Mitsubishi drops California LNG plan, eyes Alaska

Eric Watkins
Senior Correspondent

LOS ANGELES, Aug. 8 -- Mitsubishi Corp. subsidiary Sound Energy Solutions, faced with challenges in Southern California but eyeing new opportunities in Alaska, has abandoned plans to construct a regasification terminal at Long Beach, Calif.

The trading house, partnered by ConocoPhillips in the project, had planned to invest about ¥50 billion to build moorages for LNG carriers, regasification facilities, and storage tanks at the Port of Long Beach.

But the project met with opposition from local residents fearful that the terminal could be a terrorist target or suffer an explosion. As a result of intense lobbying, the California state government decided to freeze approval screening for the terminal.
Mitsubishi filed a lawsuit in response, but lost the case in April and chose not to appeal. It then decided to drop its plans after withdrawing its application with the federal government in early June.

In its filing with the US Federal Energy Regulatory Commission, Sound Energy Solutions said it was forced to withdraw its proposal after Long Beach harbor commissioners ended an environmental review on the project.

Since then, Mitsubishi signed an agreement with the Alaska Gasline Port Authority (AGPA) to develop an LNG project in southern Alaska aimed at shipping Alaska North Slope gas to the Lower 48.

Under terms of the agreement announced June 20, Mitsubishi will work with the port authority in developing a spur pipeline to a gas liquefaction plant and export facility at Valdez, following the existing trans-Alaska oil pipeline from a point east of Fairbanks near Delta Junction (OGJ, Feb. 25, 2008, p. 32).

According to reports, Mitsubishi's interest lies in the liquefaction, transport, and marketing of LNG to Asia and possibly the US West Coast in conjunction with Sempra LNG, a subsidiary of Sempra Energy, San Diego.

In July, AGPA announced that Sempra LNG, which has regasification facilities just below the US-Mexico border, also had joined the Alaska project. AGPA noted in particular that Sempra LNG's Energia Costa Azul facility "is the only LNG receipt terminal on the West Coast of North America."

Contact Eric Watkins at hippalus@yahoo.com.

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