Saturday, July 3, 2010




There’s been plenty of good news lately for Californians who oppose setting up import terminals for liquefied natural gas (LNG) in this state. But the jury is still out on whether that means California consumers will be freed from the prospect of becoming dependent on that pricey form of imported energy.

The good news first: Only one active effort to build a California LNG import facility remains active and it isn’t very active. That would be the proposed but almost dormant Esperanza receiving terminal, which would be built 15 miles off the coast of Long Beach.

The list of possibilities dwindled to that one when the state Lands Commission during the late spring formally terminated a bid to build a terminal tentatively called “Clearwater Port” on the coast just north of Ventura. The termination was automatic because there had been no activity by Clearwater’s would-be builder, Houston-based NorthernStar Star Natural Gas.

Shortly after the Lands Commission action, NorthernStar declared itself bankrupt.

The demise of Clearwater marked the third LNG proposal to go under in the last 10 years, joining other failed plans to site facilities near Eureka and off the coast near the Los Angeles-Ventura county line.

LNG is natural gas supercooled to a liquid and shipped thousands of miles across oceans in gigantic, multi-hulled tankers, then reheated back to a gaseous state and pumped into existing pipeline networks. The only foreign LNG now able to reach California comes through Sempra Energy’s Costa Azul receiving plant north of Ensenada, not far south of the Mexican border.

There’s further good news for California consumers in the forecasts of both the U.S. Energy Information Agency and several leading private natural gas consultants indicating there will be no need for LNG anytime in the foreseeable future.

One reason for that is a fast-increasing effort by U.S. companies to exploit the gas contained in shale deposits in Wyoming and Colorado.

Consultant Ben Schlesinger, who has worked for Exxon Mobil, BP, Shell Oil, Tokyo Gas, Nigeria LNG and other industry giants, is one who predicts the glut of American gas coming on-line in the next several years will create an oversupply of gas not only here, but also in Europe – which imports almost all its energy.

This suggests it’s likely that some American LNG facilities will be converted from receiving gas to sending it overseas – the very thing that’s about to happen to a just-approved facility at Kitimat, Canada, on the British Columbia coast north of Vancouver. First designed as an import plant, Kitimat now will become an exporting facility.

And yet, there’s still some potential bad news out there for California gas customers worried about the high cost of LNG. It comes from Oregon, where a plant at Coos Bay is well along in the approval process. Oregon’s Public Utilities Commission estimated long ago that three-fourths of all imports coming to any terminal in that state would end up in California.

Why should that concern consumers? Because each specially-built LNG tanker costs more than $1 billion and it takes at least six to keep any receiving plant supplied. The plants that first turn natural gas liquid and then turn it back to an invisible gas cost more billions. Those costs are inevitably included in the price consumers pay for whatever gas they use that stems from LNG, raising them substantially. No matter how piously companies like PG&E, Southern California Gas and San Diego Gas & Electric (SoCal Gas and SDG&E are both fully-owned by Sempra) deny that LNG will increase rates, the sheer amounts invested in LNG facilities guarantee it.

Which means millions of Californians have a major interest in a very local-looking Oregon dispute. For the longer farmers in two Oregon counties can delay building of a link between Coos Bay and PG&E’s existing pipeline for Canadian gas near Roseburg, Ore., the greater will be the predicted American natural gas glut.

And the greater the glut, the lower the price of all natural gas worldwide. If the price gets too low, there will be little incentive for building any new LNG plants. That’s what happened in the early 1980s, when both PG&E and Southern California Gas insisted LNG was critical for California’s energy needs – only to see crashing gas prices make their plan for an LNG plant at Pt. Conception in Santa Barbara County economically infeasible. As a result, Californians have paid an estimated $40 billion less in gas bills over the last 30 years than they otherwise would have – and there have been none of the shortages the big utilities predicted. The sky did not fall when Pt. Conception was left in its natural state.

A lawsuit by the Chumash Indian tribe created the delay that killed that effort. Citizen groups in Oregon are using every delaying tactic they can devise while trying to duplicate the consumerist triumph of the Chumash.

Californians need them to succeed – or we will pay untold billions more in gas bills over many decades to come.

Email Thomas Elias at His book, "The Burzynski Breakthrough," is now available in a soft cover fourth edition. For more Elias columns, visit

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