Market elusive for US West Coast LNG imports

By Edward McAllister

NEW YORK (Reuters) - Woodside Petroleum's (WPL.AX) decision to scrap a liquefied natural gas import terminal in California last month bodes ill for developers on the U.S. West Coast already struggling to bring projects to fruition.

Australian-based Woodside said poor market conditions prompted it to shelve its Oceanway project offshore Los Angeles, clouding the fortunes of the remaining West Coast proposals.

Problems in attracting supply, as well as a questionable need for more imports in the near term, have made the West Coast less friendly territory than the East and Gulf coasts for building import terminals.

In 2007, California authorities vetoed BHP Billiton's (BHP.AX) $800 million (553.27 million pounds) Cabrillo Port facility over environmental concerns.

Analysts say scant demand and low U.S. natural gas prices threaten the other four plans to import super-cooled gas to the region in the short term.

"Our view is that it is unlikely in the short and medium term that an LNG terminal on the West Coast (of the) U.S. will be built," given the healthy supply scenario there, said Murray Douglas, a global LNG analyst at Wood Mackenzie.

Northern Star Natural Gas' Bradwood Landing project in Oregon has won regulatory approval and three other terminals are proposed. Together they have a potential import capacity of nearly 5 billion cubic feet of natural gas per day.

But convincing federal and state authorities of the need for LNG is a major hurdle.