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Southwest Louisiana ,

Magnolia LNG signs lease for $2.2 billion plant

Last Modified: Wednesday, March 06, 2013 7:55 PM

By Lance Traweek / American Press

Port of Lake Charles Board of Commissioners on Wednesday approved an option for a long-term lease agreement on 90 acres with Magnolia LNG, an Australia-based company that plans to invest in a $2.2 billion export facility on port property.

The midscale LNG project will reportedly create 35-50 permanent jobs and 600 construction jobs.

The liquefied natural gas facility will be on acreage at the port’s Industrial Canal, which is off the Calcasieu Ship Channel.

In January, officials with the company were in Lake Charles and announced the potential investment.

“We are very pleased that the commission was in agreement and voted in favor of this project,” Port Executive Director Bill Rase said after the meeting. “It will bring good jobs and more employment into the area.”

Magnolia LNG will produce 4 million metric tons of liquefied natural gas per year, and construction will begin in 2015, pending the company’s acquiring permits and finalizing financing. The port will receive lease payments based on how much LNG is produced, Rase said.

“We have executed a four-year option of leased property,” Maurice Brand, Magnolia LNG managing director, said after the meeting. “We will commence the approval process with permitting and then we will exercise the lease which will be at least 30 years — that will allow us to start construction on the LNG plant.”

Brand said Lake Charles is an ideal location for the plant because “it is used to having LNG ships come through, so it’s set up environmentally to accommodate LNG.”

“The Port of Lake Charles has been able to provide a unique combination of location, infrastructure and transportation capabilities to help bring this project to the region,” Rase said in a news release. “Magnolia LNG will be a significant and welcome addition to Southwest Louisiana’s energy corridor.”

The project will be positioned for direct access to various existing gas pipelines. Magnolia LNG said it will produce liquefied natural gas more efficiently with fewer emissions than other LNG operations by using a patented process.

Magnolia LNG will distribute to domestic markets and countries that have free trade agreements with the United States. In addition, the company will look into a potential expansion to 8 million metric tons per year in the future.

The company will seek federal Department of Energy free-trade agreement approval in 2013. Magnolia LNG will submit a prefiling application to the Federal Energy Regulatory Commission next week and then complete the selection of project partners by June. The company wants to begin hiring in early 2015 with commercial operations to begin in 2018.

The state began talks with Magnolia LNG in late 2012. The company’s proposed 90-acre site will include a long-term lease with the Port of Lake Charles. As soon as Magnolia determines to proceed with construction, the state will negotiate an incentive package with the company for the LNG project.

Newly formed Magnolia LNG, which got its name from the Louisiana state flower, is owned by Liquefied Natural Gas Ltd.

Liquefied Natural Gas Ltd., based in Perth, Australia, will join the Lake Charles project with its other facility in Fisherman’s Landing, near the Port of Gladstone in Queensland, Australia. The Gladstone project, which is also a midscale production facility, is capable of producing 3.8 million metric tons of LNG each year.

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