El Paso Pipeline Partners LP EPB.N, a Kinder Morgan unit, and Shell will form a limited liability company to develop a natural gas liquefaction plant at Southern LNG Co LLC's existing terminal.
Recent drilling innovations have unlocked vast shale oil and gas reserves, placing the United States in a position to be a major exporter. A number of companies, including Exxon Mobil Corp (XOM.N), have lined up to get permission to sell the country's cheap abundant natural gas overseas, where it can fetch much higher prices.
The Energy Department's authorization is needed to export natural gas to all but a handful of countries with free trade agreements.
The Elba Island LNG Terminal near Savannah received U.S. Department of Energy approval in June to export up to 4 million tons per year (mtpa) of LNG to countries that have free trade agreements with the United States.
"This announcement underscores how the abundance of natural gas in the United States is changing the energy landscape," Shell President Marvin Odum said in a statement.
The project, once completed, is expected to have a liquefaction capacity of about 2.5 mtpa of LNG or 350 million cubic feet of gas per day.
El Paso Pipeline, through its affiliates, will own 51 percent of the entity and operate the facility, while Shell will own the rest.
Reporting by Swetha Gopinath in Bangalore; Editing by Roshni Menon