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CA City of Long Beach, LNG Proponents Still Talking

Despite more delays in a final joint local/federal environmental impact report (EIR) for the proposed liquefied natural gas (LNG) receiving terminal in Long Beach, CA, harbor, the port city's local government is still talking regularly to the project sponsors about an eventual supply contract and pipeline between the receiving terminal and the city municipal utility operations, according to the city energy manager. A final EIR originally was scheduled for release this month.

The City of Long Beach Energy Department Director Chris Garner said he was told to expect the final EIR around mid- to late-November. In the meantime, Garner told Daily/NGI that his office was still in negotiations with the LNG terminal developers, Sound Energy Solutions (SES) for a contract for some of the gas supplies to serve the city's municipal gas loads and satisfy the city facilities' gas needs.

Long Beach signed a new three-year gas supply deal with Shell's Coral Energy earlier this year covering all of its needs for 10 Bcf annually, aside from local supplies the city receives that amount to 2-3 Bcf.

The city's ongoing negotiations with SES, a joint venture of Mitsubishi Corp. and ConocoPhillips, have failed to produce a longer-term agreement for supplies from the proposed LNG receiving terminal that could process up to 700 Bcf/d. "We're still talking to them," said Long Beach's Garner, who plans to update the city council on the issue later this month. (Long Beach has a new mayor, Bob Foster, a former Southern Califonria Edison Co. president, and three new council members.)

Last June, with no public announcement, the Long Beach port's board of harbor commissioners in closed session decided to let expire an ongoing exclusive rights agreement with SES on the designated site in the harbor. The five-member board said it would await the final EIR on the project before taking any further action. A draft EIR released in October 2005 concluded the project could be "constructed and operated in a safe manner," given a series of protective and mitigating measures by SES.

SES had a memorandum of understanding (MOU) for a 25-acre site in Long Beach Harbor to build a receiving terminal for processing up to 700 MMcf/d of LNG. The MOU essentially outlined the terms of a lease of the property from the port if the permitting process is successfully completed, according Tom Giles, COO at SES.

Garner said he didn't think the port "was actively marketing" the vacant site, and that it was sincere in wanting to work through the environmental review process before re-visiting the issue of a lease agreement with SES.

Aside from the final joint EIR, Long Beach and SES are negotiating a gas supply deal for the city and eventually a 2.4-mile, 24-inch-diameter pipeline the city would own between the port-based terminal and Southern California Gas Co.'s transmission pipeline system.

The Long Beach Energy Department, which operates a municipal water-gas utility system and purchases the power supplies for the city's facilities, currently takes its gas supplies off Sempra Energy's SoCalGas system, and wants to continue taking supplies off of that system, Garner said. Eventually the connecting pipeline between the proposed joint Mitsubishi Corp.-ConocoPhillips LNG terminal and the SoCal transmission system may be leased by the city to the Sempra utility, he said.

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