Shell US Gas and Power announced it will no longer participate in a plan to build a $1.5 billion liquefied natural gas (LNG) terminal in Vallejo, CA citing problems with scheduling, expansion or cost. However, the Royal Dutch/Shell unit said it may consider building a terminal somewhere else in the state.

Shell joined engineering firm Bechtel Enterprises in May 2002 on a Mare Island Feasibility Study, to consider developing an LNG terminal as well as power generation facilities on Mare Island in Vallejo. Mare Island is a former Navy base located about 25 miles northeast of San Francisco.

“While we still believe that LNG facilities can be built and safely operated at Mare Island, a number of factors have led us to conclude that this is not the best site for Shell,” said Gus Noojin, CEO of Shell US Gas & Power. “Regrettably, after taking a hard look at almost eight months of feasibility study results from Mare Island, we no longer see the potential for this site to fit within our long-term strategic plans.”

The LNG terminal would have required large tankers to pass under several major bridges in the Bay Area, including the Golden Gate Bridge. Shell’s original plan would require the U.S. Coast Guard to escort the LNG tankers into the harbor. The project has been controversial from the start, as opponents have cited safety concerns — despite LNG’s relatively good safety record. Bay Area officials had cited “unacceptable” risks in discouraging Shell from building a terminal so close to the populated area.

Bechtel, the San Francisco-based engineering firm, had initiated the project, and said it wanted to find another partner. However, Vallejo city officials said in a statement that they do not believe any other companies would be interested in assuming Shell’s project. “Any future partner would come to the same conclusion as Shell. Therefore, any attempt to continue discussions with Bechtel would be pointless,” said Mayor Tony Intintoli Jr. in a statement. The major added that a recent study suggested to city officials that there would be a “moderate chance of a maritime accident” within the proposed terminal site.

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