FERC notified the backers of a proposed liquefied natural gas (LNG) receiving terminal in the Port of Long Beach, CA, Monday that it was suspending its 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.

The project has been dormant for more than a year since the port unilaterally stopped processing the joint environmental review and Sound Energy Solutions (SES) subsequently filed a lawsuit against the city and port that has yet to be heard (see Daily GPI, Feb. 12, 2007).

After three past delays, the lawsuit is scheduled to be heard March 17 before California Superior Court Judge James C. Chalfant in downtown Los Angeles. SES CEO Thomas Giles told NGI Monday that this is the “big event” for the four-year effort by Mitsubishi Corp. to build and operate a 1 Bcf/d facility in the harbor on part of what was once a U.S. naval base.

In saying that he wasn’t surprised by the action by the Federal Energy Regulatory Commission (FERC) and SES did not ask for the action, Giles said the company is taking the notice pretty “matter-of-factly” at this point. “We’re keeping FERC informed all the time, and will do so regarding the court hearing later this month.”

Under California law, no company or individual can obtain a legally binding lease on commercial or industrial property until the state environmental review is completed. With the port-FERC joint environmental processing stopped, SES could not gain the lease it eventually needs to pursue the project.

“We are suspending our review of SES Terminal LLC’s Long Beach LNG import project based on the fact that SES does not have access to, or control of, its proposed LNG import terminal site,” FERC’s J. Mark Robinson, energy projects office director, said in a letter sent to Giles. “As confirmed by your Feb. 15 response to our environmental information request, nothing has changed regarding the status of a lease since receiving the Board of Harbor Commissioners’ Jan. 22, 2007 letter declining to enter into a lease with SES for the site.”

Robinson also said that if in the future SES obtains a lease on the 25-acre industrial site that is proposed for the $800 million combined regasification and LNG transportation distribution facility, FERC will reactivate processing SES’s application.

Last January SES distributed its most recent written communications to local stakeholders, focusing on its court filing, which at that time was set for a hearing Feb. 11. As part of his pitch in the letter, Giles pointed to the SES project as a means of mitigating soaring energy prices, and he estimated that the local economic benefits from the proposed plant would exceed $1 billion. He promised “lasting benefits” to the Long Beach community in terms of jobs, local governmental revenue and clean fuel for trucks, buses and equipment operating in the port.

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