Gas Liquefaction GAIL Books Capacity in the Cove Point LNG Liquefaction in the US

Editor: Dominik Stephan

GAIL has signed a terminal service agreement with Dominion through GAIL Global (USA) LNG LLC for booking 2.3 mmtpa liquefaction capacity in the Cove Point LNG liquefaction terminal project located at Lusby in the state of Maryland. Dominion would be setting up the liquefaction facilities in the premises of its existing 11.7 mmtpa regasification terminal.

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GAIL books gas iquefaction capacity in the US
GAIL books gas iquefaction capacity in the US
(Picture: PROCESS)

New Delhi/India – Construction work is expected to start in 2014 so as to put the liquefaction facilities into service in 2017. Dominion is marketing 4.6 mmtpa and GAIL has booked 50% of such capacity for 20 years. A major Japanese buyer holds the balance capacity in the terminal. Cove Point will be a premier facility in terms of direct access to the Marcellus and Utica shale plays, two of the most prolific shale gas basins in North America.

During an interactive video session following the signing of the document, BC Tripathi, Chairman and Managing Director of GAIL said “This is an important occasion for GAIL and we are delighted to have executed this agreement. GAIL has a positive outlook on Henry Hub indexed LNG exports from US and that has prompted us to sign this terminal service agreement which follows our deal with Cheniere signed in 2011. The contracts signed with Cheniere and Dominion make GAIL one of the largest Henry Hub LNG portfolio holders and provide us an opportunity to market about 6.0 mmtpa of LNG from the US.”

Under this agreement, GAIL will procure its own natural gas and deliver it to the Cove Point pipeline for liquefaction at the terminal and loading into ships brought to the facility on the Chesapeake Bay. “This would enhance GAIL’s scale of operations in the US where we already have a presence through our participation in a shale gas asset in the Eagle Ford basin. Our upstream acquisition efforts for gas sourcing and hedging would now intensify in US. This deal would also provide GAIL with an opportunity to trade part of the volume in the international market apart from organizing the ships required to transport rest of the volume to India,” Mr. Tripathi said.

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