Meetings to Begin for LNG Project 22 Miles Off Malibu

• BHP Shuts Down California Operation as Woodside Moves into the Spotlight

BY HANS LAETZ

Just as one Australian energy company sailed out of California waters this week, a second firm dropped anchor in Santa Monica Bay.

Woodside Natural Gas called a news conference Monday to host a key federal regulatory official, who praised the company for promising to hire American workers on the very same project that he will have to make a key decision on in a little more than a year.

U.S. Maritime Administrator Sean Connaughton said the long approval process for Woodside’s liquefied natural gas project 22 miles south of Malibu’s Point Dume will start in September, with environmental hearings in Los Angeles.

Woodside brought the senior regulatory official to its Santa Monica offices so he could endorse a written promise made by the company this week to use American-flagged ships staffed by U.S. unionized crews in California waters. Although not required, such crewing arrangements are standard for the various LNG plants planned along the U.S. coasts.

Monday’s ceremony in Santa Monica came the same week that BHP Billiton offered its three local employees jobs at its Houston domestic headquarters. “I can confirm we are closing the Oxnard office,” company spokesperson Patrick Cassidy said.

The firm might give up its quest to market natural gas in California due to world market conditions that have changed drastically since planning began on the Malibu LNG proposal nearly five years ago.

But BHP Billiton’s sometime partner in worldwide oil projects, Woodside, is preparing to begin the lengthy regulatory review and permitting process for its proposed LNG terminal midway between Point Dume and Santa Catalina Island.

Marketed as OceanWay, the Woodside proposal would be different than BHP’s ill-fated Cabrillo Port project, most notably in that the Woodside proposal would use two LNG ships that would loop out to sea, transfer cargo from other LNG carriers, and then anchor in Santa Monica Bay to heat up natural gas onboard the carriers and pipe it ashore.

The proposal calls for two buoys to be anchored 22 miles off the coast, each would remain 100 feet underwater until one of the two transfer ships anchored above it to unload gas. Underseas pipes would carry the gas ashore near Playa del Rey, and the imported gas would be sold to industrial and residential users via the existing Southern California Gas Company pipe system.

Although one ship would be at one of OceanWay’s twin buoys at nearly all times, a permanent factory ship would not be used. Woodside indicates it could eliminate most of the smog that would have been created by the BHP scheme, and OceanWay would be further off Malibu.

OceanWay will also be an “open-access” terminal, meaning it could accept LNG from BHP or any other company. But that may turn into a regulatory issue, because coastal activists have said they will want environmental safeguards at every step of the worldwide extraction and transportation process.

In a statement on U.S. Department of Transportation letterhead, and distributed by the LNG company, the federal Maritime Administrator said he is “pleased to accept, as part of its LNG Deepwater Port license application, a commitment by Woodside Natural Gas to utilize U.S. flag vessels in the company’s proposed ‘OceanWay’ LNG import facility off the coast of California.”

Connaughton, who is in charge of approving or denying the Woodside federal application, said using “U.S. citizens aboard the LNG vessels serving our natural gas receiving facilities is clearly in the nation’s best interest. Placing the transportation of LNG under the control of U.S. mariners, who are subject to strenuous background checks, will add an additional layer of supply chain.”

Woodside’s president, Steve Larson, said the company “worked closely with the Maritime Administration on this issue. We are dedicated to the highest level of safety and security for our project, and U.S. flagging is consistent with that commitment.”

Although the ship crews matter appears noncontroversial, the environmental hearings that will start in September could be a repeat of a stormy four-year controversy that brought Malibu residents out by the hundreds to protest a proposed aircraft carrier-sized factory ship on the northwest horizon.

Last spring, the California State Lands Commission rejected the BHP proposal for several reasons, including the large overall amount of greenhouse gases that Cabrillo Port would have added to the planet’s atmosphere at all phases of the transportation of gas. But the Lands Commission has no say in the Woodside project, which will be decided in at the federal level by the same agency head who appeared at Woodside’s news conference.

The City of Los Angeles also will have a say in the matter, because the OceanWay pipelines will come ashore at, and then cross, city property, including Los Angeles International Airport. But the federal government is not ceding control of the permitting process to local government this time, as it did with Cabrillo Port.

BHP’s opponents, the Santa Barbara-based Environmental Defense Center and California Coastal Protection Network, said they would not be as involved in analyzing Woodside’s project near Malibu and Los Angeles as they were in the recent BHP controversy at Malibu and Oxnard.

“It’s out of our service area,” said EDC attorney Linda Krop.

“We’re going to be working with Los Angeles-area groups very closely in watching this,” said CCPN director Susan Jordan. But she noted that two additional LNG terminals, one off Oxnard and another at Seal Beach, are also about to enter the application process, meaning her group might be stretched thin.

“The BHP project set a very high and new standard,” Jordan said. “We are going to have to make sure that all agencies use the same set of standards on the other [applications], which is only fair and the right thing to do.”

The federal government said it would begin the Woodside application process with a “scoping hearing” at an unspecified date in September in Los Angeles. At that session, the public will be allowed to list potential areas of concern that must be examined as the proposal goes through an Environmental Impact Report.

The BHP EIR took four years to complete and was ultimately rejected by the state. Environmentalists and industry officials have noted that problems that emerged during Cabrillo Port’s unsuccessful EIR will likely come back and need to be addressed in subsequent projects.