Texaco Announces Gulf of Mexico Offshore LNG Terminal Study

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May 15 2001

Texaco announced today that it will soon complete a study for the development of a new Liquefied Natural Gas (LNG) Receiving and Regasification Terminal in the U.S. Gulf of Mexico. The study examines and evaluates infrastructure requirements and costs of the project.

The proposed Gulf of Mexico terminal would be constructed as an offshore facility and initially designed to process approximately one billion cubic feet per day (BCFD). This facility would connect to Texaco's extensive offshore infrastructure, which has under-utilized capacity as Gulf of Mexico natural gas production has declined. The company's offshore natural gas infrastructure is connected onshore to several interstate pipeline systems, as well as the Henry Hub, which is operated by a Texaco subsidiary. This facility could be operational in four to five years.

According to Robert A. Solberg, President of Texaco Commercial Development, "The U.S. demand for natural gas continues to increase at a significant pace, demonstrating the need for clean burning fuels for power generation, industrial fuels and residential markets. The traditional supply basins can be developed to meet this growing demand, and LNG creates an outstanding opportunity to construct new facilities that can deliver this much needed gas supply to U. S. markets."

The facility could ultimately be expanded up to two BCFD to meet further increases in natural gas demand from the U.S. market. The supply of LNG for the terminal would be produced from one or more potential projects in the Atlantic Basin in which Texaco holds an equity interest.

"We are enthusiastic about the prospects for growth of the natural gas business and this regasification effort is part of Texaco's larger natural gas strategy. Natural gas discovered in areas where there are no local markets is being considered for use as feedstock for projects such as this, targeting the U.S. market," said Solberg.

The four existing U.S. LNG receiving terminals are almost fully contracted, which creates the need for new import facilities that can deliver this important new energy supply into the U. S.

The study is being conducted over a six-month period and is expected to demonstrate that by creatively accessing and utilizing existing infrastructure in this area where traditional supplies are in decline, the project would have minimal environmental impact.

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