Regional LNG: Cherry Point plans to build LNG receving terminal in West Coast US

New York-based Cherry Point Energy LLC would file an application to build a liquefied natural gas (LNG) in Washington state with U.S. energy regulators by the end of the year, Reuters reported Tuesday

"We're looking at one of possibly four locations to build the terminal in Washington ... and we hope to have a formal application in by September or December," said Spiro Vassilopoulos, chief executive of Cherry Point Energy LLC.

The company's proposal is one of a handful planned for the U.S. West Coast, which has no terminals to receive LNG, gas super-cooled into liquid form and shipped on tankers.

No cost estimate has yet been made for the Cherry Point onshore project, scheduled to start commercial service around 2008, Vassilopoulos said.

There are about 35 LNG terminals proposed in North America aimed at helping close a growing gap between domestic gas supplies and increased gas use from power plants though analysts say only about 10 of these will be built over the next decade.

Vassilopoulos said Cherry Point's terminal was likely to make between 450 to 500 million cubic feet per day (mmcfd) available to markets which could include Washington, Oregon, southern British Columbia, and northern California.

He estimated the projected output represented about 15 percent of current daily gas demand in the Pacific Northwest.

Vassilopoulos said regional utilities, like Cascade Natural Gas and Puget Sound Energy , were likely to be the primary customers for the LNG which could come from export counties Russia, Indonesia, and Malaysia.

He also said the Cherry Point terminal was not likely to be allowed to receive LNG from Alaska, the closest potential LNG supplier, because of the so-called Jones Act.

The long-standing U.S. law prohibits foreign-flagged vessels - nearly all of the global LNG tanker market - from transporting U.S.-produced goods between U.S. ports.

LNG from Alaska, home to one existing LNG terminal and a second planned facility, could be sent to Washington if an LNG tanker was built by a U.S. company, registered in the United States, and staffed by a U.S. crew, Vassilopoulos said.

Many LNG tankers are built in Asia, the world's biggest LNG market.(*)