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BHP eyes LNG plant off Southern California coast Site 21 miles offshore; closer to natural gas infrastructure than Baja Debra Beachy Petroleum News Contributing Writer
HP Billiton, the Australian mining and energy company, is planning to build a liquefied natural gas import terminal in deep water off the coast of Southern California, a company spokesman told Petroleum News Aug. 15. The company said it expected the plant to start operating by 2008.
BHP spokesman Patrick Cassidy said in Houston that although the company is focusing on using LNG from the Pacific Rim and Australia, it could consider Alaska or Latin America LNG as well — when those projects come on line. BHP is an investor in Australia's North West Shelf LNG operation, expected to be on line in 2008.
“Nothing is ruled out at this point,” Cassidy said. He emphasized that the terminal project is in the most preliminary phase. Alaska, other projects on line later LNG projects proposed for Bolivia and Peru have been held back by political and economic problems in the region. The earliest Alaska North Slope gas is expected to come on line is 2010, but, to date, the North Slope gas producers have not considered LNG a viable option for the slope’s stranded gas. Instead, they are proposing a natural gas pipeline from the North Slope, down the Alaska Highway into Canada. From there the gas would be delivered to Midwest markets in the United States.Floating offshore facility planned BHP’s $550 million regasification plant would be in federal waters, and would float offshore, Cassidy said. Although BHP “is in the earliest stages,” the company is betting that the offshore location will help it with environmental concerns of coastal development in California and with closer proximity to California's natural gas infrastructure compared with other projects planned for Baja California or offshore Mexico, he said. “We're out of the path of migrating whales,” Cassidy pointed out. “And we are closer to California’s infrastructure. A facility at Baja California, Mexico, would have to transport the gas to California,” he said.
In a description of the project, the company said the facility, named Cabrillo Port, would be permanently moored in deep water 21 miles offshore Ventura County in Southern California. It would use a heat exchange system to convert LNG into natural gas and the natural gas would be transported through an undersea pipeline into the system of local utility Southern California Gas, a unit of Sempra Energy. The plant would have three spherical storage tanks capable of holding the equivalent of 6 billion cubic feet of natural gas. It would have the ability to produce up to 1.5 billion cubic feet of natural gas from LNG per day, although the anticipated output is expected to be 800 million cubic feet per day (15 percent of California‘s demand).
New LNG plants on drawing board The United States hasn't built a new LNG receiving facility in more than two decades, though several are now in planning stages. Low gas prices made building such facilities uneconomical for years.
Since the Sept. 11 attacks, security concerns also have grown and the rising price of natural gas has reignited interest.
BHP's project is the latest in a growing field of proposed facilities They include plans to build U.S. or Mexico West Coast LNG facilities by: ConocoPhillips LNG Group, Marathon (near Tijuana), Sempra and Shell (north of Ensenada) and ChevronTexaco (near the Mexican Coronado Islands).
BHP said it will file applications with the U.S. Coast Guard/Maritime Administration to build the deep water port facility and with the California State Lands Commission to build and operate an undersea pipeline to shore. The regasification facility would be developed by BHP unit BHP Billiton LNG International Inc.
The permitting process, which includes a review of the project’s environmental impact, will take at least a year, Cassidy said. Federal regulations for building and operating the facility are in place, unlike regulations for land-based LNG terminals in California, which are under review, Cassidy said. State regulations for operating the undersea gas pipeline also are in place, he added. “I don’t know of any regulations that are not already in place for the terminal, because it will be located 20 miles offshore,” Cassidy said. “If it were located on land, then it would be a different story.”
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