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Tuesday, April 04, 2006 4:33 PM ET
New LNG project under evaluation for Southern California coast
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Last Updated: 1/23/2020

Esperanza Energy LLC, a wholly owned subsidiary of Texas-based Tidelands Oil & Gas Corp., announced April 4 that it is evaluating the potential for building an offshore LNG receiving terminal off the coast of Southern California. Although details of the size, site and cost of the project were not available, the company said it is looking at several sites up to 12 miles offshore from Long Beach, Calif.

"We're looking at a variety of options … but are not ready to discuss those yet — for two reasons," explained David Mull, former manager of the California Energy Commission's natural gas office and spokesman for the project. "One is that we're in the process right now of talking to a variety of potential partners that might join us in the project on various aspects of it … and also there are certain aspects about the project design and location that we have not finalized yet."

Esperanza plans to work with a number of key stakeholders — regulatory agencies, environmental groups and local communities — and seek their input. "We will use that feedback and guidance we get from them to make final decisions for both the project design and the location," Mull said.

In initiating the evaluation process, Esperanza has contracted with a number of specialists, including: ENTRIX Inc., an environmental consulting firm; Project Consulting Services, an engineering consulting firm; and Pillsbury Winthrop Shaw Pittman LLP, which will handle legal issues.

Although no details were given, Esperanza said it believes that the technology it is looking at can be built a little faster than some of the other projects that are currently further along in the permitting process. "We have learned enough from the other projects that have gone through the process, that together, we can go through everything a little quicker than the other projects have," Mull said.

"Esperanza will only pursue this project if it can be sited, designed and operated in the safest, most environmentally responsible and economically viable manner possible," Esperanza Energy President Michael Ward said in a statement. "Our goal is not to just meet the environmental, public health and safety requirements, but to exceed them."

Given that the Esperanza project is slated for offshore development, the permitting process would include filing before both the U.S. Coast Guard for the terminal and the State Lands Commission for the onshore pipeline. The regulatory clock for the Coast Guard is generally one year, with the potential for time-outs that can prolong the process.

"In the past, the State Lands Commission and the U.S. Coast Guard together have done joint environmental review projects and project application reviews, so it would be a similar time frame for both of the agencies to go through," explained Mull.

Esperanza expects to pipe gas from the terminal directly into Sempra Energy's Southern California Gas Co. network.

"The size of the gas market in the L.A. area is large enough that all the gas brought in from an LNG terminal, or actually two or three LNG import terminals, would all be consumed in the L.A. area," Mull said. "We would not envision any of the gas physically escaping the L.A. area."

If the developers decided to proceed, the Esperanza project would be the 16th LNG receiving terminal planned between Mexico and Canada. It could potentially compete with Sempra Energy's Energia Costa Azul project in Mexico, BHP Billiton's Cabrillo Port, Woodside's OceanWay and Mitsubishi LNG/ConocoPhillips Co.'s Sound Energy Solutions project.


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