Power play looms over bringing in liquefied natural gas - sacbee.com: "By Dan Walters -- Bee Columnist
Published 2:15 am PST Monday, January 23, 2006
Story appeared on Page A3 of The Bee
James Connaughton, President Bush's top environmental adviser, strongly touted shipping liquefied natural gas from Australia to California during a two-nation conference in Sydney this month, saying that the White House wants to overcome political inertia and environmentalist objections.
'We have a dedicated commitment to opening up the opportunity for a lot more LNG to America,' one Australian newspaper quoted Connaughton."

A week after Connaughton spoke, an Australian firm, Woodside Petroleum, announced that it wanted to build an offshore terminal to bring Australian gas to California. Coincidence? Hardly. Woodside is the fifth company - including one other from Australia - to advance plans to meet the state's ever-expanding demand for clean-burning natural gas through LNG with policy support from Washington.
LNG is created when gas is supercooled to 260 degrees below zero, shrinking its volume to one-600th as a liquid and thus making transport by insulated tanker ship feasible. The gas is then warmed and regasified at the receiving terminal. Most of the gas used by petroleum-bereft Asian countries such as Japan is supplied via ship, and LNG terminals have been in operation for years on the Gulf Coast and East Coast of America. But California, with its supersensitivity to any coastal development, has been a tough nut to crack.
Then-Gov. Jerry Brown, responding to warnings that California faced a looming natural gas supply crisis, pushed through legislation authorizing an LNG terminal near Santa Barbara more than a quarter-century ago, sweeping aside complaints about his family's strong business ties to the Indonesian gas supplier, Pertamina. The project collapsed, however, after an earthquake fault was found beneath the site and after the supply squeeze eased with national deregulation of gas prices.
There's no question that a dependable supply of natural gas is vital to California, not only for direct household, commercial and industrial heating, but as raw material for fertilizer and, perhaps most importantly, as a low-polluting fuel for much-needed electric power generation. Nor is there any question that supplies are tight and prices have been rising dramatically. So it's an appropriate moment to introduce LNG into what will be a fierce political debate.
Most of the public attention to LNG so far has been centered on one of the five proposals, that of Mitsubishi-ConocoPhillips for an onshore terminal at Long Beach - mostly because it's the only one that would receive gas on California soil and thus must contend with human neighbors. Woodside's plan and those of Australia's BHP Billiton and Houston-based Crystal Energy would have ships transfer their gas at offshore terminals (Crystal's is an unused oil-drilling platform).
The fifth proposal is an onshore terminal, already under construction near Ensenada in Baja California, to be operated by a subsidiary of California-based Sempra Corp. All of the LNG firms have hired top-drawer Sacramento lobbyists to advance their cases, and the business community is pushing hard for LNG supplies.
California officials - especially Gov. Arnold Schwarzenegger and his Public Utilities Commission president, former utility executive Mike Peevey - must decide not only whether the state will embrace LNG as a future fuel supply but also the safety issues of whether the terminal should be onshore or offshore, whether we need more than one terminal and whether a terminal would be used exclusively by one company or through "open access" be available to a multitude of suppliers and overseas sources. And they must also wrest with very complicated contract and pricing issues.
This is heavy political lifting, as veterans of the bitter battle over LNG in the Capitol in the 1970s could attest. At one point, it created a near-rupture between Brown and his fellow Democrats in the Legislature - and that was when the state's politics and its cultural dynamics were much simpler than those of the moment.
The last time the Capitol attempted to make such a momentous energy decision was exactly a decade ago, when the Legislature unanimously passed a misnamed "deregulation" bill for electric power that turned out to be a financial disaster. One hopes today's politicians do a much better job of it.
About the writer:
Reach Dan Walters at (916) 321-1195 or dwalters@sacbee.com. Back columns: www.sacbee.com/walters