Calif. Rejects Bhp Billiton Offshore Lng Project

Calif. Rejects BHP Billiton Offshore LNG Project

PlanetArk US

21st May 2007

LOS ANGELES - California Gov. Arnold Schwarzenegger Friday rejected a liquefied natural gas port off the Southern California coast proposed by Anglo-Australian mining company BHP Billiton.

The rejection was expected. The US$800 million Cabrillo Port project has been on its last gasps since April 12, when the 12-member California Coastal Commission unanimously rejected it.

The governor is a supporter of LNG for California as a way to diversify energy sources.

But Schwarzenegger said an "LNG import facility must meet the strict environmental standards California demands to continue to improve our air quality, protect our coast, and preserve our marine environment. The Cabrillo Port LNG project, as designed, fails to meet that test."

There are no LNG ports on the US West Coast and none approved. But Sempra Energy is to open the Energia Costa Azul terminal in 2008 in Baja California in northern Mexico that will feed gas into California.

BHP is disappointed by Schwarzenegger's rejection, said Patrick Cassidy, spokesman for the company.

"For four years, BHP worked cooperatively with federal and state officials," Cassidy said. "We designed and redesigned our project along the way to meet the concerns that regulators and members of the public expressed at the hundreds of meetings we've held throughout the state since 2003.

"Right now, we need time to consider all of the comments made and as a result we are not in a position to comment on what further steps may be taken in relation to Cabrillo Port."

Also in April, the California State Lands Commission voted 2-1 against Cabrillo Port, which was to be located about 14 miles (23 km) off the coast of Ventura County.

BHP wanted to build a floating terminal larger than an aircraft carrier and standing taller than the Queen Mary. It would regasify natural gas before pumping it ashore to hook up with existing Southern California pipelines.

Natural gas becomes LNG by being chilled to minus 260 degrees Fahrenheit so it shrinks to 1/600th of its gaseous state. After being transported, it is then converted back to natural gas.

Natural gas is the largest source of fuel for California's power plants largely because it burns cleaner than coal, which fires about half of the power plants in the United States.

In California, about 55 percent of in-state power plants use natural gas. Once imported power made by coal, hydro and nuclear power are considered, about 38 percent of California's power is generated by natural gas plants.

Story by Bernie Woodall