BHP Steps Closer to Building $800M Terminal off Calif. Coast

Australian firm BHP Billiton's two-year effort to build an $800 million liquefied natural gas terminal off the coast of California moved closer to reality yesterday, when the U.S. Coast Guard and California State Lands Commission issued a revision of an environmental report.

The report addressed various worst-case scenarios, such as the terminal being bombed, rammed by a ship, commandeered or attacked from the air, and it concluded that it was an unlikely terrorist target and any fire resulting from an attack would be contained by the ocean.

BHP has been planning the offshore terminal to receive LNG from Australia, which it would convert into vapor and ship through an undersea pipeline to a local gas utility's pipeline near Ormond Beach, Calif. Officials in nearby Malibu and Oxnard had cited the possibility of terrorism directed at LNG ships or at the facility itself. The Malibu and Oxnard city councils have passed a resolution opposing the facility.

The project cleared a major obstacle last year when the U.S. EPA classified the terminal as being outside the control of the Ventura County Air Pollution Control District. The location is 25 miles from Anacapa Island, which is part of the Channel Islands chain in Ventura County. Ventura County smog rules do not apply to the Channel Islands, meaning an LNG plant there would be able to emit more than 261 tons of pollutants per year (Greenwire, July 21, 2005).

The 1,000-page report is open for public comment until April 28. Gov. Arnold Schwarzenegger (R) could approve the project as early as September (Jamie Freed, Sydney Morning Herald).

Another Australian company, Woodside Energy, will join the fray in California when it unveils plans today to put an LNG terminal near the site of BHP's proposed facility.

Woodside's proposal differs from BHP's in that it does not require a permanent offshore regasification facility to turn the liquid back into gas. It would involve just a ship, moored with a flexible connection to Southern California Gas Co.'s pipelines.

While BHP's site is 21 miles off Port Hueneme in Ventura County, Woodside's is in the Santa Monica Basin, 22 miles from Point Dume in Malibu.

Woodside will file applications with state and federal regulatory agencies within the next 60 days. There are at least four other proposals in the works from other companies, including building land-based plants in Long Beach and Northern Mexico.

Environmentalists and community activists opposed to the environmental dangers inherent to LNG facilities in urban settings are backing a bill in the state Legislature that would force the California Public Utilities Commission to quantify the state's natural gas demand and rank LNG proposals according to safety, environmental protection and economic necessity (Marc Lifsher, Los Angeles Times).

Meanwhile, Australia is also trying to increase LNG use domestically. Federal Resources Minister Ian Macfarlane will announce today a plan formulated by the industry and the government to switch the domestic energy market's dependence from coal to gas.

Spearheaded by the Australian Petroleum Production and Exploration Association, the initiative will aspire to use natural gas for up to 70 percent of all new energy capacity, triple LNG production to 50 million metric tons per year by the end of the decade, and double the use of natural gas as a feedstock for resource processing.

APPEA is also lobbying for changing the petroleum resources rent tax to encourage production (Nigel Wilson, The Australian).

Freeport to modify $1B La. terminal to protect fish

Freeport-McMoRan Inc. announced yesterday it would modify its proposed LNG terminal 16 miles off the coast of Louisiana to lessen its environmental impact, but Louisiana officials said they are not yet satisfied with the $1 billion project.

Governors from Louisiana, Mississippi and Alabama can veto the Main Pass energy hub during a 45-day period beginning next week, according to federal law. Louisiana Gov. Kathleen Blanco (D) said last year she would block projects like Freeport's if they were not environmentally sound.

The hub would process up to 350 billion cubic feet per year of imported natural gas, using 49 billion gallons of seawater to reheat the supercooled liquid. But it would be located in one of the most productive fisheries in the world, raising environmentalists' ire.

The U.S. Coast Guard's final environmental impact statement released last week said Main Pass would have "minor environmental impacts," particularly on stocks of red drum, one of the Gulf of Mexico's most popular fish. The impact of Main Pass combined with that of six other proposed terminals could reduce stocks by 420,000 pounds per year.

Five LNG ports, including Main Pass, are waiting for Blanco's approval. Four of them, including Main Pass, use an "open-loop" system to reheat the LNG, which requires billions of gallons of seawater. One uses a "closed-loop" technology that relies on combustion but is more expensive and burns about 2 percent of the unloaded gas.

Freeport's proposed modification would reuse excess heat to reduce the amount of water needed from 180 million to 134 million gallons per day. Open-loop systems still use 1 percent of unloaded gas to power water intake pumps, but Freeport executives maintain their profit margins on natural gas are too small to justify losing the extra 1 percent of unloaded gas that closed-loop technology would use.

Freeport will also add filters to reduce the amount of fish and fish eggs being sucked into intake pumps (Matthew Brown, New Orleans Times-Picayune). (All cites March 15 unless noted.) -- DK

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