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Long Beach, CA LNG Terminal Plans Pushed Back to 2011

As the field of would-be West Coast liquefied natural gas (LNG) terminal proponents has gotten more crowded, one of the early developers, Japan's Mitsubishi Corp., has had to push back the initial terminal start date by nearly four years. Its current joint plans with subsidiaries of ConocoPhillips to open a terminal in Long Beach, CA harbor target 2011 for the first commercial operations, Mitsubishi's COO for the project said Wednesday.

The Mitsubishi-ConocoPhillips joint venture known as Sound Energy Solutions (SES) now expects its permits will be obtained some time in mid-2007, and it will be at least a three-and-a-half-year process from that point until a finished facility would be ready to take its first LNG shipments, said Tom Giles, SES's executive vice president/COO.

The new timeline puts the project behind all but two of the other seven proposed LNG projects slated for siting along the Southern California and North Baja, Mexico Pacific Coasts. Only one of the offshore proposals -- Woodside Energy's plans for delivering and regasifying LNG onboard the tankers and piping natural gas to shore at a point near Los Angeles International Airport -- carries a projected start-up date as far away as 2011. A third proposal, the most recent by Pacific Gateway, has very few specifics identified at this point, including a target date.

All of the other projects, including Sempra Energy's Energia Costa Azul terminal now under construction onshore along the North Baja coast, have target dates between 2007 and 2010. Sempra's project -- the most advanced -- is slated for an early 2008 start, but it does have unresolved litigation in Mexico from adjacent land owners who are attempting to block the project. Sempra announced earlier in the month that an open season for a proposed expansion of the facility to more than double its capacity drew bid volumes that collectively would be three times the proposed expansion's size.

"The permitting process [for the proposed Long Beach terminal] is not as fast as we originally predicted," said SES's Giles. "We've made some adjustments to our facility, but basically it looks pretty much the same as it has looked for a number of years." It includes the use of some quantities of the LNG in its liquid state as fuel to run transportation and heavy equipment in the Long Beach-Los Angeles Harbor -- what Giles called "an important part of the project."

Giles thinks SES has a leg up on the competition because its project is the only one designed to bring in new natural gas supplies, but also to help mitigate growing air pollution problems in and around the harbor by displacing a lot of the diesel fuel now being used extensively to unload and subsequently transport the goods coming through what amounts to the nation's busiest port (LA-Long Beach harbors combined).

Along with going through what is expected to be a tough state processing at the California Coastal Commission, SES expects the final environmental impact report to be issued by later summer or early fall.

"We feel pretty good about the progress," said Giles, who added that the company has "spent a lot of time out in the community" responding to stepped up organized opposition to the project, the only onshore LNG facility proposed for California. "Long Beach is an industrial port and has a lot of built-in safeguards; it is used to handling large ships, many larger than the LNG ships. We feel we have made real progress in the community."

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