LNG Updates: Some Projects Moving Forward; Others Shelved

Woodside Natural Gas has submitted the required permit applications to federal and local agencies for a proposed liquefied natural gas import terminal off the coast of Los Angeles. The OceanWay Secure Energy project, announced in August, would boast an average capacity of 400,000 Mcf/d, with subsequent development phases possibly increasing that to as much as 1.2 Bcf/d. Potential Woodside expansions would depend on market conditions, but the project could eventually satisfy 10% to 15% of California's gas demand. The project specifies a ship-based regasification system, which would require specially designed vessels unloading LNG at two buoys more than 20 miles off the coast, feeding an undersea pipeline for delivery onshore.

Woodside joins BHP Billiton, another Australian entity which has its eyes on the California natural gas market. BHP has filed its own applications for an 800,000 Mcf/d Cabrillo Port LNG offshore terminal. The proposed facility would also employ subsea pipelines to transport LNG ashore.

Elsewhere, ExxonMobil has dropped its plan to build the Vista del Sol liquefied natural gas import terminal in San Patricio County, TX. The 1.1 Bcf/d project, which already had received FERC approval last year, was scrapped because ExxonMobil says that it does not need two locations in Texas. The oil major also maintains a partial interest in the proposed Golden Pass LNG terminal in Jefferson County, TX. That facility has also received FERC approval. The move follows last year’s withdrawal from the proposed Pearl Crossing LNG import terminal.

Closely following ExxonMobil’s announcement, Oil giant BP announced that it does not intend to proceed with plans to build a $650 million LNG terminal on Pelican Island, near Galveston, Texas. 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, 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.

On the U.S. East Coast, the competition between the proposed Weaver's Cove LNG terminal in Fall River, MA and the Excelerate Northeast Gateway Deepwater Port proposed for offshore Gloucester has heated up. Excelerate is hoping for clearance from the Commonwealth’s governor and the US Maritime Administration (MARAD) by the end of the year, setting the stage for groundbreaking next spring.

Local opposition to the Weaver’s cove project, taking the form of legislation in the Bay State, may have given the Execlerate Project a leg up. But the Hess LNG project won a recent battle when Massachusetts Governor Mitt Romney returned a bill to the state Legislature that would have blocked LNG deliveries to not only Weaver's Cove, but the also the Distrigas LNG terminal in Everett. The latter facility provides about one-third of the region’s winter gas energy requirements. The Hess Weaver's Cove permitting is arguably far ahead of any other US LNG project outside the US Gulf.

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. At least 15 projects are under consideration for the west coasts of Canada, the United States and Mexico. Domestic demand for natural gas in the United States may reach 35 trillion cubic feet annually by 2025, according to the U.S. Energy Information Administration.