Firm Says Process for Shipping Gas Is Safer

A major Australian energy firm plans to ship liquefied natural gas to Southern California with a new process that it says is safer and more environmentally sound than the use of the terminals that three other companies want to construct in the state.

A Woodside Energy Ltd. subsidiary is set to announce its plans Wednesday at a Sacramento news conference but will not disclose where off the coast it hopes to build its system. The project could supply 10% to 15%of California’s natural gas supply, said Jane Cutler, president of the Woodside subsidiary that is leading the effort.

The firm’s entry into the California market could shake up the current liquified natural gas debate over the safest way to import the fuel.

Three terminals have been proposed, one at the port in Long Beach and two off the coast of Ventura County. But unlike those projects, Woodside officials say, their plan would not require building a terminal to convert the liquid back to a gas. Instead, the company would construct special tankers that could do that and would deliver the natural gas directly into an underwater pipeline 15 miles off shore.

A similar but smaller liquified natural gas project began operating in the Gulf of Mexico last year.

The four proposals must be thoroughly vetted under state and federal environmental laws. The final environmental review for the Long Beach project is expected by early summer. A new version of the review of one Ventura County project, proposed by Australian-based BHP Billiton, is expected in March.

Liquified natural gas is gas has been chilled to minus 260 degrees Fahrenheit, a process that condenses the gas so much that it can be shipped by tanker. When it is unloaded, it is warmed in a process called regasification and shipped inland by pipeline for use in homes, businesses and other facilities.

The liquefied gas is highly flammable.

In Long Beach, a proposed Mitsubishi-ConocoPhillips onshore terminal inside the city’s port has drawn concern from state officials and some residents that a terrorist attack or major accident could kill or injure hundreds of people. And the two proposed terminals off the Ventura County coast have been criticized because environmentalists worry they could produce air pollution and interfere with shipping lanes.

Proponents of the plants say they can be built so they are safe and will provide California with a needed supply of natural gas, which has become increasingly expensive in recent years as domestic sources have dwindled.

Only five liquified natural gas import facilities are operating nationwide today, all on the East and Gulf coasts. But energy companies have submitted dozens of applications for new terminals, including some on the West Coast.

Some state officials think that California needs only one or two liquified natural gas import projects, intensifying the competition.

Michael R. Peevey, president of the California Public Utilities Commission, said Monday: “Over the next 10 to 15 years, we could probably use two.”

Peevey said he met with Woodside representatives about 10 days ago and was impressed with their plans. “They are a very large, reputable company that operates [gas] fields on behalf of itself and many others,” he said.

He added that offshore facilities -- the kind proposed by Woodside, BHP Billiton and a third company, Crystal Energy -- would seem safer than placing an onshore facility in a populated area. “If you’re going to site an LNG terminal, it seems to me it’s vastly preferable to have them offshore rather than sited in a very busy harbor,” Peevey said.

Officials with Mitsubishi-ConocoPhillips said their onshore terminal would include many safeguards to prevent accidents.

Woodside Energy is Australia’s largest independent oil and gas company. It exports liquified natural gas, largely to Japan and Korea. The company, which established its U.S. subsidiary, Woodside Natural Gas Inc., last year, said the Southern California project is its central West Coast focus.

The California coast provides some special challenges for LNG importers, Cutler said. “There is an extra sensitivity about the environment,” she said, adding that Woodside is committed to sound environmental practices.

The firm already has met with environmentalists involved in the liquified natural gas debate, including veteran Sacramento environmental lobbyist V. John White.

“The questions they’re asking, and their approach, and the fact they own their gas, makes them a serious player,” he said.