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Plans for Long Beach gas terminal shelved

June 07, 2008|From Times Staff and Wire Reports

Mitsubishi Corp. has given up plans to build an $800-million liquefied natural gas terminal in Long Beach after significant local opposition and the suspension of an environmental review.

The venture proposing the terminal, SES Terminal, submitted a notice of withdrawal, according to a filing Friday with the Federal Energy Regulatory Commission. The Port of Long Beach in January 2007 suspended an environmental review of the site, and the state Supreme Court upheld the decision in March.

"Under these circumstances, SES has determined it has no alternative but to terminate the project," Sound Energy Solutions, a subsidiary of Tokyo-based Mitsubishi, said in the filing. ConocoPhillips was a partner in the proposed project.

The terminal would have provided California, which gets natural gas from in-state suppliers and via pipeline from Texas and other places, with an alternative source of the fuel. High natural gas prices were in part responsible for the California power crisis in late 2000 and early 2001.

But the Long Beach project was extremely controversial. Opponents raised safety concerns, including the potential for a natural gas explosion that could kill hundreds of people and destroy much of the Long Beach waterfront.

Another problem facing proposed liquefied gas facilities is the sharp decrease in available supplies for the U.S. market. Higher prices for liquefied natural gas, or LNG, paid by Japan have prompted shippers to send more loads there, leaving less for the U.S. to import. LNG use in the U.S. in May was the lowest in five years, according to Pan EurAsian Enterprises.

San Diego-based Sempra Energy has an LNG terminal, Energia Costa Azul, on Mexico's Baja Peninsula that last month received its first two deliveries.

There are eight LNG terminals operating in the U.S. and an additional 12 under consideration by FERC, including three in Oregon and two off the coast of California.

LNG is gas that is super-cooled and compressed into liquid form for transport by ship to markets not connected by pipelines. The fuel is received at import terminals and converted back into a gas so it can be piped to users.

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