Kinder Morgan to buy Shell’s stake in Elba Liquefaction LNG joint venture – Houston Business Journal

Houston-based Kinder Morgan Inc. (NYSE: KMI) said July 15 it agreed to buy Royal Dutch Shell’s (NYSE: RDS-A, RDS-B) interest in Elba Liquefaction Company LLC.

Also on July 15, Kinder Morgan announced an increased dividend and reported second-quarter earnings that missed analysts’ expectations.

Kinder Morgan currently owns 51 percent of the ELC joint venture, and Shell owns the remaining 49 percent. Terms of the transaction were not disclosed.

As a result of the deal, Kinder Morgan expects to invest another $630 million in the Elba Liquefaction Project, bringing the company’s total incremental investment in all of Elba’s liquefaction and terminal facilities to approximately $2.1 billion.

ELC owns the Elba Liquefaction Project, which is proposed to be constructed and operated at the existing Elba Island LNG Terminal near Savannah, Georgia. The Hague-based Shell, which has its U.S. arm headquartered in Houston, will retain its 20-year contract to subscribe to 100 percent of the terminal’s 2.5 million tonnes per year of liquefied natural gas export capacity, which is equivalent to approximately 350 million cubic feet per day of natural gas.

Permitting is underway, and the next step in the regulatory approval process is for the Federal Energy Regulatory Commission to issue a draft environmental assessment.

Construction is expected to begin in the fourth quarter, depending on regulatory approvals, and initial production is expected in late 2017.

“Our current project backlog of expansion and joint venture investments is $22 billion,” Kinder Morgan President and CEO Steve Kean said in the company’s second-quarter earnings report released July 15.

That’s up approximately $3.7 billion from the first quarter.

via Kinder Morgan to buy Shell’s stake in Elba Liquefaction LNG joint venture – Houston Business Journal.

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