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Long Beach LNG Backers Stay Course Despite Court Loss

Mitsubishi Corp.'s Sound Energy Solutions (SES) isn't throwing in the towel yet, despite a California state court ruling last Monday that upheld the Port of Long Beach's termination of the environmental review of a proposed SES liquefied natural gas (LNG) terminal in Long Beach Harbor. SES Executive Vice President Tom Giles told NGI Wednesday his firm will decide in April what its options are and whether to appeal.

Los Angeles Superior Court Judge James Chalfant ruled against the SES court filing, upholding the Long Beach port's discretion in its January 2007 decision to stop work on a final environmental impact report (EIR). The project was "dead" anyway at that point because a memorandum of understanding (MOU) for a harbor site between the port and SES had expired by that time, Chalfant said in his ruling.

The judge's ruling will be formally entered April 9, after which SES has 60 days to appeal.

Giles said SES obviously is "very disappointed" by the court setback, but it would wait until it reviews the judge's final ruling that comes out in April before deciding first "what the verdict actually looks like and what our alternatives are." At that time, the appeal option will be assessed. Giles would not pronounce the project as dead at this stage, or comment on whether Mitsubishi might try to partner with one of the offshore LNG terminal proposals still alive in Southern California.

Earlier in March the Federal Energy Regulatory Commission (FERC) notified SES that it suspended the Long Beach application based on the proponents' lack of a lease for the proposed site in the port, which combined with adjacent Los Angeles Harbor comprises the busiest port in the United States (see Daily GPI, March 4).

The project now has been dormant for more than a year since the port unilaterally stopped processing the joint (FERC-port) environmental review, and SES subsequently filed its lawsuit against the city and port that was postponed three times before being heard last Monday.

Chalfant ruled that the court cannot interfere with the port's decision in this case unless there was an alleged violation of law by the Long Beach Harbor Commission, and SES did not cite any such allegations that a law was broken.

Ultimately, as the earliest of nearly a half-dozen LNG terminal proposals for Southern California that have emerged in the past five years, SES sought a 25-year site lease with the port to build an $800 million, 1 Bcf/d facility that would regasify most of its shipments, but distribute some LNG locally for use in transportation and running port equipment in the harbor. By the end of 2006, the City of Long Beach political leaders, including Mayor Bob Foster, a former president of Southern California Edison Co., turned against the project.

SES has said it has spent $80 million thus far trying to get its project permitted by FERC and the port. In the end, local citizen concerns about safety turned city leaders against SES's proposed terminal.

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