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Supreme Court Appoints Special Master in New Jersey v. Delaware LNG Dispute

BP's proposed Crown Landing LNG terminal suffered a setback last week when the U.S. Supreme Court granted a request by the state of Delaware to appoint a special master in the border dispute case with New Jersey over the project.

A BP spokesman acknowledged that the decision could delay the project another 1-2 years given prior lengthy reviews by special masters. "We were prepared for this as a possible outcome," said BP's Tom Mueller. "It wasn't a total surprise." But Mueller said the decision probably pushes Crown Landing's in-service to 2011 from 2008.

The high court granted attorney Ralph Lancaster broad authority to fix time and conditions for the filing of additional pleadings in the case, direct subsequent proceedings, summon witnesses, issue subpoenas, take evidence and submit reports.

Lancaster, a Harvard-educated lawyer, has served as special master to the Supreme Court twice before, in Virginia v. Maryland (2001-2003), which involved Virginia's attempt to place a water pipeline in the Potomac River inside Maryland's border, and in New Jersey v. Nevada, et al. (1987-1988), a dispute over the disposal of hazardous waste.

In this case, Delaware is arguing that it can block the 2,000-foot offloading pier from being built in the Delaware River, which it considers inside the Delaware border based on a "deed of feoffment and lease" granted on Aug. 24, 1682 by the Duke of York to William Penn. New Jersey, which wants the terminal built to provide a new source of gas supply to its residents and businesses, contends that a 1905 compact between the two states gives the Garden State control over water access and structures, such as piers, built along its side of the river, even if they extend across the state border. The state has referred to a 1935 Supreme Court decision that recognized the 1905 agreement.

The $500 million Crown Landing project, which would occupy about 40 acres on a 175-acre site adjacent to the Delaware River in Logan Township, NJ, would provide 1.2 Bcf/d of new LNG supply to the region. It would include about 480,000 cubic meters of storage capacity and pipeline interconnections to Texas Eastern, Columbia Gas and Transcontinental Gas Pipe Line.

A delay might give several competing regasification projects in the region more time to navigate through the regulatory review process. However, BP has the benefit of being a partner in the U.S.' largest LNG supplier, Atlantic LNG in Trinidad. With the option of adding more liquefaction trains in Trinidad, BP is in a better position that most other Northeastern regas developers to manage a downstream delay.

Crown Landing received Coast Guard approval for river transit last September. BP expects a final environmental impact statement on the project from the Federal Energy Regulatory Commission by the end of the first quarter.

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