After talking with state and utility officials, Australian-based Woodside Natural Gas Inc. last week unveiled more details on its plans to use liquefied natural gas (LNG) ships with onboard regasification facilities to deliver offshore pipeline gas supplies to California at a proposed undersea and underground connection along the coastal fringe that is part of the Los Angeles International Airport (LAX).
Woodside's President Jane Cutler announced the plans in a conference call with news media. With no specific project cost estimates or projections on the fuel costs, Cutler said Woodside could have some of its Northwest Australia gas supplies available for delivery into Sempra Energy's Southern California Gas Co. transmission system that runs through the LAX property as early as 2010 if the supplies came from its Pluto Field and in the 2012-2014 time frame if they came from its Browse Field. The Australian gas company is looking at volumes in the range of 800 MMcf/d to 1.4 Bcf/d, she said.
The principal permits needed, which Cutler estimated could take from 18 months to 2 years to obtain, would come from the U.S. Coast Guard and the California State Lands Commission. Woodside is banking on the fact that its "Oceanway Energy" project will not involve the construction of an offshore or onshore LNG receiving terminal and regasification facility to gain support of elected officials, environment groups, citizens and permitting agencies.
Each ship -- still to be built -- will cost more than today's traditional LNG tankers and will have the capacity to regasify its cargo. The natural gas will travel to shore through a 20-mile pipeline resting on the bottom of the sea and connected underground to the existing onshore SoCalGas transmission system. Ships will dock at a buoy that Cutler said would be submerged when not in use.
Ostensibly, there will be no visible facilities from the shore, and the project will be able to vary quantities of LNG to conform with the state's changing energy supply needs. "The Oceanway buoy will be more than 20 miles from shore and more than five miles outside shipping lanes," Cutler said. "This site contains the safe conditions our ships need."
"We believe Oceanway can be an important part of fulfilling California's energy future through the secure, safe delivery of natural gas the state needs," Cutler said.
Cutler said Woodside executives have met with Gov. Arnold Schwarzenegger and various other state officials, who they said "welcome" another potential new source of natural gas. Similarly, she said the company has been in discussions with SoCalGas related to the needed interconnection, as well as a number of potential buyers of the gas.
The so-called "airport buffer zone" at LAX where the supplies would come onshore is within less than two miles of a major Los Angeles Department of Water and Power (LADWP) natural gas-fired electric generation plant (Scattergood), a Chevron refinery, and a second power plant operated by NRG Energy (El Segundo) that has approvals to expand. Cutler emphasized that Woodside's proposal involved bringing in gas in the same pipelines that are already running underground throughout the area.
Nevertheless, she was peppered with a number of questions related to the environmental and security aspects of the project and its targeted landing at one of the nation's busiest international airports.
Cutler said the onshore connection would take about four months, building the LNG ships with onboard regasification capability would take three years, and ultimate timing will depend on scheduling of the production of the LNG supplies in Australia. In response to questions, Cutler said that both the quality specifications for the gas being intermixed with California's domestic supplies and the ultimate volumes will have to be managed at the production point before the supplies are shipped.
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