Gas juggernaut advancing with little opposition
The question, apparently, may no longer be whether liquefied natural gas will be arriving soon in California, but where.
This is true even though there has never been a definitive study of whether the state needs this expensive new energy source, natural gas frozen into a liquid form in a variety of far-off foreign locations, then brought here by tanker, warmed back to a gaseous state and piped to homes and businesses.
This is true even though there has yet to be any public hearing where advocates of LNG who stand to make billions of dollars on their projects could be cross-examined on questions of need and price.
And this is true even though a gas industry trade journal last winter reported a boom in domestic American gas production, with storage capacity at a premium and wholesale prices dropping.
Plus, what independent studies do exist – from the federal Department of Energy and the state Energy Commission during the days before Gov. Arnold Schwarzenegger stacked it with gas industry advocates – indicate that natural gas use in California has been flat and even dropping slightly and that North American sources of gas in Texas, Oklahoma, Colorado, Wyoming and Alberta probably could supply all this state would need for the foreseeable future.
State officials chose to focus instead on one study funded by Sempra Energy, the San Diego-based firm that owns San Diego Gas & Electric Co. and the Southern California Gas Co. Not surprisingly, the study Sempra funded concluded California will need LNG – and Sempra will likely be the first to provide it. How reliable is Sempra’s analysis? Some say it’s good, others say no.
Meanwhile, construction goes forward on Sempra’s LNG project in Baja California, the first LNG receiving facility on the West Coast. Gas from that plant will be used both in northern Mexico and California, under current plans.
Sempra pledges its LNG will not raise prices for consumers, and that might be correct given today’s high prices, still feeling Hurricane Katrina’s effects and fears that a new war might disable Iran’s ability and willingness to produce gas. But retail prices will likely drop when those crises abate; wholesale prices already have.
Still, the LNG juggernaut looks more and more like a bandwagon.
– Shipyards around the world now have orders for 126 new natural gas carriers, which will almost double the current world fleet of 184. Plainly, shipowners expect LNG facilities to proliferate, or they wouldn’t be building a huge new fleet to supply them.
– Pacific Gas & Electric Co. and two other firms announced plans last month to build a new pipeline linking Northern California to a proposed LNG terminal at Coos Bay, Ore. A key PG&E partner in this: the Williams Companies energy firm of Tulsa, Okla., which was one of the first market manipulators caught cheating during the energy crunch early this decade.
– A major Australian company entered the California LNG sweepstakes in late winter, announcing it can use a new and safer process to regasify LNG arriving here. Woodside Energy Ltd. says it could regasify LNG aboard ship, then put it directly into a pipeline extending offshore without building a big and expensive receiving plant. The firm’s plan to unload in the Santa Monica Bay about 24 miles southwest of Los Angeles International Airport is a major departure from what Sempra is building and what others propose at Long Beach and off the coast of Ventura County.
None of this would be happening, of course, if the energy world did not simply assume LNG will be approved and in use in California sometime later this decade.
It’s an assumption every powerful interest in the state also now makes, because all have bought into the idea LNG is needed. There has been no effort at all to assure guarantees of price cuts here when worldwide gluts of natural gas appear. There’s also a general tendency to disregard two lawsuits pending before state appellate courts by the consumer group Ratepayers for Affordable Clean Energy.
The state’s largest newspaper editorializes that “California badly needs … imported natural gas” even though that assertion is totally unproven. Gov. Arnold Schwarzenegger not only favors fast development, but has a pet project – one proposed by Australia’s BHP Billiton off the coast of Oxnard.
Only rarely has California seen such massive support for an unproven new scheme. One such occasion was the unanimous backing electricity deregulation received from state legislators, the governor and the state energy and public utilities commissions in 1996.
With little on the horizon seeming likely to stop it, Californians can only hope LNG does not turn out to be a equally disastrous.
Thomas D. Elias is a syndicated columnist whose work appears in The Union. Contact him at firstname.lastname@example.org via e-mail.
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