Cheniere Energy, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Property, Plant and Equipment

Property, Plant and Equipment

9 Months Ended

Sep. 30, 2012

Property, Plant and Equipment [Abstract]

Property, plant and equipment consists of LNG terminal and natural gas pipeline costs, LNG site and related costs, investments in oil and gas properties, and fixed assets, as follows (in thousands):



	September 30,			December 31,
	2012			2011
LNG terminal costs
LNG terminal	$	1,650,965		$	1,647,107
LNG terminal construction-in-process	966,389			39,010
LNG site and related costs, net	4,976			4,982
Accumulated depreciation	(156,864		)	(125,108		)
Total LNG terminal costs, net	$	2,465,466		$	1,565,991

Natural gas pipeline costs
Natural gas pipeline	$	564,027		$	564,021
Natural gas pipeline construction-in-process	2,427			2,427
Pipeline right-of-ways	18,455			18,455
Accumulated depreciation	(64,062		)	(52,878		)
Total natural gas pipeline costs	$	520,847		$	532,025

Oil and gas properties, successful efforts method
Proved	$	4,170		$	4,170
Accumulated depreciation, depletion and amortization	(3,179		)	(3,033		)
Total oil and gas properties, net	$	991		$	1,137

Fixed assets
Computer and office equipment	$	6,739		$	5,952
Furniture and fixtures	4,057			4,057
Computer software	12,707			12,601
Leasehold improvements	8,732			7,318
Other	2,738			1,892
Accumulated depreciation	(27,225		)	(23,844		)
Total fixed assets, net	$	7,748		$	7,976
Property, plant and equipment, net	$	2,995,052		$	2,107,129

LNG Terminal Costs

Depreciation expense related to the Sabine Pass LNG terminal totaled $10.6 million and $10.8 million for the three months ended September 30, 2012 and 2011, respectively. Depreciation expense related to the Sabine Pass LNG terminal totaled $31.8 million and $32.2 million for the nine months ended September 30, 2012 and 2011, respectively.

In June 2012, LNG trains 1 and 2 of the liquefaction facilities Cheniere Partners is developing and constructing adjacent to the Sabine Pass LNG terminal (the "Liquefaction Project") satisfied the criteria for capitalization. Accordingly, costs associated with the construction of LNG trains 1 and 2 of the Liquefaction Project have been recorded as construction-in-process since that date. For the three and nine months ended September 30, 2012, we capitalized $14.0 million of interest expense related to the construction of LNG trains 1 and 2 of the Liquefaction Project.

Natural Gas Pipeline Costs

Depreciation expense related to the Creole Trail Pipeline totaled $3.8 million and $3.7 million for the three months ended September 30, 2012 and 2011, respectively. Depreciation expense related to the Creole Trail Pipeline totaled $11.2 million for the nine months ended September 30, 2012 and 2011.

Fixed Assets

Depreciation expense related to our fixed assets totaled $0.7 million and $0.9 million for the three months ended September 30, 2012 and 2011, respectively. Depreciation expense related to our fixed assets totaled $3.4 million and $2.5 million for the nine months ended September 30, 2012 and 2011, respectively.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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