Plans for LNG Terminal at Point Conception Dropped

Plans to build a $1.6-billion liquefied natural gas terminal at Point Conception--one of California’s hottest environmental issues of the last 10 years--have been quietly dropped by backers, the state Public Utilities Commission said Monday.

In a Feb. 4 letter to the PUC that surfaced on Monday, Western LNG Terminal Assn. indicated that the growing availability of natural gas from other sources, combined with reduced market demand, had prompted the action.

“For all intents and purposes, this project is dead,” PUC staff attorney Alvin Pak said in an interview. Keith McKinney, who headed the project, said the plan could be revived, but added: “It probably will be early in the next century before it would be feasible to put it together.”

Western LNG was formed by Southern California Gas Co. and Pacific Gas and Electric Co., which will continue to collect $144 million from rate payers through 1988 to recover development costs. For the average Southern California Gas Co. customer, that amounts to about 11 cents a month.

Gas Market Changes

William Cole, vice president of Pacific Lighting Corp., parent of Southern California Gas Co., said Monday that the natural gas market has changed abruptly since the LNG terminal planned at Little Cojo, 3 1/2 miles east of Point Conception, was first proposed in the early 1970s. At that time, he said, supplies were tightening.

During the controversy, the utilities warned that unless the plant was quickly approved, Indonesian supplies of scarce LNG would be sold to Japan instead.

But in ensuing years, Cole said, the rise in natural gas prices following deregulation in 1978 provided an incentive for domestic suppliers to produce more. At the same time, consumers began conserving more.

The project caused widespread opposition from conservation groups, who cited the dangers of handling liquefied natural gas in an area with wind and wave hazards as well as earthquake faults.

Would Have Piped LNG

The plan called for the unloading of 127 ocean-going tankers annually from Indonesia and Alaska at a marine terminal. The LNG would then be piped to a regasification plant and then shipped by pipeline into the regular PG&E; and Southern California Gas Co. distribution systems.

There was also widespread opposition from local officials. But a measure was pushed through the state Legislature that preempted local government land-use controls over siting such terminals.

Santa Barbara County Supervisor David Yeager called the decision “exciting good news.”