Liquefied Natural Gas

AGL Resources' LNG facilities
Liquefied Natural Gas (LNG) plays an important role in AGL Resources' strategy to meet the growing demand for safe, reliable natural gas in the states served by its utilities. AGL Resources owns and operates four LNG peak-shaving facilities, which supply gas at peak use times.

The largest, the Riverdale LNG plant in Riverdale, Ga., has storage capacity of 31,080,000 gallons or 2,560,000 million cubic feet (Mcf) of natural gas in its two tanks. Located south of Atlanta, the plant is supplied by two interstate pipelines for supply. It is connected to the Atlanta Gas Light (AGL) beltline pipeline system for distribution of gas to the Atlanta market. The plant is able to deliver 400,000 Mcf/day of gas during peak send-out.

The Cherokee LNG plant, located north of Atlanta in Ball Ground, Ga., has storage capacity of 25,242,957 gallons or 2,020,237 Mcf equivalent of natural gas in a single tank. The 934-acre site was designed to accommodate a second tank of equal capacity if warranted. This plant receives supply from three pipelines and can deliver an equivalent of 400,000 Mcf/day of peak send-out to AGL's Atlanta market.

AGL Resources also owns and operates an LNG plant in Macon, Ga. This plant's single tank storage capacity is 18,900,000 gallons or the equivalent of 1,501,983 Mcf. Although the plant is capable of delivering up to 150,000 Mcf/day, the pipeline system exiting the plant can accommodate a delivery of less than half that volume, of only 70,000 Mcf/day. Several options to capitalize on this plant's capabilities more effectively are under consideration.

In Tennessee, Chattanooga Gas, another AGL Resources subsidiary, receives peak day supplies from the company’s Chattanooga plant, which holds the equivalent of 1,186,035 Mcf. This facility is supplied by two pipelines and can deliver up to 90,000 Mcf/day to the Chattanooga Gas market.

AGL Resources, through Virginia Natural Gas (VNG), also owns some storage capacity — 752,174 Mcf equivalent — in the Columbia Natural Gas Company-operated Chesapeake LNG facility. This plant is located at the end of the Columbia pipeline that supplies VNG’s south system. To more fully utilize this contracted capacity, VNG constructed a LNG vaporization plant adjacent to its propane plant in 2002. This system is capable of adding up to 14,400 Mcf/day into the VNG system by trucking LNG from the Chesapeake plant to the vaporization plant.

About LNG
LNG is natural gas that has been cooled to about minus 260 degrees Fahrenheit for storage as a liquid. LNG is more compact than its gaseous equivalent with a volumetric difference of approximately 600 to 1. This difference in volume allows AGL Resources to store a large quantity of natural gas in a relatively compact storage space.

Most LNG storage facilities in the United States were constructed solely for use by local utilities. Storage facilities in utilities' service areas often hold LNG for an extended period of time to meet peak demand periods.

LNG facilities offer several advantages over alternative storage options such as depleted reservoirs, aquifers and salt caverns. Above-ground storage tanks give companies more flexibility in locating LNG facilities where they are needed.

LNG peak-shaving plants are also more economical to build than new, larger and longer pipelines. LNG plant construction costs average $54/Dth (dekatherm); expanding a pipeline cost much more, an average of $232/Dth.

LNG facilities are often constructed with a higher degree of "deliverability" (the amount of gas the facility can send out under peak conditions relative to inventory) than traditional underground storage facilities. LNG accounts for only a small portion of working gas in storage, but it often represents a significant part of a company's supply portfolio for peak days.

LNG Marine Terminals
LNG has been imported into the United States for more than three decades. Because of high natural gas prices in the 1970s, some companies anticipated large profits and constructed four U.S. LNG receiving terminals. Dreams of high profits never materialized, however, and all but one of the four were mothballed.

The Everett, Mass., LNG marine terminal remained in operation only because it was located in a market center where demand was high and the cost of bringing in conventional natural gas supplies by pipeline exceeded the cost of LNG. In 1989, the Lake Charles, La., facility was reactivated, mainly to receive spot cargoes.

As a result of high natural gas prices experienced in the winter of 2000-2001 and the growing demand for natural gas, the other two facilities — at Elba Island, Ga., and Cove Point, Md. — also have reopened.

AGL Resources owns a combined 790,000 Dth of capacity at Cove Point and is able to capitalize on its pipeline capacity out of Elba Island to move gas on an interruptible basis. While the industry has experienced periods of both high growth and prolonged downturns, recent natural gas prices have caused many analysts to predict that imported LNG may provide a much larger share of the U.S. natural gas supply.

Propane
Propane-air storage is also a common choice for utilities to meet their short-term peak demand energy needs. However, unlike LNG, propane is not pipeline quality gas. It must be blended or mixed into a flowing gas stream.

One advantage of propane-air plants is their ability to be refilled via supplies that are trucked in. A pipeline is not needed. In times of critical need and without other cost-effective options, propane-air plants can be a valuable supply option.

AGL Resources owns and operates three propane-air plants. The south plant in the Virginia Natural Gas system is capable of supplementing up to 28,800 Mcf/day equivalent into the system. This plant has storage capacity of 185,586 Mcf equivalent.

Another valuable option for the VNG system is its north plant, which has storage capacity of 160,000 Mcf equivalent and send-out capability of up to 14,400 Mcf/day.

When necessary, propane can be trucked from one plant to the other so the company can avoid purchasing additional supply when prices are high. Atlanta Gas Light’s Valdosta propane plant in Georgia is capable of storing up to 7,022 Mcf equivalent and supplementing the Valdosta distribution system with 3,600 Mcf/day.

The estimated total capacity of LNG storage facilities in the lower 48 states as of mid-2001 (excluding marine facility storage) was 86 billion cubic feet (Bcf). AGL Resources' storage capacity accounts for more than 8 Bcf or more than nine percent of that total. The 7.3 Bcf of AGL-operated storage also comprises 33 percent of the existing LNG storage in the Southeast.

In addition, AGL Resources owns two portable vaporization units that can be transported to any location in AGL's system. When coupled with tractor-trailer LNG tankers, these units can supplement the utility's pipeline system. This service is critical to avoid loss of service to customers in times of peak demand.

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