On the eve of the start of the public permitting process, Australian resource giant BHP Billiton's liquefied natural gas (LNG) unit announced Wednesday it has received interest from 18 large utilities and other major industrial customers totaling nearly 3 Tcf annually for new gas supplies in California from BHP's proposed Cabrillo Port offshore LNG receiving terminal 14 miles from the shore and 21 miles from Oxnard, CA, 60 miles northwest of Los Angeles.
"The main importance of this development is that the market in California supports LNG supplies," said a Houston-based spokesperson for BHP Billiton LNG International, a wholly owned unit of the Australian-based company that has major interests in natural gas and LNG supplies being produced in and around the Northwest Shelf Down Under. The market is "eagerly ready" for new supplies that BHP and several other competitors are proposing to land at proposed on- and offshore facilities along the Pacific Coast (see Daily GPI, Jan. 25).
The list of customers expressing interest is confidential, however. BHP Billiton did acknowledge that the Los Angeles Department of Water and Power (LADW), the nation's largest municipal utility, was a signatory.
BHP Billiton's spokesperson said the company envisions final state and federal permitting decisions by the end of this summer, and assuming they are not overly conditioned, the company would start engineering design and other preliminary site work, along with pursuing more aggressive supply contracts, next year, targeting 2010 or 2011 for commercial start-up of its facility. The draft environmental impact report and statement now being written by a third-party consultant on a joint basis with the U.S. Coast Guard and the California State Lands Commission will be released in the "next few weeks," the BHP Billiton spokesperson said.
Prospective customers who provided "letters of interest," including potential volumes, include utilities, electric generation plant operators, cogeneration units, manufacturers and trade groups, BHP Billiton said in its written announcement. "The letters all express support for the development in the region of additional natural gas supply sources, such as Cabrillo Port," the company spokesperson said.
Renee Klimczak, president of BHP Billiton LNG, said the feedback "clearly demonstrates the need for an alternative source of natural gas for West Coast markets," adding that gas is the "preferred fuel source because it burns cleaner and more efficiently than other fossil fuels."
The Cabrillo Port project will essentially double the supply of natural gas delivered into the state's natural gas distribution pipeline system, which in the southern half of the state is controlled by Sempra Energy's two utilities, and in the north is operated by the gas part of Pacific Gas and Electric Co. Prospective buyers in the south presumably would have to work out transportation arrangements with Sempra's Southern California Gas Co. to get it to their industrial or generational plants.
"While the letters are nonbinding, they express a desire by large consumers of natural gas to negotiate, consider the purchase, or meet and confer with BHP Billiton for the supply of natural gas from Cabrillo Port when the resource becomes available," said the spokesperson, who emphasized that "formal statements of support" from prospective gas buyers are not required for approval of the project.
Cabrillo Port is being designed as a floating offshore receiving point for California-bound LNG shipments. It will provide both storage in liquid state and then regasification and transportation via undersea pipeline to onshore gas pipeline transportation pipelines.
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