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Bloomberg: Woodside California LNG Project Starts Public Review (Update2)

By Angela Macdonald-Smith

Sept. 5 (Bloomberg) — Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, said its California natural gas import project started a public review after regulators declared the company had provided all the required information.

The ruling by the U.S. Coast Guard and the City of Los Angeles that the port license application is “complete” signals the beginning of the environmental assessment for the OceanWay liquefied natural gas receiving plant, Perth-based Woodside said today in a statement to the Australian Stock Exchange.

The proposed project, which may start up in late 2012, would be able to provide about 15 percent of California’s annual gas supplies. The state so far has no LNG import terminals. Woodside, 34 percent owned by Royal Dutch Shell Plc, lodged an application for a deepwater port license for OceanWay with the U.S. Coast Guard and the City of Los Angeles in August 2006.

The project “is still a long way off,” said Stuart Baker, a Melbourne-based oil and gas analyst at Morgan Stanley. “You wonder whether they will ultimately ever need it but they may as well push forward. The more chances they have to sell gas to different places the better chances they have of getting higher prices or better terms.”

Woodside rose as much as 78 cents, or 1.7 percent, to A$46.33 on the exchange, beating a gain of as much as 1.3 percent in the exchange’s benchmark energy index. The stock was at A$45.85 at 11:57 a.m. in Sydney.

Woodside produces LNG at the North West Shelf venture in Western Australia and in July approved the A$12 billion ($9.9 billion) Pluto project in the same state. It has proposed LNG projects also in Australia’s Browse Basin and the Timor Sea. Chief Executive Officer Don Voelte said Aug. 22 the OceanWay project probably has a 50:50 chance of going ahead.

Ships, Buoys

The project comprises a ship and buoy system to deliver gas to California, with tankers unloading at two buoys 28 miles offshore Los Angeles. LNG would be converted back into natural gas onboard the ships for transportation into California’s existing gas network through underwater pipelines.

“California leaders and energy agencies have recommended the construction of a new natural gas import facility in the state, and OceanWay is positioned to provide a solid solution,” Steve Larson, president of the Australian company’s Woodside Natural Gas Inc. unit, said in a separate statement.

The information provided by Woodside will now be passed to an independent environmental review company that will carry out an environmental assessment of the project, said Michael Hinrichs, a spokesman for Woodside Natural Gas in California.

A hearing will enable the public to make sure various subjects are covered in the review, he said. The U.S. Coast Guard now has about 330 days to decide on the application, though that may be interrupted should Woodside be required to provide further information, Hinrichs said.

Woodside can’t yet estimate how much the project may cost, he said.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at [email protected]

Last Updated: September 4, 2007 22:01 EDT

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