LNG PROMOTERS NO LONGER HAVE FERC, SHOULD FORGET ABOUT CALIFORNIA

CALIFORNIA FOCUS
FOR RELEASE: FRIDAY, APRIL 17, 2009, OR THEREAFTER

BY THOMAS D. ELIAS
"LNG PROMOTERS NO LONGER HAVE FERC, SHOULD FORGET ABOUT CALIFORNIA"

Memo to NorthernStar Natural Gas, Woodside Energy, Mitsubishi Corp. and other would-be developers of liquefied natural gas facilities in California and elsewhere on the West Coast:

Forget it. At least for another decade or two.

That's a message they should have gotten in the early days of last winter, when reports from the former George W. Bush administration's Energy Department and the staffs of two key state agencies concluded that neither California nor the United States in general will be needing more LNG anytime in the foreseeable future.

In fact, those reports predicted a huge drop in LNG imports over the next 20 years, with the federal experts expecting that LNG will account for just 3 percent of all natural gas used in America by 2030, compared with 16 percent today.

LNG is natural gas supercooled into liquid form, then taken across oceans by huge, specially-built tankers and eventually warmed back into gaseous form at receiving facilities, where it is pumped into existing pipeline systems.

Just in case the reports from the Energy Department and the state Energy and Public Utilities commissions weren't enough, along came new President Barack Obama with his theme of change. He certainly made a big one at the Federal Energy Regulatory Commission, and he did it on only his third day in office last January.

That was when he appointed Jon Wellinghoff president of FERC, the agency that must approve all major energy transmission and pipeline projects anywhere in America.

Wellinghoff had already served on the commission for a few years before Obama elevated him to chairman. He was a dissenting vote when FERC prematurely approved the putative Bradwood Landing LNG facility near the mouth of the Columbia River in Oregon, about two-thirds of whose natural gas product would have ended up padding the monthly bills of California consumers. His written dissent on that vote and another involving the Sparrow's Point LNG project on the Chesapeake Bay in Maryland provide good insight into where new LNG facilities are likely to get with FERC under Obama - nowhere.

For one thing, his Bradwood opinion shows he was well aware this plant was intended to extract money from Californians. "The primary purpose of Bradwood," he said, "is not to meet the projected energy needs of the Pacific Northwest, but rather is to serve other markets. Access to Northern California markets would be necessary to site an LNG terminal in the Pacific Northwest…"

On Sparrow's Point, he wrote, "Evidence leads to the conclusion that (domestic natural gas and renewable energy sources) are reasonable, environmentally preferable alternatives to service the future energy needs of the Mid-Atlantic and South Atlantic regions."

This is change: A federal official who actually looks at the evidence.

For contrast, have a look at the farewell speech of Joseph Kelliher, the Bush-era FERC chairman who tried to hustle through as many LNG approvals as possible during his last months in office.

Among other "achievements" he reviewed in his swan song, Kelliher listed the fact that his FERC "authorized a 500 percent increase in LNG importing capacity."

What an accomplishment! When the potential need for LNG is about to drop by 80 percent, he proudly trumpets that he's approved a 500 percent increase. No wonder construction on several East Coast LNG plants already approved has halted or been mothballed.

It is, of course, no accident that Obama chose Wellinghoff to replace Kelliher. For Wellinghoff cut his government teeth as the official consumer advocate for the state of Nevada, representing that state's consumers in all utility matters and helping it avoid the kind of energy crunch California experienced during the early years of this decade. Back then, as now, California's public utility commissioners were pretty much the property of the companies they regulated, and their votes for deregulation led to that disaster. This did not happen in Nevada, partly because of Wellinghoff and the consumer advocate office he helped create.

Obama's pledge to wean America from much of its dependence on foreign energy found Wellinghoff an existing advocate at FERC. By contrast, even as Bush was calling for the nation to end its addiction to foreign oil, his man at FERC was pushing vastly increased dependence on foreign natural gas. Consistency, as Ralph Waldo Emerson famously observed, is the hobgoblin of small minds, and was never much of a Bush concern.

So the latest era of pushing for LNG in California has probably ended, both because there never was any need for it and because priorities in Washington, D.C., have shifted in a consumerist direction.

But that doesn't mean Californians should cease their vigilance. For the state utilities commission still hasn't rescinded its foolhardy 2004 vote to allow gas companies to substitute LNG - if they can get it - for domestic natural gas supplies. Until that happens, nothing in this field can be certain and consumers will continue to be at risk for billions of dollars in rate increases.

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Elias is author of the current book "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government's Campaign to Squelch It," now available in an updated third edition. His email address is tdelias@aol.com