Shell US Gas & Power LLC and Southern Liquefaction Company, LLC, a Kinder Morgan company and unit of El Paso Pipeline Partners, L.P. today announced their intent to form a limited liability company to develop a natural gas liquefaction plant in two phases at Southern LNG’s existing Elba Island LNG Terminal, near Savannah, Georgia.

Subject to various corporate and regulatory approvals, Shell and Kinder Morgan affiliates have agreed to modify El Paso Pipeline Partners Elba Express Pipeline and Elba Island LNG Terminal to physically transport natural gas to the terminal and to load the liquefied natural gas onto ships for export.

“Kinder Morgan is delighted to be working with Shell at Elba Island on this project, which has already received Free Trade Agreement approval,” said Kinder Morgan Chairman and CEO Richard D. Kinder. “This project will facilitate further development of the abundant natural gas resources in the United States and will be a positive factor in the overall balance of trade between the U.S. and other countries.” Kinder added that the facility anticipates receiving non-Free Trade Agreement approval in due course.

Once finalized, El Paso Pipeline Partners, L.P., through its affiliates, will own 51 percent of the entity and operate the facility. Shell, through its affiliates, will own the remaining 49 percent and subscribe to 100 percent of the liquefaction capacity. According to Kinder Morgan the project will use Shell’s small-scale liquefaction unit which will be integrated with the existing Elba Island facility and enable rapid construction compared to traditional large-scale plants.

“This announcement underscores how the abundance of natural gas in the U.S. is changing the energy landscape,” said Marvin Odum, President of Shell Oil Company. “With a measured, phased approach, exports of cleaner burning natural gas can help meet the world’s rising energy needs while also giving a boost to the U.S. economy.”

The total project is expected to have liquefaction capacity of approximately 2.5 million tonnes per year of LNG or 350 million cubic feet of gas per day. In June 2012, the Elba Island terminal received approval from the U.S. Department of Energy to export up to 4 mtpa of LNG to Free Trade Agreement countries. In August 2012, the terminal submitted a filing to the DOE seeking approval to export up to 4 mtpa of LNG to non-FTA countries. Phase I of the project, approximately 1.5 mtpa, requires no additional DOE approval.