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 cited market conditions in halting the project, but he said Woodside 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.

The OceanWay project design was based on an offshore ship-and-buoy system, which would have delivered gas by ship about 28 miles offshore, away from population centers and shipping lanes. 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 Daily GPI, Aug. 1, 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 to the U.S. Coast Guard for a Deepwater Port license and to the city of Los Angeles for a pipeline franchise.

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 Daily GPI, Jan. 9).

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