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Woodside LNG Project Runs Out of Gas

Australia's Woodside Petroleum has scrapped plans to build a 1 Bcf/d liquefied natural gas (LNG) import terminal off the Southern California coast because of "changed energy market conditions."

U.S. subsidiary Woodside Natural Gas Inc. President Steve Larson said company officials "still believe" in the long-term value of LNG for the Los Angeles area.

"But we must acknowledge the impact of the current market, and have notified the regulatory agencies that we are withdrawing our application for the time being," Larson said. He acknowledged the support from area stakeholders, which included the business community and union leaders.

"While the permitting process in California and Los Angeles is challenging, we were confident that, with the overall environmental and safety attributes of our design, our application would ultimately succeed," Larson said.

Woodside had been working on the LNG proposal since 2004, first joining Houston-based Crystal Energy LLC to pursue the project (see NGI, Nov. 8, 2004). Crystal originally proposed bringing Alaska gas supplies through its terminal. Woodside provided its technical expertise to the facility's design, then dubbed the Clearwater Port LNG Project. Woodside also planned to act as operator. Less than a year later the companies revised their agreement, and Woodside considered pursuing its plans alone (see NGI, July 4, 2005). A year later Woodside applied with federal and state officials for permits to proceed (see NGI, Aug. 21, 2006).

To alleviate environmental and safety issues, the renamed OceanWay project design was based on an offshore ship-and-buoy system, which would have shipped gas from 28 miles offshore California. Two LNG carriers were to be placed under the U.S. flag, requiring around 200 American sailors to be employed. The flag decision in 2007 was made by Woodside following security concerns about LNG shipping, which led the United States to offer incentives to employ Americans for the project (see NGI, Aug. 6, 2007).

A public review of the project was under way, including a comprehensive environmental and safety review process that began when Woodside Natural Gas submitted applications in 2006.

Earlier this month Woodside officials said OceanWay was on track despite a U.S. Geological Survey assessment that indicated the terminal's proposed location faced a "medium-to-high" chance of damage from earthquakes or other causes (see NGI, Jan. 12).

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