Woodside Scraps Plans for OceanWay LNG Project

• Subsidiary of Australia’s Second Largest Energy Producer to Close Local Office on Feb. 28

BY ANNE SOBLE

Woodside Natural Gas, a subsidiary of Woodside, the second largest energy producer in Australia, announced last week that it is terminating work on its proposed liquefied natural gas deepwater port project off the Southern California coast.
Although the company’s announcement said the project, named OceanWay, was suspended, most energy observers view it as dead. A Woodside spokesperson told the Malibu Surfside News that the company’s local offices will be shuttered at the end of February.
The termination statement followed Woodside’s decision at the end of last year to downsize the project, citing community and regulatory concerns, and weaker customer demand.
Woodside Natural Gas president Steve Larson told The News that the current energy market conditions are not right for the proposed development.
Larson said, “We have no complaint with the regulatory process. We embraced it and were committed to insuring our project was fully in the public interest. Indeed, we designed it with California’s environmental values in mind.”
Larson said, “We still believe in California and in the L.A. region in particular. Natural gas is going to be part of the clean air solution, and we expect to play a role in helping to bring forward additional, lower cost supply.”
As soon as Woodside’s plans were announced, project critics, including the small Westside group, No Way on OceanWay, whose Web site is maintained by the Santa Monica Baykeeper, danced on its grave.
But Woodside officials said there was as much as support as opposition at this early stage of the OceanWay permitting process, and the international economy is what sounded the project’s death knell.
Laura Doll, WNG vice president of governmental and public affairs, told The News, “Contrary to what others may claim, our decision to suspend the project for the time being is based solely on dramatic changes in the global market, not anything else. Anyone who is paying attention to events in the world right now understands that severe market changes are forcing many businesses to make difficult but necessary decisions to delay or defer major investment projects.”
Doll added, “We are proud of the level of support our project had already engendered and were confident that the ultimate review would confirm that OceanWay offered a truly safe and clean alternative source of energy for Southern California.”
WNG had steadfastly expressed confidence that OceanWay would have received the necessary approvals. Company officials did not view seismic safety issues raised by the U.S. Geological Services in a report last November as insurmountable concerns.
The OceanWay project design includes an offshore buoy system to receive liquefied natural gas by tanker that had to be submitted to the U.S. Coast Guard for a deepwater port license and to the City of Los Angeles for a pipeline franchise.
LNG is natural gas chilled to liquid form for transportation by tanker to destinations not directly connected by pipeline.
The project was undergoing a comprehensive environmental and safety review process that would have resulted in a number of public hearings.
When first proposed, market conditions were interpreted to warrant a SoCal LNG facility providing as much as 15 percent of California’s annual gas. However, recent conditions indicate a glut of natural gas supplies in this county and zero-to-little need for import into the state.
Estimates on how much the OceanWay effort cost the parent company that has a full plate of development projects in Australia are not yet available, but the firm is reported to have spent large sums on lobbying for the project.
Still, the Australian Woodside, one-third owned by Royal Dutch Shell, said it wouldn’t rule out a possible resurrection of the project if the market changes.
Australia’s largest energy behemoth, BHP Billiton, dropped its Cabrillo Port proposal off the Malibu coast in 2007 after well-organized-and-funded opposition from area residents and environmental groups.