Petroleum News: Woodside seeks permits for U.S. LNG port

Australian company wants to regasify cargoes far off the coast of Los Angeles using special ships; first Shell LNG reaches Mexico

By Allen Baker

Woodside Petroleum Ltd. has filed for permits to build an offshore terminal to bring natural gas to the California market via ships carrying LNG.

The Australian company has tried to meet objections from environmental and other groups opposed to various West Coast LNG importing schemes by offering to unload its long-haul liquefied natural gas carriers more than 20 miles offshore onto two special regasification ships that would be built for Woodside.

Those ships would turn the liquid back into natural gas, which would then be sent out in two pipelines that would reach shore near the Los Angeles airport and hook into the onshore pipeline network there.

Initial capacity of the system, called OceanWay, would be 400 million cubic feet of natural gas daily, with expansion potential up to 1.2 billion cubic feet of gas daily.

Permits are being sought from the U.S. Coast Guard and the Maritime Administration for a deepwater port and from the city of Los Angeles for a natural gas pipeline franchise.

It’s not clear how long the permitting process might take or when Woodside plans to put the system into operation. The applications were filed Aug. 18.

The company has access to several sources of offshore gas near Australia, and it operates the huge North West Shelf gas field and LNG production plant.

The company is aggressively pushing development of its 100-percent-owned Pluto gas field 118 miles off Western Australia. That $3.8 billion project is expected to start production in 2010 and initially supply 5 million tonnes of LNG, which would convert into 240 billion cubic feet of natural gas at its destination.

In full operation, the OceanWay terminal could handle 440 billion cubic feet annually, about 20 percent of California’s current natural gas consumption.

Shell LNG to Mexico

Mexico received its first-ever cargo of LNG on Aug. 17 as the SS Gracilis brought Shell-owned liquefied natural gas from the Nigeria LNG plant in Africa, a 14-day journey of 6,250 nautical miles.
The ship docked at Terminal de LNG de Altamira, near Tampico on Mexico’s northeast coast. Shell owns 50 percent of the Altamira facility, with Total and Mitsubishi each holding a 25 percent stake. Shell has rights to 75 percent of the terminal capacity and Total 25 percent.

Mexico’s power authority, Comision Federal de Electricidad, has contracted for 184 billion cubic feet of regasified LNG annually. It will take 3.9 million tonnes of LNG to provide that much gas.

BP halts Texas terminal

BP PLC is stopping work on a proposed $650 million LNG terminal planned for an island near Galveston, Texas, the company said Aug. 22. The terminal would have had a sendout capacity of 1.2 billion cubic feet daily, but U.S. terminal projects in the works may end up fighting to get the LNG cargoes to keep them humming.
“This is strictly a business decision that has nothing to do with either politics or litigation,” BP spokesman Neal Geary told the Galveston County Daily News. But the company got a black eye locally when 15 workers were killed at the nearby Texas City refinery last year.

In any case, several other LNG terminals are in process in the Gulf of Mexico, and BP faces litigation and other hurdles for the project, called Bay Crossing.

The company has renewed a three-year lease option with the Port of Galveston for 185 acres on Pelican Island, and it can reactivate the project during that period.

Meanwhile, BP is still moving forward with its Crown Landing terminal, a similar-size project in New Jersey. That terminal has federal approval but is caught in a legal fight between New Jersey and Delaware over who controls the river where the dock would be built. That issue is going before the U.S. Supreme Court for a decision.

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