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California and the West

Offshore Natural Gas Site Sought

Tiny Tidelands Oil & Gas wants to import and `regasify' liquefied fuel near Long Beach.

April 06, 2006|Elizabeth Douglass | Times Staff Writer

Tidelands Oil & Gas Corp. said it was weighing a liquefied natural gas project off the coast of Long Beach, making it the fifth company to propose such a facility in Southern California.

The small San Antonio-based company, which is pursuing a smattering of natural gas projects, announced its intentions Tuesday but declined to offer details except to say that the sites under consideration for building a terminal are as many as 12 miles away from the shores of Long Beach.

"We're very far along," said Michael Ward, president of Tidelands and Esperanza Energy, a California subsidiary created for the enterprise. "We're in the 'fatal flaw' analysis of our project."

Ward, in an interview Wednesday, said the company would provide more information soon.

California is more dependent on natural gas than many states because nearly half of its electricity comes from gas-fired plants. The state consumes an average of 6 billion cubic feet of natural gas each day -- and imports 87% of it from elsewhere in the United States, according to the California Energy Commission.

As the state's energy needs grow, so will demand for natural gas imports. State energy officials believe that will require liquefied natural gas, which is liquefied by chilling it to minus 260 degrees Fahrenheit, compressing it so it can be carried long distances by tanker ships. At the unloading point, a "regasification" facility converts the liquid back into a gas, which is carried by pipeline to power plants and other users.

Last month, Woodside Energy of Australia unveiled plans to build a receiving terminal in the ocean about 22 miles south of Malibu. That design calls for regasification to take place onboard specially designed ships. The gas would then be piped to shore, eliminating the need for a regasification structure.

BHP Billiton of Australia, Crystal Energy and a partnership between ConocoPhillips and Mitsubishi Corp. also have announced proposals for liquefied natural gas projects in Southern California. Excelerate Energy, based in the Woodlands, Texas, is considering building a gas project off California but hasn't said where.

Shell Oil Co., Chevron Corp. and Sempra Energy are involved in liquefied gas projects along the Western coast of Baja California.

All of the projects have been dogged by community concerns about safety and pollution.

"What you're seeing is competition in the approach, design and structure ... to satisfy the environmental and safety issues associated with the various designs," California Energy Commission Chairman Joseph Desmond said. "In the end, it will be one, maybe two" plants.

Paul Flemming of Energy Security Analysis Inc., a Wakefield, Mass., research company, said the state "really needs additional energy resources, so having LNG coming right into California makes a lot of sense.... In California, the permitting issues are the big hurdles."

Tidelands is tiny, especially when compared with the conglomerates and oil giants in the field. The company reported a $3-million loss for the first half of 2005 on $850,000 in revenue from natural gas sales and pipeline fees, according to data on file at the Securities and Exchange Commission. Tidelands had $3.5 million in cash June 30 but raised $6.6 million this year in a private placement.

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