Esperanza Energy LLC, a unit of San Antonio-based Tidelands Oil & Gas Corp., Wednesday became the fourth company to join the Southern California offshore liquefied natural gas (LNG) terminal competition with a proposal to develop two receiving platforms 10 miles off the coast at Huntington Beach, CA. Esperanza said it hopes to file an application by the end of this year.

Touting the preliminary work of a "best-of-class" industry/environmental team, Esperanza was not specific about potential site locations in a written announcement, noting it was concentrating on up to 12 miles offshore of the greater Long Beach area, but the company told the Los Angeles Times the site was offshore Huntington Beach, which is located five miles south of the port city.

The proposal is to link to an onshore gas-fired electric generation plant, of which there are several located in the Long Beach-Huntington Beach area, with a horizontally drilled tunnel buried 100 feet under the beach that would provide a conduit for water, communications and electrical lines to serve the offshore terminal while also providing an artery in which to run an undersea natural gas pipeline for bringing the LNG in gaseous form to shore and interconnection with the Southern California Gas Co. transmission pipeline system.

When it was formed almost a year ago, Esperanza officials said the company's goal was to create a LNG import facility that "can play an important role in meeting California's growing energy needs," meaning gas priced competitively with supplies flowing in from various interstate pipelines. They said the company would only pursue the project "if it can be sited, designed and operated in the safest, most environmentally responsible and economically viable manner possible."

One of the company's consulting team members is a former natural gas official at the California Energy Commission (CEC), David Maul, who said that he chose to work with Esperanza because of what he called "the company's strong commitment to design and build a LNG project that is responsive to California's unique environmental and regulatory sensitivities." Maul said he is "intimately familiar" with every LNG project along the West Coast from his work at the CEC.

"Energy project development can be accomplished in a manner consistent with California's high environmental quality and public safety project requirements," Maul said. Buying into the state's environmental and safety requirements, the project team has come up with a way to meet "California's energy needs in the most environmentally acceptable manner possible," he said.

Esperanza contends its project would have no significant air quality or marine impacts; no petroleum fuels will be stored at the site; and whenever possible the emissions from the LNG ships will be minimized by using natural gas for the ship engines while undergoing the offloading of the shipments.

As the LA Times referenced in its report, Esperanza plunges into the offshore LNG terminal competition just weeks after the City of Long Beach Port's oversight commission walked away from a proposal to build an $800 million onshore LNG terminal in the harbor by Sound Energy Solutions (SES), a joint venture of Mitsubishi Corp. and ConocoPhillips. The sponsors have subsequently filed a lawsuit against the port and city, seeking to force the completion of an almost two-year-old environmental review process on its project.

Esperanza's announcement also comes within a few weeks of when the U.S. Coast Guard is expected to release its final environmental impact report on a proposed LNG terminal offshore Oxnard that Australian-based BHP Billiton has proposed to develop.

Tidelands, a small oil/gas developer with a keen eye on northeastern Mexico, announced last April that it was looking to develop an LNG project off the Southern California coast (see Daily GPI, April 5, 2006).

Tidelands CEO Jim Smith said that Esperanza's consulting team, including and environmental, engineering and legal experts, completed a "comprehensive study" that has concluded the project is viable. "It will provide more benefits and features than any other proposed LNG project in California," he said.

Esperanza proposes two floating terminals that it describes as half the size of yard cranes used at the docks in Long Beach-Los Angeles harbors. Each would project about 100 feet above the water and would employ warm water discharged from an onshore thermal host in the regasification of the super-cooled LNG, eliminating the use of nearby sea water. The water would be warmed to ambient temperatures before being discharged in water surrounding the floating facilities.

In Huntington Beach and Long Beach, there are several merchant- and utility-operated gas-fired coastal electric generation plants, any one of which could serve as a source of warm water and electricity for the LNG project. Esperanza said it was in technical discussions with these plants, which are operated by AES Corp., NRG Energy and the Los Angeles Department of Water and Power (LADWP).

The warm water discharge approach would allow Esperanza's LNG facility to be more efficient in its regasification process, reducing its "greenhouse gas (GHG) emissions footprint," according to the company. Offshore facilities would further reduce emissions by using electricity purchased from the coastal plant for its primary power needs and use of onboard batteries for backup power.

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