Mitsubishi Pushes for California LNG Terminal at Long Beach Harbor

Flying low under the normal local media and environmental radar screens, Japanese mega-conglomerate Mitsubishi is pushing ahead with preliminary plans for building a liquefied natural gas (LNG) receiving terminal along the Southern California coast in Long Beach Harbor on part of a former U.S. Naval Base. A local official connected to the Japanese giant said it is only a few months away from making formal federal energy and environmental filings.

Mitsubishi is "very close" to finishing a memorandum of understanding (MOU) with the Port of Long Beach, maybe as early as next week, said Tom Giles, Mitsubishi's local LNG project manager. And he expects an application at the Federal Energy Regulatory Commission by the end of this year. "It's an excellent site from both a safety and security standpoint; we feel very good about it."

The vision is for a terminal that processes in excess of 400 MMcf/d, starting in 2007 or 2008 with initial supplies coming from Malaysia, Australia, Indonesia, or even southern Russia. Mitsubishi already has major involvement in bringing LNG into Japan, importing more than half of the supplies in a nation that has 19 LNG receiving terminals, five of which are in Tokyo. The huge Japanese company also is among the largest LNG shipbuilders and operators.

Behind the plans is the assumption that LNG installations in North Baja California, Mexico won't satisfy future natural gas needs in the Los Angeles Basin or central parts of California. Having spent almost two years working and studying possible LNG sites in the LA-Long Beach Harbor area about 25 miles southeast of downtown Los Angeles, Mitsubishi's Giles, a former general counsel with Halliburton, said the "community is very supportive" for environmental reasons, wanting some of the LNG imported to be used directly to replace diesel used in transportation in and around the harbor.

"Once the safety issue got answered, this became more of a pro-environmental project than most any project you could conceive of as one of the new projects in the port," said Giles in an interview Thursday with NGI. "It comes right after a local energy crisis, so it is good timing for diversifying your supply of natural gas, and you have the nation re-opening LNG facilities on the East Coast to bring in gas, so I think the timing is good."

Even though Long Beach is now the focus, Giles said that the LA Harbor Commission and surrounding community groups favored a site in the Los Angeles portion of the harbor. A designated site was not offered quickly enough to satisfy Mitsubishi.

While anticipating up to two years from the time applications are filed to getting approvals from the Federal Energy Regulatory Commission and environmental agencies, Mitsubishi has been working over the past 12 to 18 months doing preliminary work with FERC staff, state officials and the Los Angeles-Long Beach Harbor commissions and surrounding communities.

"Mitsubishi is going to be working with FERC and on the EIR in sort of a collaborative process," said an official close to the project. "By the time we have to turn everything into FERC, they are going to have had the opportunity to go through the information. So we won't be filing something with them that is sight-unseen a year from now. Everybody is going to be working together so when it finally gets to them, there should be consensus and agreement on what the document says."

Giles indicated that Mitsubishi is talking to both potential sellers and buyers for LNG, and the buyers include local public- and private-sector utilities.

Initially the Los Angeles part of the combined LA-Long Beach Harbor was targeted, and the LA Harbor Commission and surrounding community supported the project, but a specific site was never targeted, so Mitsubishi went to Long Beach on the other side of the Naval Base from the LA side of the harbor, the nation's busiest and the third busiest in the world. Long Beach officials have embraced the project, according to the Mitsubishi official close to the project.

"Our intent is to have the same level of discussion with community groups in Long Beach as we had in Los Angeles," Giles said. "We want to make sure that they understand the project and that we fully answer their questions."

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