LNG Not the Only Path, Say Clean-Energy Advocates

Not only does the prospect of liquefied natural gas threaten the state's Energy Action Plan, but the U.S. can make plenty of gas supplies available to California at prices likely to be lower than output from LNG terminals proposed in the region, according to the Sierra Club and the Ratepayers for Affordable Clean Energy (RACE) coalition. Representatives of both groups made their case at the Capitol this week for greater examination of LNG issues as a prelude to their upcoming bid to rehear a California Public Utilities Commission decision on the matter. During the September 27 session, coalition members alleged that state regulators glossed over environmental issues when they welcomed LNG development last month ( Circuit , September 3, 2004). The coalition disputes industry assertions that liquefied natural gas will be a much needed, cost-competitive addition to energy supplies. Environmentalists said that contrary to notions of shortages, the amount of natural gas stored in reserve each year has outpaced production in eight of the past nine years, according to the federal Energy Information Administration. Further, production in the U.S. and Canada is expected to rise by 50 percent by the year 2025, says the Department of Energy (DOE). Aside from whether LNG is necessary for California, the price of supplies yielded by a West Coast terminal might give pause to decision makers. The DOE maintains that the wellhead price for natural gas will dip to about $3/MMBtu by 2006 and remain below $4/MMBtu through 2025. By comparison, bringing LNG into California will cost more than $4/MMBtu, according to the government. The coalition appears to have at least one California Public Utilities Commission member's ear. Loretta Lynch phoned in to the meeting to question the commission's stance on liquefied gas, holding that California is mistakenly overprocuring natural gas and that regulators have excluded environmental groups from related proceedings. As the state replaces its aging power plants, newer units will require less gas, not more, she argued. However, a majority of commissioners believe that more gas supplies are necessary. In addition, Bob Weisenmiller, MRW Associates principal, maintains that California needs more natural gas, coming either from the Gulf of Mexico or from LNG facilities on the west coast?with the latter costing consumers less because of greater proximity. The environmental coalition also charged that accepting LNG as a foregone supply conclusion would hobble renewable power and energy-efficiency objectives under the state's Energy Action Plan. That plan also calls for regulators to evaluate the issue of liquefied gas, including market power and price concerns. "That hasn't happened," said Bill Powers of the Border Power Plant Working Group. According to Powers, dedication to green power and efficiency measures would wipe away the need for two LNG terminals over the next 10 to 12 years. Such efforts would also produce the benefit of lowering natural gas prices, since gas-fired units would not be as prevalent. Powers, however, did not specify costs of requisite renewable and efficiency efforts. Powers and Pacific Environment spokesperson Rory Cox also ticked off numerous environmental concerns associated with LNG, including the emission of carbon dioxide, or "greenhouse" gas; adverse impacts on local marine life; and the use of hundreds of millions of gallons of seawater per day to regasify the fuel. The RACE coalition will likely submit its petition in early October to rehear regulators' order on liquefied gas policy.

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LNG Not the Only Path, Say Clean-Energy Advocates

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