Although no conclusions or commitments have been reached,Chevron is very actively pursuing studies leading to thedevelopment of a liquefied natural gas (LNG) receiving terminal ata still undetermined spot along the California coast to regasifythe equivalent of 500 MMcf/d of LNG from the Northwest Shelf offWestern Australia (see Daily GPI, March 20). Chevron is a one-sixthowner of the huge NW Shelf LNG Project involving 15 Tcf of gas nowbeing liquefied and shipped to markets in the Far East, and atwo-seventh partner in the not-yet-producing Gorgon Projectoffshore Western Australia.

An onshore facility, according to Chevron, would require 200 to400 acres, and access to deep-water ports able to handle large LNGtankers in the range of 70,000 dead-weight-ton size. Potentialprice tags on the terminal would be in the $300 to $400 million,not including the ships to bring supplies from Australia.

“We haven’t determined the location of a receiving terminal thatwould be that would be most suitable, but that is part of what weare doing in our current study,” said San Francisco-based Chevronspokesperson Fred Gorell, noting that both onshore and offshoresites are being assessed. “The marketplace fundamentals are thereto have us move forward, so we are gathering data and informationand we’ll we looking at the economics.” Chevron is not the only onelooking for a West Coast site. El Paso Natural Gas has announced itwill build six LNG receiving terminals in North America, with atleast two of them intended for the West Coast (see Daily GPI, March22)

A knowledgeable West Coast oil/gas industry source said it isunlikely that coastal sites in northern Baja in Mexico will beviable because of adverse oceanic factors, and Oregon is expectedto reject any sites along its coast, so that leaves the varied, butnow overly protected 1,000-mile California coast, on which Chevronalready operates facilities.

Chevron is the single largest gas resource holder in WesternAustralia, so it makes sense that it would want to find a marketfor some of that gas in the United States, particularly in thesupply-constrained western states and its corporate home state ofCalifornia.

For California energy players with long memories, the Chevronplans are “déjà vu all over again” because inthe gas supply shortage years of the 1970s a joint venture betweenaffiliates of PG&E and Southern California Gas Co. triedunsuccessfully to site an onshore LNG receiving terminal about 40miles west of Santa Barbara to bring in supplies first fromIndonesia and later from Australia. Even with special state help tostreamline the terminal site pricing, local environmental andearthquake safety issues raised by Native American interests in thecoastal site, and economic inertia caused by an over-supply of gas,combined to eventually kill the project, something its backerslater cited as a blessing because with the depressed gas prices ofthe 1980s, the LNG supplies would have been grossly above market.

Chevron is banking on its experience in international oil/gasexploration, development and transportation, including the LNGproject in Western Australia, as providing an advantage over pastand current proponents of similar projects. Marketplace andtechnology changes are dramatically different now than they were 25years ago, Gorell said.

“The key things we are looking at are safety and environmentalfactors, along with a site that can position us strategically inthe marketplace,” Gorell said. “Beyond that, we would look at theeconomics of specific sites. We do think the fundamentals are inplace for a regasification plant on the West Coast of NorthAmerica.

“We haven’t decided where that might be, however, it is part ofour ongoing study.”

Chevron contemplates about 3.8 million tons of LNG annuallybeing the regasification plants maximum capacity, which convertedto electricity is about 3.5 gigawatts.

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