NEW YORK (Reuters) - Exxon Mobil Corp hopes to build a $1 billion facility off the New Jersey coast to receive and regasify liquefied natural gas, which could ease concerns of a natural gas supply crunch in the US Northeast.

The largest US oil and gas company said yesterday it would file for regulatory approval for a floating liquefied natural gas (LNG) receiving terminal with the capacity to supply about 1.2 billion cubic feet per day to New Jersey and New York.

It plans to anchor the terminal, which it calls BlueOcean Energy, about 20 miles off the New Jersey coast and 30 miles offshore New York state.

Cleaner-burning natural gas has been the fuel of choice for new power generation for the last decade, but price spikes during periods of peak demand have raised concerns about the adequacy of supply, particularly in the Northeast.

The Northeast "is a market that we think needs additional infrastructure," Ron Billings, vice-president in charge of Exxon's global LNG operations, said in an interview.

"It's a growing market - particularly in New Jersey - that is looking for additional supplies of energy. The new source of natural gas for that region could readily replace coal in existing applications as well as future power plants. We think there's a lot of upside and growth in that market," he said.

Still, the company expects a lengthy and rigorous approval process for the terminal - a process that has already derailed other proposed regasification terminals around the country.

One factor working in Exxon's favor is the project's proposed offshore location, which could allay some of the security concerns that have faced some of the onshore terminals.

Mr. Billings said Exxon currently projects spending between 18 months and two years receiving the necessary permits from various federal and state agencies, including the Coast Guard and Federal Energy Regulatory Commission. The company expects the terminal to begin service around the middle of next decade.

Liquefied natural gas is natural gas that has been cooled to liquid form in order to make overseas transport of the fuel practical. It is later warmed, or regasified, so the natural gas can be moved in pipelines.

Putting LNG facilities near high demand coastal markets like New York can cut transport costs and eases pipeline bottlenecks that can occur when shipping gas from the Gulf Coast.

LNG is widely expected to account for a major portion of future US energy use with the number of receiving terminals set to sharply increase.

Exxon expects LNG to grow to around 20 percent or more of total gas demand by 2030. It currently makes up less than five percent of the natural gas used in the US

The BlueOcean Energy terminal will be built on a floating platform anchored to the sea floor. It is designed to receive LNG supplies from ships about twice a week and store the fuel in insulated tanks.

The stored LNG could then be warmed back into natural gas for delivery to New Jersey and New York markets through a new subsea pipeline that will connect to onshore pipelines.