Woodside runs out of gas off Californian coast  

The SMH reports that Woodside are giving up on their plans to build an LNG import terminal in California - Woodside runs out of gas off Californian coast.

THE dream of exporting Australian liquefied natural gas to a dedicated import station in California appears to have died after more than five years of effort.

Woodside Petroleum yesterday abandoned its OceanWay project, citing an increase in domestic US gas production, which limited demand for imported gas, and poor economic conditions.

It marks the second time Woodside has given up on a California LNG import project, following the collapse of an earlier joint venture called Clearwater Port.

In 2007, BHP Billiton cancelled its $1.2 billion Cabrillo Port proposal after significant opposition from celebrities and environmental activists in Malibu. It had started work on the project in August 2003.

The idea of exporting Australian LNG to California gained notoriety in 2004, when the then prime minister, John Howard, and BHP's chairman, Don Argus, flew to California to meet the state's Governor, Arnold Schwarzenegger, in support of the Cabrillo Port plan.

Woodside had hoped its OceanWay project would be more palatable to environmentalists than Cabrillo Port, since it involved regassifying liquefied gas on dedicated ships in an industrial area near the Los Angeles International Airport rather than building a huge LNG regassification terminal visible from shore.

A US Geological Service report released in December warned OceanWay was in a fault zone and there was a 16 per cent to 48 per cent probability a large earthquake would occur in the pipeline's path in the next 30 years.

A Woodside spokesman, Roger Martin, said the report was a "bit confused". He attributed Woodside's decision to abandon the project to general market conditions.

Mr Martin would not disclose how much the company had spent on the project or whether those expenses would be written-off in Woodside's full-year accounts, which will be released next month.

The chief executive of the energy consultancy EnergyQuest, Graeme Bethune, said previous concerns over a looming gas supply shortage in California had been allayed due to an increase in shale gas and coal-seam gas production in the US.

"US gas prices have been falling also because of the downturn," he said, noting an LNG terminal operator in Texas was attempting to reroute planned gas imports to export markets.