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LNG: Who's On First?

by Janet Bridgers |
Nov 30, 2007

Many LNG proposals face California; here's an overview of them.

   The relative positions among the broad array of proponents racing to build North America's first West Coast liquefied natural gas (LNG) terminal shifted dramatically with the disclosure that NorthernStar's application process to build so-called "Clearwater Port" off the coast of Santa Barbara County is now on hold.

   This may be good news for the people and animals of our area, but the developments will do little to prevent LNG's impacts on global warming. LNG is coming soon via Mexico, and it’s still a horse race to determine exactly when, where and if it will also come ashore in California or Oregon.

   One major recent development was the Coast Guard’s request to Houston-based NorthernStar to respond to almost 400 questions about environmental and safety issues regarding the LNG terminal it proposes for Platform Grace, a short distance from the Santa Barbara/Ventura countyline.

   The company’s application process is suspended until it responds. Northern Star’s vice president Billy Owens made light of the postponement, saying in a Nov. 3 article in the Ventura County Star, “we don’t feel that this is a sign of delay in the schedule. Many of the questions raised by the Coast Guard have been dealt with in plans already submitted by the company.”

   But even NorthernStar’s own website argues strongly against Owens’ public optimism, carrying the following statement on its investor relations’ page: “Because of the significant regulatory and environmental challenges that must be addressed to successfully develop, build and operate an LNG terminal on the West Coast, our low-cost, first-to-market strategy will give us a competitive advantage over later market entrants…” Actually, the company was once ahead of its competitors, being first to make its plans for Clearwater Port public in 2003. But though the company’s website still says that the project’s construction is set for 2008, with commercial operation by 2009. NorthernStar’s prospects of merely having the project approved in 2008 are now remote.

   Meanwhile, the Sempra Energia, Costa Azul project near Ensenada, Mexico, leads the race to be first-to-market on the West Coast. It has received all permits, construction is nearly complete, and commercial operation is expected in early 2008. At least half of the capacity will be contracted to U.S. markets according to the California Energy Commission’s website. Another project in Mexico has also been approved. The Sonora Pacific LNG Terminal, a $1 billion joint venture between El Paso Corp. and KDRW Energy LLC of Houston, is to be built outside Puerto Libertad, 130 miles south of Lukevile, AZ. Its location on the east side of the Gulf of California would also give that terminal access to both U.S. and Mexican markets. LNG project developers’ decisions to locate in Mexico not only make project approvals easier because they circumvent our state and federal environmental laws.

   In addition, legal opposition on environmental issues is not only rare in Mexico, but can be extremely expensive. One of the stipulations of the NAFTA treaty requires plaintiffs in such lawsuits to post large bonds. At a Ratepayers for Affordable Clean Energy (RACE) Coalition meeting in Los Angeles, Carla Garcia-Zendejas, with Border Power Plant Working Group in Mexico, said that a $7.7 million bond would be required to file a court case against the Puerto Libertad project. Representatives of organizations fighting the three LNG terminal proposals for Oregon also attended the RACE meetings.

   The groups are making headway in their opposition to two projects proposed in the Columbia River estuary (including another project by NorthernStar in Bradwood, Oregon) and a third project proposed for Coos Bay. On November 7 the Coos County Board of Commissioners tentatively approved a land use application to allow the construction of a liquefied natural gas terminal on Coos Bay’s North Spit.

   Should any of the three projects be permitted, most of the LNG is targeted for the California market. Sempra’s Ensenada near-complete terminal makes the addition of LNG to the West Coast energy mix all but certain. Still another wild card was added to the card deck with the recent announcement by Houston-based Spectra Energy Corp. that it plans to build a 650-miles-long, $3 billion natural gas pipeline to connect Rocky Mountain supplies to markets in California and the Pacific Northwest.

   With this pipeline, any pretense that a U.S. West Coast LNG terminal is needed is gone, especially as the Sempra terminal and Puerto Libertad will be bringing regassified LNG in through Mexico.

   At the State Lands Commission hearings in Oxnard last April, Lieutenant Governor John Garamendi grilled Billiton representatives regarding what the Ensenada terminal would mean for California. He asked, “is this terminal really needed and what are the alternatives?”

   It’s one of the questions the Coast Guard has asked NorthernStar about Clearwater Port. In the wake of the Enron scandal earlier in the decade, then-Governor Gray Davis negotiated long term natural gas contracts for California. The terms are more favorable than any involving LNG will be. Without public vigilance, those contracts could easily be cancelled (just like two others were by the California Public Utilities Commission) in favor of new ones relying on LNG. At the April Cabrillo Port hearings, it also became public that the process of extracting, super-cooling, transporting and regassifying LNG is anything but wise in terms of CO2 emissions. Governor Schwarzenegger’s recent signing of the Solar Water Heating and Efficiency Act of 2007 goes in the right direction for our energy future.

   It will continue to require monumental efforts to keep this state focused on investing in renewable energy that supports our domestic economy as well as the global environment. Global warming is the issue that will truly determine whether Americans care more for comfort and convenience than their planet and children’s future. And never mind the TV ads they’re all running, LNG is the issue that proves how little the oil and gas companies actually care.

Janet Bridgers is a member of Earth Alert! Website is: <www.earthalert.org>