Bechtel to Suspends Natural Gas Project on Mare Island

AP 31jan02

VALLEJO, CA -- A proposal for a $1.5 billion complex on Mare Island that includes a liquefied natural gas plant has been put on hold.

San Francisco-based Bechtel Enterprise Holdings decided to suspend negotiations with Vallejo over the plant, citing a flat economy and uncertain energy sector. Bechtel's former partner, Shell Gas & Power, pulled out of the proposal two weeks ago and Bechtel now wants to do a feasibility study of the project.

On Tuesday, the Vallejo city manager is expected to recommend that the City Council stop talks with the company, and the council is expected to vote on whether to allow the feasibility study.

Bechtel has also said that it believes the city is having a hard time fulfilling its end of the deal, but city officials say they have kept their promise.

City spokesman Mark Mazzaferro said Vallejo's only promise was to look at the proposal for the 600 megawatt to 900 megawatt plant, and that the city didn't commit to anything else.

Residents have complained about the proposed project for months, saying it poses too many health and safety risks.

If the project doesn't go through, the city would look at other plans for the southern end of Mare Island, which housed a naval shipyard that closed in 1996. The original plan included preserving open space.

Bechtel pulls out of gas plant project Yields to mounting opposition in Vallejo

GEORGE RAINES / SF Chronicle 31jan03

The developer of a proposed liquefied natural gas terminal and gas- fired power plant on Mare Island suspended planning Thursday, bowing to increasing opposition and the possibility that the Vallejo City Council might sever ties with the project.

Doug Brown, vice president for power development at Bechtel Enterprises Holdings, said that while Vallejo officials had been encouraging at first, "it has proven particularly difficult . . . for the city to sustain its original commitment."

Bechtel has been considering building the $1.5 billion natural gas terminal and power plant for more than a year, but its partner, Shell Gas and Power, pulled out Jan. 16, concluding that the old naval shipyard on Mare Island was "not the best site for Shell."

Bechtel said then that it would press on with plans and look for a new partner. However, support from city administrators has slipped away, and opponents in Vallejo and neighboring cities gathered 11,391 signatures on petitions that they gave to the City Council on Tuesday.

Opponents feared that the project could pose a risk of explosion, fire or environmental contamination, and they persuaded Vallejo officials to order up a health and safety study by a citizens committee. That study raised serious concerns about building the terminal in the middle of a densely populated area.

Still, the City Council had scheduled a vote for next Tuesday on whether to give Bechtel the go-ahead for a feasibility study for the site on the southern tip of Mare Island. On Thursday, opponents said it appeared that the council was prepared to vote against Bechtel.

Despite the company's decision, the Bechtel item remains on the council agenda. Opponents of the liquefied natural gas terminal and power plant hope the council will take the opportunity to kill the project.

"That is the day we really will feel we have accomplished something, and the council votes to support the original reuse plan for Mare Island," said Rod Boschee of Vallejo, one of the organizers of the campaign against the terminal. The original reuse plan called for much lighter use of the old shipyard, the first U.S. Navy facility on the West Coast. The military closed it in 1996.

San Francisco-based Bechtel said business conditions contributed to its decision. Brown cited the "uncertainty in the energy sector and general economy," noting that those conditions "are being further complicated by unfolding international events."

Bechtel said it would close an office it has kept in Vallejo, where a representative has been fielding questions from residents.

Bechtel had hoped to open the liquefied natural gas terminal and power plant in 2007 or 2008. The plan called for tankers bearing liquefied natural gas -- chilled to minus 260 degrees Fahrenheit -- to pass under the Golden Gate and Richmond-San Rafael bridges and proceed up San Pablo Bay to unload at Mare Island.

Fifty people spoke against the proposed terminal at the council's meeting Tuesday night, and only one in favor.

"I think Bechtel definitely had to bow to community pressure," said Stephanie Gomes, a member of Vallejo Citizens for Planned Renewal, which opposed the project. "The real reason they are leaving is that the community did not want this. This is not the right fit for Vallejo."