Teekay, Merrill Lynch to Develop Kitimat FLNG Vessel

Teekay Corporation announced an agreement with Merrill Lynch Commodities, Inc. to jointly develop a project to convert the S/S Arctic Spirit into a floating liquefied natural gas plant to be moored alongside a pier near Kitimat, British Columbia. Teekay LNG Partners L.P. will have an option to participate in the project as well.

The converted Vessel would have the production capacity to liquefy 75-100 million standard cubic feet per day of pipeline quality gas, or, approximately 0.5 million tonnes per annum of LNG.

"The Vessel is one of only two LNG carriers with the self-supporting prismatic type B cargo containment system, which should be ideal for floating LNG," said Mark J. Kremin, Vice President, Gas Services, Teekay. "The potential to produce the world's first floating LNG unit in British Columbia, where our operations are headquartered, is an exciting prospect."

"Reliable Canadian LNG supply should be very attractive for LNG buyers and end users. This development will prove the feasibility of floating liquefaction and will provide an option for monetizing stranded gas resources in other parts of the world," continued Mr. Kremin.
The project is expected to commence LNG operations in 2012, subject to obtaining the necessary regulatory and local approvals.