LNG Market Share Worries Legislators While Administration Welcomes It

Liquefied natural gas terminals are quickly moving to the top of California?s energy agenda as Governor Arnold Schwarzenegger and members of the California Energy Commission are ensuring that LNG companies get ?a fair shake? from the state, according to David Maul, manager of natural gas special projects for the CEC. A conference in Long Beach?the site of a proposed terminal?this week revealed increasing support from state officials and increasing concerns about LNG?s explosive factor on the part of opponents. Driving the growing interest among state officials is a projected shortfall in supply. Gas field depletion, coupled with growing demand, has set off a race among producers to develop new supplies and bring them to the U.S. market. ?LNG now becomes critical to the U.S. supply picture,? Catherine Elder, executive consultant for R.W. Beck, told the Pacific Coast LNG Development Conference organized by Infocast and Paul Hastings Janofsky & Walker earlier this week in Long Beach. While the state is pounding the LNG drumbeat, LNG?s market share is not a slam dunk. Many state legislators have concerns about the ?market power? that the LNG industry would gain, according to Maul, because any supplier is expected to quickly provide up to 15 percent of the state?s natural gas. ?The control issue is one that?s emotional in legislators? minds,? he said. Lawmakers are further concerned that California will become dependent on vital natural gas produced in distant and politically unstable countries. Accordingly, the CEC is taking several steps, including an analysis in the spring of how LNG will affect the state?s energy market. Price volatility is a concern, and so is physical volatility (see Energy Circuit , February 6, 2004). ?We have a very large hill to climb with the public,? said Maul. ?The Algerian accident is very unfortunate from a public relations point of view.? A recent explosion at an Algerian LNG plant killed scores of people. ?There?s general opposition to onshore terminals,? said Don May, head of Earth Corps. May is coordinating 18 environmental groups expected to demand that the state not permit construction of any land-based LNG terminal. The groups are likely to back a viable offshore terminal, however. LNG could blow up accidentally or on purpose. ?There are 20 to 30 terrorist groups seeking weapons of mass destruction,? said Bry Myown, a community activist opposed to the terminal in Long Beach. ?We?re going to build a weapon of mass destruction in the Port of Long Beach.? William Bailey, security specialist for Ecology & Environment, Inc., offered energy industry executives tips on how to address security concerns at LNG terminals. The security consultant shared a long list of ?potential? terrorist organizations that he said LNG operators needed to be aware of, including Greenpeace, the Anti-War Coalition, and Southern California Alliance, as well as Islamic and right-wing terrorist groups.

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LNG Market Share Worries Legislators While Administration Welcomes It

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