NGI The Weekly Gas Market Report / NGI All News Access

BP Suspends Delaware River LNG Terminal Plans

BP Crown Landing LLC, which suffered a major setback to its plans to build a liquefied natural gas (LNG) terminal along the Delaware River at the hands of the U.S. Supreme Court earlier this year, has suspended those plans.

The decision to suspend the $700 million project was largely market-driven, a company official told the South Jersey News. The company felt that it was "very unlikely" that LNG cargoes would be delivered to the United States in the foreseeable future and noted much higher natural gas prices in Asia, according to the newspaper account.

In April the U.S. Supreme Court threw a wrench into Crown Landing's project plans when it ruled that the state of Delaware had the authority to block the construction of an off-loading pier that would serve the LNG terminal proposed in Logan Township, NJ (see NGI, April 7). Delaware opposed the construction of the pier, and it gained the power to halt the entire LNG project through the decision. In light of the court's ruling, a spokesman for BP Crown Landing LLC said the company was exploring a "variety of options" for the LNG terminal.

The 410-mile river constitutes part of the boundary between Pennsylvania and New York, the entire boundary between New Jersey and Pennsylvania, and most of the boundary between Delaware and New Jersey.

In August 2005 New Jersey petitioned the high court to settle an ongoing boundary dispute with the state of Delaware that was reignited when Crown Landing proposed building the off-loading pier along the Delaware River (see NGI, Aug. 8, 2005).

New Jersey's action was fueled by Delaware's assertion of regulatory jurisdiction over the construction of the proposed pier. By claiming it had jurisdiction over a portion of New Jersey's side of the river, Delaware in February 2005 denied a permit to Crown Landing for the construction of the proposed pier (see NGI, Feb. 7, 2005). It said the proposed pier, which would extend into the Delaware River, was prohibited by Delaware's coastal zone laws.

The pier would be used to transfer LNG from tankers in the Delaware River to storage and regasification facilities in New Jersey. BP's plans called for an import terminal with sendout capability of 1.2 Bcf/d that was targeted for service in 2009.

The LNG industry is experiencing the same economic downturn as the rest of the world and those looking to sell LNG may find few buyers for some time. Stephane Caudron, head of LNG at RBS Sempra Commodities, said LNG is becoming a buyer's market, Bloomberg reported. At a conference in Amsterdam on Thursday, Caudron said traders in the Far East, who had been snatching up spare LNG cargoes in August, are now waiting for prices to drop, according to the Bloomberg report.

Stephen Smith Energy Associates recently said robust production and the weakening economy are combining to soften natural gas prices and global LNG demand (see NGI, Oct. 6a). At the same time the Natural Gas Supply Association said LNG consumption has dropped "precipitously" (see NGI, Oct. 6b).

Despite the consumption downturn, several North American LNG facilities are seeking the ability to export their wares. Earlier this month Calgary-based Kitimat LNG said it would convert its northern Pacific LNG terminal for exports to Asia (see NGI, Oct. 6c). Last month Repsol Energy Canada Ltd. received approval for a 25-year license to import liquefied natural gas (LNG) at the Canaport LNG Terminal at Mispec Point, near Saint John, NB, and a separate 25-year license to export regasified LNG to the U.S. Northeast by Canada's National Energy Board (NEB) (see NGI, Sept. 8). Cheniere Marketing Inc. has requested U.S. Department of Energy (DOE) authorization to export LNG that has been imported and stored at the Sabine Pass LNG terminal in southwest Louisiana (see NGI, Sept. 1) and Freeport LNG Development LP asked DOE to permit it to export up to 24 Bcf of LNG to markets in Europe and Asia (see NGI, Aug. 18a). Last week FERC said Sabine Pass LNG does not have to go through the mandatory pre-filing process for LNG facility modifications related to its request to export foreign-sourced LNG (see related story).

BP's decision came in the same week FERC gave Dominion Cove Point approval to resume expansion of its LNG import terminal on Maryland's eastern shore (see related story).

©Copyright 2008 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

Comments powered by Disqus