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New York Times: Shell Drops Gulf LNG Port

By REUTERS
Published: March 28, 2007
Filed at 8:59 p.m. ET

HOUSTON (Reuters) – Shell U.S. Gas and Power (RDSa.L) is discontinuing plans to build a liquefied natural gasterminal offshore of Louisiana because import capacity will be sufficient without it, the company said Wednesday.

“It’s just an assessment of the market,” said project manager Greg Koehler in announcing cancellation of the terminal that had been dubbed Gulf Landing.

When Shell proposed Gulf Landing for a site 38 miles (61 km) south of Cameron, La., in 2003, there was one LNG terminal in the Gulf of Mexico. Now, including Mexico, there are seven either operating or under construction and more are planned.

“That is not to say we’re abandoning the LNG business,” Koehler said. “Quite the contrary.”

Shell is a partner in the Altamira terminal opened last year on the Gulf Coast of Mexico, and it has capacity at existing U.S. ports at Cove Point, Maryland, and Elba Island, Georgia.

Shell also is a partner with TransCanada (TRP.TO) in the Broadwater LNG project proposed for Long Island Sound between New York and Connecticut.

“Our plans are to continue to increase volumes of LNG into the U.S.,” Koehler said.

The cancellation is part of ongoing shakeout in the LNG import industry, which spawned more than three-dozen proposals for sites around the United States after prices rose and concerns grew about an impending domestic U.S. gas shortage.

Now that prices and demand have flattened, a number of other projects have been delayed or canceled.

But others are going forward. Earlier this year, the U.S. Maritime Administration (MARAD) licensed two new terminals off Boston and the U.S. Federal Energy Regulatory Commission approved two more onshore on the Mississippi Gulf Coast.

Shell notified MARAD Tuesday, Koehler said. The agency had licensed Gulf Landing in 2005. Paperwork has yet to be submitted, Koehler said.

Finding reliable LNG supply and resistance from environmentalists have been problems for some terminal developers, but Koehler said neither was a factor in the cancellation.

A spokesman for an environmental group, which had opposed Shell’s plan for a system circulating large amounts of seawater, welcomed the news as beneficial to fish populations.

“Whatever the reason, environment or economy, this is an important day for Gulf fisheries,” said Aaron Viles of the Gulf Restoration Network.

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