Phillips plans West Coast LNG terminal

Posted: Friday, March 09, 2001

ANCHORAGE (AP) -- Phillips Petroleum Co. says it has teamed up with a major natural gas firm to build the first liquified natural gas terminal on the West Coast, to be used for gas imported from Australia.

The terminal, which would be half-owned by El Paso Corp., could help an LNG project in Alaska, according to Phillips.

''Development of this terminal on the West Coast of North America could facilitate an Alaska LNG project,'' said Kristi DesJarlais, a spokeswoman at Phillips headquarters in Bartlesville, Okla.

But she said the company still considers a pipeline from the North Slope through Canada was the ''best opportunity to maximize the value of Alaska gas.''

The company hasn't decided on a pipeline route, she said, but ''Phillips is committed to developing an economic Alaska gas project.''

If Phillips and the other gas owners choose to develop a pipeline to Fairbanks and then along the Alaska Highway, a spur line could be built to Valdez or another port in Alaska. The other alternative being considered, across the Beaufort Sea and then south in the MacKenzie River valley of Canada, wouldn't offer that possibility.

The LNG terminal ''tells us about the Lower 48 market,'' said Dawn Patience, a Phillips spokesman in Alaska. ''It's pretty consistent with Phillips' belief that the Lower 48 marketplace presents the best opportunity to sell Alaska North Slope gas.

The deal between Phillips and El Paso calls for the two companies to jointly build a receiving terminal to serve the California and Baja California markets, and for Phillips to deliver 4.8 million tons of liquefied natural gas annually. That would provide about 680 million cubic feet of gas a day, starting in 2005. El Paso would market the gas.

No terminal site has been announced, but it could be in Mexico.

''The companies are working with Mexican and U.S. authorities to establish a site of the new terminal and acquire regulatory permits,'' Phillips said in a statement. There are currently no LNG terminals on the West Coast, at least in the Lower 48, DesJarlais said.

The companies would also jointly own the tanker fleet that would bring the gas from Australia, she said.

The gas plant near Darwin, Australia, would be owned by Phillips and two partners, Royal Dutch Shell and Woodside Petroleum Ltd., of Australia, which is operator of the Greater Sunrise fields in the Timor Sea. It would use the same technology as Phillips' pioneer plant in Nikiski, which has been operating for more than 30 years to liquefy Cook Inlet gas.

Phillips has a 30 percent share of the Timor Sea field, which has estimated gas reserves of 9 trillion cubic feet. The field is expected to begin producing as early as mid-2006.

To start deliveries in 2005, Phillips would ship gas initially from its Bayu-Undan project, also in the Timor Sea. That field is scheduled to start production early in 2004.

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