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CA Environmental Advocate Agrees LNG Needed, But With More Balance

May 23, 2005
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Within an hour of announcing the consummation of a Mitsubishi-ConocoPhillips partnership last week to build a proposed liquefied natural gas (LNG) receiving terminal in the Port of Long Beach, CA, the backers received some support -- albeit qualified -- from a leading environmental/renewable energy advocate in California.

Last Tuesday the companies finalized their agreement to jointly develop the $400 million LNG receiving terminal, which is expected to have 700 MMcf/d of average sendout capacity and a peak delivery capacity of up to 1 Bcf/d. They plan to start construction on the terminal in the first half of 2006 after obtaining all necessary approvals and permits from relevant federal, state and local authorities, with completion in 2009.

Getting the approvals, however, has been far from a routine endeavor with the state and the Federal Energy Regulatory Commission battling over jurisdiction in the courts, and determined local opposition seeking to derail the project . The proposed in-service date already has been pushed back from 2008 to 2009. Currently supporters and opponents are awaiting the results of an environmental impact assessment being performed by port authorities, which is expected to be released for public comment by mid-June.

During a panel discussion last week at an industry conference in Santa Monica, CA, V. John White, who is the head of the Sacramento-based Center for Energy Efficiency and Renewable Technology (CEERT), praised Mitsubishi subsidiary Sound Energy Solutions for its steadfastness and sensitivity to the port air emissions.

Meanwhile, SES CEO Tom Giles told the Law Seminars International conference that he expects SES to receive a permit to begin construction by the fall of next year.

With a targeted start-up of the LNG terminal in 2009, Giles said he thinks most of the Long Beach terminal's supplies will come from Australia where Mitsubishi's partner, ConocoPhillips, owns substantial reserves. "The finds in other areas such as Southeast Asia and Indonesia are sold out, and there is a bunch of gas that is going to be liquefied in Australia," Giles said.

While he heads a center based in Sacramento dedicated for the last 15 years to boosting the amount of renewable energy resources in the state's mix, White said he got interested in natural gas and more recently LNG because of that fuel's relationship to the "value and effectiveness of renewable energy." He said CEERT has "refused to totally rule out LNG" because it supports the idea of balanced energy portfolios.

"I have to say that Mitsubishi has done a very good job of staying in this process [despite the FERC-state fight over jurisdiction] and working the process, and it has done a surprisingly good job of defusing and deflecting the controversy that could have been the end of this project, and the fact that they are still here, still serious and still moving forward is an indication of how good a job they have done," said White, although he added that he still has his own personal doubts about the viability of onshore LNG development.

While backing the SES proposal to commit part of the LNG supplies to the transportation market as an air pollution mitigation measure in the region, White said on a more macro basis he thinks LNG is more of a "symptom" of a global natural gas supply/demand crisis, rather than a "solution" for it. "The fact that LNG has become the prominent part of the debate suggests to me that we should look more closely at it."

Giles emphasized that SES sees two purposes to its LNG receiving terminal, which he said makes it different than any other existing or proposed terminal in the world -- helping create cleaner air and stabilizing volatile natural gas prices. On the other hand, White is very concerned that the current domestic gas situation is forcing renewed interest in coal-fired electric generation, which on a global basis threatened to reverse any potential progress from the Kyoto Protocol on curbing greenhouse gases.

Thus, given the choice, White will take a "balanced" or moderate role for LNG and greatly increased renewables to reverse what he said were plans nationally to develop another 70 GW of coal-fired generation with 114 new projects on the radar screen currently across the country.

David Huard, a Los Angeles attorney who moderated the panel and whose involvement with LNG goes back to his days as a young lawyer on the old Federal Power Commission (FPC) staff in the mid-1970s, said LNG as a major energy factor in the United States is somewhat of a certainty given the global gas supply/demand situation, but he noted that the history of the fuel in this country is fraught with legal actions, and organized local opposition and safety concerns are still a major challenge to the developers of the 58 current proposed new or expanded receiving terminals And he added that todays opponents are much more sophisticated and numerous than they were 30 years ago when a proposal for a receiving terminal in Southern California failed.

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