BP Says it will Not Proceed with Pelican Island LNG Terminal

Published Aug 25, 2006 12:01 AM by The Maritime Executive

Oil giant BP has announced that it does not intend to proceed with plans to build a $650 million LNG terminal on Pelican Island, near Galveston, Texas. BP advised the port of Galveston and the city of Galveston on Tuesday of their decision. The decision represents a significant disappointment for the Galveston Port Authority, because the project was expected to produce annual revenues of $2.5 million, or more. Originally proposed in 2004, the terminal was to be located on about 185 acres offshore and adjacent to the Houston Ship Channel.

The project had met stiff opposition from local citizens and environmental activists and BP’s US operations have been plagued by one disaster after another over the past year. The proposed facility would have been located just five miles from the BP Refinery in Texas City where recent high profile events, such as an explosion and a contractor accident have stained the oil major’s safety reputation. But BP says that none of that had anything to do with their change of mind in Galveston. Rather, they say, changing market conditions and economics were the prime mover for the pull-back.

More than 45 LNG terminal projects have been proposed nationwide, with at least ten of these still in the planning phase on the U.S. Gulf Coast. The plethora of LNG projects proposed for the Gulf Coast was reportedly factored into BP’s decision in the matter. Domestic demand for natural gas may reach 35 trillion cubic feet annually by 2025, according to the U.S. Energy Information Administration.