During the recent Asia-Pacific Partnership on Clean Development and Climate conference in Sydney President Bush’s top environmental adviser James Connaughton strongly argued for shipping LNG from Australia to California this month.
The White House was putting its weight behind the push for LNG into California and was determined to overcome political inertia and address environmentalist objections, he said.
"We have a dedicated commitment to opening up the opportunity for a lot more LNG to America," Connaughton said.
"Natural gas is one of the cleaner of the fossil energy sources currently and so natural gas is an important and vital part of energy security needs. "Having LNG as an opportunity in the US enhances our energy security because it promotes a diversity of potential future supply so we're not reliant on one particular area."
But two days after Connaughton’s comment Australian resources minister Ian Macfarlane warned that the world energy market was moving rapidly and if LNG contracts were not locked in soon, California could miss out.
Then a week later, Australian LNG giant Woodside Petroleum announced its plans to bring Australian gas to California via ships capable of onboard regasification.
Now BHP Billiton has joined the public relations campaign with its subsidiary BHP Billiton LNG International announcing the 18 letters of intent on Wednesday.
The company said these prospective customers represented a wide range of natural gas purchasers including utilities, electricity generators, co-generators, manufacturers, and trade groups, who collectively consumed nearly 3 trillion cubic feet of natural gas annually.
The non-binding letters expressed a desire by large consumers of natural gas to negotiate or discuss the purchase of gas from Cabrillo Port, according to BHP Billiton LNG International.
Many of the letters are confidential, but one of the signatories is the Los Angeles Department of Water and Power.
"This commitment clearly demonstrates the need for an alternative source of natural gas for West Coast markets," BHP Billiton LNG International president Renee Klimczak said.
"Natural gas is a preferred fuel source because it burns cleaner and more efficiently than other fossil fuels. With the natural gas brought by Cabrillo Port, California will effectively double the supply of gas delivered first into the state's natural gas distribution systems for local consumption and local supply."
Cabrillo Port would be a floating storage and re-gasification unit 22km off the southern Californian coast. Its location is outside existing shipping lanes and marine mammal migratory patterns, according to BHP Billiton.
LNG will be stored onboard in traditional LNG storage tanks and will be converted to natural gas at sea through a heat exchange system, and then transported by an undersea natural gas pipeline into the existing pipeline system of the local gas utility.
The project is currently under review, and an independent firm contracted jointly by federal and state government authorities is preparing environmental impact studies.
BHP Billiton said it expected the reports to be issued in the next few weeks, with public hearings later this year and a decision on the port license and land lease by these agencies during mid 2006.
“Cabrillo Port could become operational within four to five years after these initial permits are received,” the company said.
There are five proposals to bring LNG to North America’s west coast. Only one has been approved and that is in Mexico. That project co-owned by Sempra and Shell will be taking gas from Shell’s share of Gorgon production.
The other four proposals are for California. The Mitsubishi-ConocoPhillips plan to build a terminal onshore at Long Beach seems very likely to be rejected as California’s strong anti-LNG lobby would not tolerate an onshore facility.
The other three are all offshore. The BHP Billiton and Woodside proposals have been outlined in this article, and Houston-based Crystal Energy is planning to develop an abandoned oil-drilling platform into a terminal.
