Jeff Montgomery, News Journal, DelawareOnline.com, Jan 6, 2012
N.J. terminal seen as unprofitable
A New York energy company has quietly surrendered its controversial authorization for a liquefied natural gas import terminal along the Delaware River in New Jersey, opposite Claymont, saying low domestic gas prices and rising global demands make the venture's profitability "unlikely."
It was a low-key ending for Crown Landing LLC, whose landmark proposal dating to 2002 originally launched by energy giant BP sparked a series of environmental and interstate jurisdictional disputes, including one that reached all the way to the U.S. Supreme Court.
In settling a disagreement between Delaware and New Jersey over Crown Landing's right to put a 2,000-foot-long delivery pier into the Delaware River, the nation's highest court in 2008 clarified Delaware's right to control or veto construction across the full width of the Delaware River bottom north of Artificial Island. The boundary between the two states splits the waterway and Delaware Bay south of that point.
In a letter to the Federal Energy Regulatory Commission, made public Friday, Crown Landing said "significant" increases in shale gas production in North America had lowered domestic prices. High international prices meanwhile "make it unlikely the company can secure supplies of LNG on economic terms attractive enough to ensure sustained profitability of the project" as an import-only terminal.
Gordon Shearer, president of Crown Landing LLC, said domestic natural gas now sells for about $3 per million cubic feet, while prices paid for imports from international markets can range as high as $10 to $15 for the same volume.
"A huge price gap has opened up," Shearer said. "I don't think we've given up completely, but it's not reasonable, from our perspective, to keep the docket open until we see a clear way forward. Frankly, given the state of the U.S. natural gas market, the way forward is not clear at all."
Crown Landing is now owned by Hess LNG, which bought BP's project and federal authorization in 2009. Both companies sought extensions of a tentative FERC license approval for the plant, which would have received traffic to two to three big LNG tankers weekly. BP officials originally said the plant would send out enough gas by pipeline each day to meet the energy needs of 5 million homes.
Businesses and some New Jersey community groups supported the project and the jobs it would bring. But environmental groups and some Delaware communities opposed the project, arguing that tankers could become a target for terrorists. Studies found that a catastrophic spill from a large tanker could trigger a fire that would send blistering heat up to a mile away.
Contact Jeff Montgomery at 678-4277 or firstname.lastname@example.org.