TRENTON - Energy giant BP P.L.C. has suspended plans to build a $1 billion liquefied natural gas terminal along the Delaware River in southern New Jersey.
"We've been looking at the global market conditions surrounding LNG, and the timing for a terminal just isn't right. So we've put it on hold for at least two years," BP spokesman Tom Mueller said yesterday.
BP's project had been in doubt even before low U.S. prices for LNG made the project financially unfeasible. Last spring, the U.S. Supreme Court ruled against New Jersey, which had backed the BP project, in a jurisdictional dispute with neighboring Delaware, which opposed the BP plan.
BP's plans for the plant, to be called Crown Landing, called for a 2,200-foot pier to be built off Logan Township. The plant was designed to handle enough liquefied natural gas to serve five million homes and meet rising demand.
"We will hold on to the property," Mueller said. "We believe it will be needed at some point in the future, and if it makes sense down the road, we may reactivate it."
He acknowledged the projected cost of the plant had risen, from about $600 million to $1 billion, but he emphasized BP would have borne the higher cost if the prevailing U.S. price for LNG had been higher. Prices BP can fetch for LNG in Asia recently have been about double the U.S. figure.
"If the price was right for the gas, it would have paid for it," Mueller said. "The cost [of the plant] was one of the factors. The overriding factor was the Asian price."
Delaware had rejected the project request, saying unloading natural gas at the site would have violated a Delaware law that limits industrial activity along the coast. The state owns part of the riverbed where the pier would have been built.
New Jersey had approved the project, with supporters saying it would create jobs and protect the region against price increases. New Jersey argued that each state controlled piers on its side of the river.
The high court ruled that Delaware had veto power over developments that extended into its borders on the river.
At the time of the ruling, BP said it would not give up. "This is an important energy project for the nation and for the region. We will continue to explore other options and anticipate that the project will move forward and eventually be built here on the Delaware River," Mueller said at the time.
Since the ruling, Mueller said yesterday, BP had been pursuing a new plan to develop the facility entirely on New Jersey lands, including negotiating with local property owners.
"The global economics of LNG have caught up with us," he said.
BP, based in London, has its U.S. headquarters in Houston and is the largest producer of oil and natural gas in the United States.