After more than three years of controversy, Shell Oil Co. has dropped plans to build its Gulf Landing liquefied natural gas (LNG) terminal, which was to be located about 38 miles offshore Louisiana.

Gulf Landing, the first proposed Shell-operated LNG terminal in the United States, already had been licensed and was in the early stages of development. Shell notified the U.S. Coast Guard of its decision earlier this week.

Shell's Greg Koehler, project director for Gulf Landing, said the decision to halt the project was driven by U.S. market concerns, especially the plethora of LNG projects expected to be sited along the Gulf Coast.

"The regasification capacity is adequate to handle everything coming into the U.S.," Koehler said of the U.S. LNG market. But he said Shell remains "very bullish on LNG. We see this is a growing market," and he said Shell expects to be part of the market.

The Gulf Landing project was announced in late 2003 (see Daily GPI, Oct. 30, 2003), and Shell US Gas & Power LLC received approval to build the terminal in early 2005 (see Daily GPI, Feb. 18, 2005). However, environmental groups sued to halt not only Gulf Landing, but other proposed LNG ports that would use open-loop technology. Open-loop technology uses billions of gallons of seawater to warm the supercooled LNG that is brought to the United States via tankers.

Still Shell prevailed. Last year, a three-judge panel of the U.S. Fifth Circuit Court of Appeals turned down petitioners asking for a review of a Department of Transportation order licensing the import terminal (see Daily GPI, June 13, 2006).

Gulf Landing's cancellation is one of several LNG projects slated for the Gulf Coast region that have since been dropped for various reasons. Last November, citing market concerns, ConocoPhillips canceled plans to build its open-loop Beacon Port Clean Energy terminal offshore Louisiana (see Daily GPI, Nov. 10, 2006). ConocoPhillips earlier shelved its Compass Port LNG project, ExxonMobil Corp. dropped its Pearl Crossing project, and BP plc put on indefinite hold its Bay Crossing/Pelican Island project onshore Texas.

Last year, Louisiana Gov. Kathleen Blanco vetoed an open-loop LNG port proposed by McMoRan Exploration that would have been located off the state's coast (see Daily GPI, May 23, 2006). McMoRan revised its plans to use closed-loop technology (see Daily GPI, June 16, 2006), and in January it received final approval for its Main Pass Energy Hub (see Daily GPI, Jan. 5).

Only one remaining open-loop port, the Bienville Offshore Energy Terminal, is still in the works (see Daily GPI, Feb. 1, 2006). The 1.4 Bcf/d project, to be built by Norwegian-based TORP Technology, would be located 63 miles south of Dauphin Island. Alabama Gov. Bob Riley already has voiced opposition to the TORP terminal and has threatened to veto the project unless the open-loop plan is modified.

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