ConocoPhillips Inks Deal with Freeport for TX LNG Terminal

ConocoPhillips has signed an agreement with Freeport LNG Development, L.P. to participate in its proposed liquefied natural gas (LNG) receiving terminal in Quintana, Texas. ConocoPhillips will acquire 1 billion cubic feet (BCF) per day of regasification capacity in the terminal for its use and obtain a 50 percent interest in the general partner managing the venture.

ConocoPhillips will be primarily responsible for management of construction and operation of the facility, and provide a significant portion of construction funding. The management of Freeport LNG Development will remain in place and be responsible for all commercial activities and customer interface for the remaining capacity in the facility.

The terminal will be designed with a storage capacity of 6.9 BCF and send-out capacity of 1.5 BCF per day. Natural gas will be transported through a 9.4-mile pipeline to Stratton Ridge, Texas, which is a major point of interconnection with the Texas intrastate gas pipeline system. The Freeport LNG terminal is being developed in response to the growing need for new natural gas supplies for commercial, industrial and residential consumers in Texas.

Approval from the Federal Energy Regulatory Commission (FERC) is expected in the first quarter of 2004, with all other necessary federal, state and local approvals shortly thereafter. The project front-end engineering and design study will be completed in January 2004. Construction is scheduled to begin in the second half of 2004, with commercial startup mid-2007.

"This significant step in our LNG import and regasification development effort provides a near-term opportunity to serve the growing U.S. natural gas market," said Jim McColgin, ConocoPhillips vice president of exploration and business development. "We look forward to expanding local relationships and working closely with our co-venturers and stakeholders to continue to be a good neighbor through this project."

"This unprecedented LNG terminal transaction brings certainty to our project," said Michael S. Smith, Freeport LNG Development chairman and chief executive officer. "Combined with our previously announced agreement with The Dow Chemical Company, we will be able to commence construction on the first new LNG regasification facility in the United States in more than two decades with up to 100 percent of our capacity committed as soon as we receive FERC approval."

Freeport LNG Development, L.P. is a Delaware limited partnership whose sole general partner is currently owned 100 percent by Michael S. Smith. Other limited partners are Michael S. Smith, 60 percent; Cheniere Energy, 30 percent; and Contango Oil & Gas, 10 percent.