now be exported to any nations with current free trade agreements with the U.S.
“This announcement underscores how the abundance of natural gas in the U.S. is changing the energy landscape,” Marvin Odum, president of Shell’s U.S. subsidiary, said in the statement.
The Federal Energy Regulatory Commission must still sign off on the project, but construction should begin around 2015 at a total cost of slightly over $1 billion.
Altogether, the facility could process around 350 million cubic feet of gas per day once fully operational.