Return Gas

Les/Gene,=09

With regard to determining the BTU's of Return Gas for custody transfer, I =
am not aware of any facility that actually measures the flow of gas to the =
ship. Such low pressure flow meters would not provide reliable readings. =
Other companies, such as PERTAMINA's CIF Trade with Japan, account for retu=
rn gas by measuring the volume of LNG offloaded from the ship, then calcula=
ting the BTU's of the gas returned to the ship based upon measured temperat=
ure and pressure on the ship at the end of ship unloading, and assuming a c=
omposition equivalent to 100% methane. Actual return gas will be a compos=
ition containing N2, C1, and C2, and probably have a GHV slightly less than=
100% methane, depending upon the amount of Nitrogen in the LNG in storage.=
Presently, SLNG does not have any sample points for boiloff gas, and no pl=
ans for installing any.

With regard to the FERC Tariff Calculation, the Return Gas is accounted for=
in what is termed, LAUF (losses and unaccounted for) gas, an amount determ=
ined by differential storage volume. When comparing expected BG Return Gas=
vs Enron Return Gas, the volume of Return Gas should be directly proportio=
nal to the volume of gas delivered, as pressure and temperatures at the end=
of unloading should be essentially equivalent (pressure must be sufficient=
to allow LNG from the manifolds to drain back into the tanks). Willful ope=
rator intervention would likely have to take place to significantly increas=
e the pressure and therefore the mass of the return gas. Therefore, it is r=
ecommended that we not press for a special accounting for the Return Gas in=
the Definitive Agreement with El Paso. For accounting purposes, we should=
also track the Return Gas for Enron deliveries, just in case it does becom=
e an issue. Should either EPME or BG push for specific Return Gas accounti=
ng, we should not oppose, as it is easily calculated utilizing measured vol=
ume, temperature, and pressure with an composition of assumed 100% methane.

Regards
James