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CEO: Long Beach LNG Moribund But Not Dead

The Mitsubishi Corp.-backed project to develop a 1 Bcf/d liquefied natural gas (LNG) terminal in Long Beach Harbor along the Southern California coast is barely breathing, but still has not been officially declared dead, according to the CEO of Mitsubishi's Sound Energy Solutions (SES), the proponents of the five-year-old project. The Japanese-based parent company will decide by Friday (June 6) whether to pursue a court appeal, said SES CEO Tom Giles in an interview with NGI last Tuesday.

Acknowledging that there was little activity and most of the SES employees had gone elsewhere, Giles nevertheless would not substantiate industry reports that he was quoted as calling the project dead. "The litigation [which so far a California court has rejected] was important to us, but my instructions from Tokyo are that we will decide by June 6 [a deadline for deciding whether to appeal]."

In March a California Superior Court judge in Los Angeles denied SES's request to compel the Port of Long Beach to complete its environmental impact report (EIR), which it terminated abruptly in early 2007. At the time Giles said SES was not giving up. The judge's ruling was supposed to be entered on April 9, after which SES reportedly had 60 days to respond, which would fall around June 8.

In regard to the state of the SES organization, Giles said he still had "a number of people," but obviously "there is not a lot of activity right now. We obviously don't have as many people as we once had, that's for sure. Remember, this is a development project, so a lot of the local hires have a tendency to come and go."

Giles, a one-time Houston-based energy attorney, said he was unsure what Mitsubishi's other LNG plans for North America might be. "In one of the Gulf Coast projects a couple of years ago they decided to ship some cargoes as part of the capacity for that terminal, but they are not owners in that project.

"However, they are in the LNG business, so they are always looking at what is going on in the industry," said Giles, referring to Mitsubishi's ownership of gas production, ships and LNG terminal technology and equipment.

What criteria Mitsubishi's senior officials are using in determining the ultimate fate of the Long Beach project are unknown to Giles at this point, he said. "I don't know; it is in their sphere right now. I really don't know much at this point other than that a decision will be made around the sixth."

Earlier this year Giles told NGI that Mitsubishi had spent about $80 million on the Long Beach project, which was more than a year into the development of a joint final environmental assessment by the Federal Energy Regulatory Commission staff and the Port of Long Beach when the port stopped the process in January 2007.

As the earliest of nearly a half-dozen LNG terminal proposals for Southern California that have emerged in the past five years, SES sought a 25-year site lease with the port to build an $800 million, 1 Bcf/d facility that would regasify most of its shipments, but distribute some LNG locally for use in transportation and running port equipment in the harbor. By the end of 2006 the City of Long Beach political leaders, including Mayor Bob Foster, a former president of Southern California Edison Co., turned against the project.

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