Liquefied Natural Gas Increases USA Dependency

SUMMARY: Liquefied Natural Gas burns like a "wet" gas, hotter than processed natural gas, thus has the potential for serious problems. The heavier concentration of liquid hydrocarbons has excessive carbon monoxide emissions, and can damage equipment from soot, and damage gas stoves, water heaters, and furnaces and could reduce their lifespan by as much as 50 percent.

Where the liquids get carried all the way to the turbines, it can damage them and shut them down, and would cost approximately several hundred thousand dollars per power plant.

Spare production in Algeria, Russia and elsewhere can be liquefied and shipped to North America.

But liquefied natural gas (LNG) is dangerously flammable and explosive. Logan Airport closes when an LNG tanker enters Boston Harbour to unload at one of North America's four LNG terminals. The U.S. Coast Guard imposes a two-mile moving safety zone around each tanker. Nevertheless, new LNG terminals are proposed for more than 30 locations in North America, including several in Canada. LNG imports could at best provide temporary relief. The worldwide peak in natural-gas production may not be far behind the peak in oil production.

MAN of steel John Howard is to come face to face with the Terminator in Los Angeles to lobby support for an Australian gas deal.

The prime minister today said he would meet the Governor of California, movie star Arnold Schwarzenegger, as part of his trip to the United States, Britain and France.

Mr Howard will have talks with US President George W Bush at the White House, as well as meetings with key congressional leaders, to seek support for the Australia-US free trade agreement.

The prime minister today said he would be joined by BHP-Billiton boss Don Argus and other senior BHP-Billiton managers in his meeting with Governor Schwarzenegger to discuss a proposed LNG terminal and supply deal.

"The purpose of this call is to join BHP-Billiton ... to lobby for the company to develop an offshore terminal to permit Australian LNG to be supplied to southern California," Mr Howard said.

He said the offshore terminal and gas supply contract would be worth more than $15 billion to the Australian economy.

Mr Howard said it was important the government supported the BHP-Billiton bid for the project, which had an even-money chance of victory.

"I believe it is important that the voice of the government be the same as BHP-Billiton," he said.

A firm from his country is seeking to build an LNG terminal off the Ventura County coast.

Australian Prime Minister John Howard met with Gov. Arnold Schwarzenegger on Wednesday to urge California to import Australian liquefied natural gas and to promote construction of a controversial gas import terminal off the shores of Ventura County.

Plans for the terminal, proposed by Australian-based BHP Billiton Ltd., have generated strong opposition among some coastal residents, and the Malibu City Council last week went on record opposing the project.

The Wednesday meeting spurred curiosity among LNG proponents and critics about the governor's position on importing liquefied natural gas, which some call essential to the state's energy needs and others decry as dangerous.

Safety concerns already have led to the cancellation of two proposed import terminals in the state, in Vallejo and Eureka, and are sparking community protests in Long Beach and Ventura County, where the first West Coast LNG terminals in the United States may be built.

Some residents contend that LNG's potential fire danger makes such terminals safety threats and terrorist targets.

Last week, 25 environmental groups in California sent a letter to state Cal-EPA Secretary Terry Tamminen and Resources Secretary Mike Chrisman, requesting a meeting. The letter alleges that state officials failed to analyze the current proposals in a comprehensive manner.

Proponents of LNG say it is vital to assuring a stable energy supply in California.

Howard told reporters after the closed-door meeting with Schwarzenegger in Los Angeles that the discussion went well and that the governor made positive comments about the project. Schwarzenegger did not attend the news conference, and a spokesman later steered clear of commenting on the governor's opinion of the project.

The project, estimated to yield $15 billion in earnings for Australia, faces a lengthy federal and state permitting process. It would be built off the coast about 23 miles from the city of Oxnard, which some safety experts consider a safer location than onshore terminals, such as the one a Mitsubishi subsidiary hopes to build in the Port of Long Beach.

LOS ANGELES -- On his first leg of a U.S. visit, Australian Prime Minister John Howard made a personal appeal to Gov. Arnold Schwarzenegger on Wednesday to back an Australian company's plan to build a liquefied natural gas terminal 14 miles off the Oxnard coast.

With California's unquestioned energy needs, "The governor himself expressed a keen desire to see that our negotiations were brought to a successful conclusion -- a very keen desire," Howard told reporters after their closed-door, 30-minute meeting.

Local governments have raised fears about possible environmental damage and an increased risk of terrorism, but Schwarzenegger "said very positive things" about the multibillion-dollar plan by mining and natural resources giant BHP Billiton, Howard said.

"He didn't just show a provisional interest," Howard added. "There is clearly a desire to establish a linkage with an Australian supplier."

Oxnard Mayor Manuel Lopez, who, along with many residents, opposes the BHP project, said he understands that Howard is simply trying to look out for Australia's economic interests. But Lopez added that he as mayor has a duty to protect Oxnard's citizens.

"He's doing what he feels he should be doing for his country. It's part of diplomacy," Lopez said. "If the same project were proposed right next to where they lived, they might feel differently."

The governor did not appear with Howard after the meeting, during which the prime minister gave Schwarzenegger a pair of Australian boots.

A spokesman, Vince Sollitto, said Schwarzenegger "expressed a great deal of interest in the proposed natural gas facility and asked a number of questions about the timetable, the company's safety history and its environmental record.

"He also expressed interest in the fact that the terminal would be the state's first dedicated liquefied natural gas facility," serving only California, Sollitto said.

The proposed terminal would be anchored to the ocean floor off Ventura County in 2,900 feet of water. Tankers from Australia would ferry liquefied natural gas to the offshore plant, where it would be converted to vapor and sent by pipeline for distribution to power plants and homes.

Howard, who predicted the project could meet 15 percent of the state's natural gas needs, acknowledged various regulatory hurdles would have to be cleared. He said he didn't expect a decision before late this year, at the earliest.

"We have huge supplies ... and we have a proven track record of safely carrying it long distances to other countries," he said. "We offer to California long-term, secure, price-competitive supplies" of liquefied natural gas.

Howard said he was confident the company could address environmental concerns. As for the possible threat of terrorism, Howard said an attack was no more a risk offshore than on land. "Terrorists are more likely, in theory, to attack something when there is a large population," he said.

Although Schwarzenegger stopped short of a commitment, administration officials will meet with Howard's staff next week and will visit Australia gas fields in July, Howard said.

Residents in Oxnard and Malibu have complained that the environmental, health and terrorism risks posed by the terminal would far outweigh any economic benefits. Malibu's City Council has passed a resolution opposing two liquefied natural gas projects in the Santa Barbara Channel, although it has no jurisdiction to stop them.

"If Sacramento wants it, then put it in Sacramento," said Malibu Councilwoman Pamela Conley Ulich.

Howard, who is scheduled to meet with President Bush today to discuss Iraq and trade, said there were no plans to change his country's commitment of troops in Iraq. "You have to have conditions of stability and security ... before you can start talking about leaving," he said.

Asked about two Australian terror suspects being held by the U.S. military at Guantanamo Bay in Cuba, David Hicks and Sydney man Mamdouh Habib, Howard said, "There seems to be this strange notion that persists ... that if an Australian is charged with a crime overseas, that Australian has some kind of automatic right of repatriation to be tried in Australia. That is ridiculous."

June 19, 2004

The Facts

Feds approve LNG project

http://thefacts.com/story.lasso?wcd=14188

By Michael Baker

ABSTRACTS:

QUINTANA — Developers of a proposed liquefied natural gas terminal on the island cleared on Friday their largest obstacle in getting their plant built.

The Federal Energy Regulatory Commission issued an order Friday granting Freeport LNG the authority to construct and operate the terminal. The decision comes after months of studies, public meetings and the issuance of an environmental impact statement of more than 500 pages.

There are 12 other LNG proposals pending before the commission, according to commission spokeswoman Tamara Young-Allen.

Opponents, some of whom have homes in Quintana, have voiced concerns about safety aspects of the industry, particularly if it was chosen as a terrorist target.

Prior to FERC’s approval, the facility had gotten clearance from the Texas Commission on Environmental Quality to operate under the State Implementation Plan, Henry said.

The FERC report on air quality came a day after a study by Environmental Defense found pollution from commercial marine vessels in the Houston area, which are not restricted in the Houston-area pollution plan, cause the same amount of pollution as 288,000 cars.

The FERC report shows construction and operation of the LNG plant will add about a ton of nitrogen oxide emissions to the air per day, said Ramon Alvarez, a scientist with Environmental Defense. FERC concludes it won’t impact the pollution plan.

Freeport LNG still has a few more permits to secure, Henry said. It needs to get an air permit through the commission, which Henry said should happen in August. It also needs a permit from the U.S. Army Corps of Engineers, which also could happen in August, he said.

New Wales

June 30, 2004

Anglesey LNG plant 'a waste of gas’

http://www.newswales.co.uk/?section=Environment&F=1&id=7112

A proposal for a large gas power station on Anglesey should be turned down on grounds of low energy efficiency especially as it would use liquid natural gas (LNG) imported from the Middle East, environment campaigners said today (1).

Friends of the Earth Cymru has pointed out that there are much more efficient methods of burning gas for power which would reduce emissions of greenhouse gases and could create more jobs.

The environmental campaigners say that the LNG terminal itself could, depending on size and location, pose a public safety risk and that the threat of terrorism should be considered as part of the Health & Safety Executive (HSE) risk assessment and planning application process.

A US Congress/Senate report on LNG terminals warns that a LNG tanker fire would cause second degree burns at two miles in less than one minute, and that LNG facilities should not be located near people. Two similar LNG terminals in Milford Haven were given the green light by Pembrokeshire National Park Council in recent months (2).

Neil Crumpton, energy campaigner at Friends of the Earth Cymru said, "We think the gas plant idea should be turned down because of its low energy efficiency. Indeed in terms of emissions of climate changing carbon dioxide, using LNG imported from the Middle East to fire combined cycle gas plants is little better than the emissions from coal burnt in new coal power station technology, and the security and safety risks are far smaller with coal.

“At a time when we need to be reducing our dependence on fossil fuels from the Middle East it is a pity that old fashioned, inefficient technology such as this should be proposed for North Wales.

"As for the LNG terminal itself, it could pose a public safety risk depending on its size and location. And there are strategic questions regarding energy security. The UK could quickly become very dependent on LNG gas from Middle East as the UK sector North Sea gas resources run down in the next few years. Possibly 10-20% of the UK's forecast gas demand for 2010 could be supplied by LNG through Milford Haven and now possibly Amlwch. Politicians and the public need to be much more aware about the UK's increasing dependence on importing LNG gas from an unstable Middle East. Decision-making at national level and a national strategy are needed rather that strategic decisions being taken by local politicians.

"A national strategy is also needed for energy storage infrastructure in the UK. There is a strong case for increasing gas storage capacity and the ex-Shell tank-farm site may be appropriate. Yet the recent Energy White paper while saying storage capacity should be increased for energy security reasons, gives little further detail."

NOTES

1) The proposal by Canatxx, an American company, which wanted to build a CCGT gas plant on Anglesey several years ago, would use LNG from a new terminal proposed to be built at the Great Lakes chemical site near Amlwch. The LNG would be imported from the Middle East.

The energy used in liquefaction and re gasification of LNG is an energy-intensive operation. The gas's carbon reduction value reduces by up to 30% overall making it doubly inefficient for electricity generation in combined -cycle gas plants (CCGT) - the type likely to be chosen in rural locations - which compare poorly with CHP gas plants (60% versus 80+%). LNG from Qatar would emit 660 grammes / kWhour if used in CCGT electricity generation and 695 grammes / kWhour using gas from Russia. This compares to 440 grammes / kWhour using North Sea gas in CCGT. This also suggests a 30% plus reduction in its carbon reduction value.

By comparison 'clean coal' (IGCC) is 705 grammes / kWhour which is not much greater than imported LNG - and renewables are obviously much much less.

2) Two similar LNG terminals in Milford Haven were given the green light by Pembrokeshire National Park Council in recent months. Soon afterwards the HSE said in a public meeting to reassure Haven residents about safety, that the threat of terrorism was NOT considered in the risk analysis. This is despite the fact that the gas would come from the Middle East and the terminal would a major and vulnerable American owned facility located in Britain (Exxon are closely associated to US/ Bush's energy policy).

The campaigners say that proposals for gas storage at the ex-Shell tank-farm site may be viable and extra storage capacity is needed in the UK. They think that the public and many politicians are unaware how dependent the UK could become on imported LNG from an unstable Middle East. They would like to see more debate and a national strategy on energy security issues, particularly LNG imports and UK gas storage capacity, with decisions taken at national level.

LNG is a huge public safety risk from accident but more importantly terrorism - if a tanker catches fire it would cause second degree burns at two miles in one minute - and yet the Pembrokeshire terminals are only one mile from towns, communities, oil refineries etc around the Haven.

Friends of the Earth Cymru pressed environment minister Carwyn Jones to call the planning application in (for the Exxon terminal) but he did not and Pembrokeshire NP Council passed it on grounds of economic regeneration and local jobs.

A few weeks later the HSE finally gave a public presentation on safety aspects – and they said that the terrorist risk was no assessed - so no advice was given to councillors on a major public safety hazard.

WASHINGTON -- It's three paragraphs in a 1,600-page document, but critics warn that it could have far-reaching consequences for state and local governments fighting liquefied natural gas facilities like those proposed off the coast of Oxnard.

Language buried deep in a massive federal spending bill that Congress approved last week says the Federal Energy Regulatory Commission can pre-empt states on the permitting and siting of LNG facilities.

Though the wording does not carry the force of law, it could seriously weaken -- and perhaps even prohibit -- state and local control over such facilities, especially if disputes over such projects wind up in court, according to environmentalists and public interest groups.

"It sends a clear signal to the courts to rule against the states," said Tyson Slocum of Public Citizen, an advocacy group based in Washington, D.C.

Tim Riley, an Oxnard Shores attorney who produced the documentary "The Risks and Danger of LNG," called the language a "midnight attempt to federally fast-track LNG siting" and "a blatant effort to usurp state and local control."

"State and local governments have a voice in the licensing process, and that voice is still there," Lee said. "The commission runs a very open process. All of the environmental safety aspects of any project are taken into account and are evaluated."

Lee said the commission is prohibited by law from lobbying Congress and did not request that the LNG provision be added to the bill. But, he said, "I think in general the commission is pleased that Congress affirmatively stated its intent. And we would hope that the court, in evaluating challenges to the commission's LNG siting authority, will take it into account."

The LNG language was slipped into the $388 billion spending bill during a conference committee's behind-closed-door discussions. No one has acknowledged authorship of the provision. The final version was given to members of Congress just hours before they were to vote on it, and most probably weren't even aware the wording had been added until after they voted on the bill, Slocum said.

"Inclusion of this language is another reason I am glad I voted against this omnibus spending bill," said Rep. Lois Capps, D-Santa Barbara. "This provision shows total disregard for state and local control over the siting of LNG terminals in our communities and their potential effect on ratepayers."

Sen. Barbara Boxer, D-Calif., also voted against the bill and "is exploring all of her options to overturn this heavy-handed federal government power grab," said her spokesman, David Sandretti.

The language apparently was an attempt to resolve a legal dispute between federal regulators and the California Public Utilities Commission over a proposed LNG terminal in Long Beach. FERC ruled in March that states have limited control over such projects, prompting a lawsuit by the Utilities Commission.

The LNG language in the spending bill says that a 1938 federal law "clearly pre-empts states on matters of approving and siting natural gas infrastructure associated with interstate and foreign commerce." It adds, "These facilities need one clear process for review, approval and siting decisions."

Sheri Inouye, spokeswoman for the state PUC, could not say what impact the new language could have on the pending court case.

"We haven't seen the report, and we have to really look at it," she said. "But from what we're concerned about, the law hasn't been changed, and the law is what we base our (legal) argument on."

Others, however, are concerned that provision would impact not only the pending court case but also would limit state and local involvement in other projects, such as BHP Billiton's proposal for a deepwater port and processing facility and Crystal Energy's plans to build an oil platform off the Oxnard coast.

"The new language apparently would undercut not just the state Public Utilities Commission, but also the governor, the California Coastal Commission and probably, most importantly, the role of citizens in all of this," said Alan Sanders, conservation chairman of the Los Padres chapter of the Sierra Club. "It looks like we're heading in a direction where the importance of public input is minimal at best."

Shirley Godwin, chairwoman of the Oxnard community group Saviers Road Design Team, said it's important that local communities have a role in the approval and siting process.

"It's the local people who have to live with these facilities and the local people who should be the final decision-makers about whether they want this in their community," she said.

Before the spending bill is sent to the White House, Congress is expected to strike another controversial provision that would allow some congressional leaders to read individual federal tax returns. Slocum said he hopes that Congress will consider removing the LNG language as well.

"Whether you agree with FERC jurisdiction over LNG or not, the way that Congress went about trying to settle this issue is an outrage," he said.

Appealing to a Higher Authority Federal energy regulators smooth the way for liquefied natural gas terminals

WASHINGTON, December 7, 2004 — After scores of private meetings with Big Oil giants such as ExxonMobil and ChevronTexaco, the Federal Energy Regulatory Commission is aggressively undermining the authority of state and local governments to reject dozens of proposed liquefied natural gas facilities all across the country.

The energy companies' influence with FERC and its chairman, Pat Wood III, is evident in schedules, letters, e-mails and handwritten notes obtained through the Freedom of Information Act by the Center for Public Integrity. The documents indicate an extremely close relationship between the commission and the industry it regulates.

Over the past three years, FERC's current four commissioners have met privately at least 83 times with executives and lobbyists representing oil and gas companies active in the LNG trade. In comparison, FERC has met privately only a handful of times with opponents of specific LNG projects.

Industry access seems to be paying off. For example, despite state and local opposition, FERC recently asserted its authority to unilaterally permit the construction and operation of LNG facilities. (California is currently in the process of challenging that decision in court. ) Top FERC officials have also supported more LNG imports in speeches and presentations. The agency has even announced a "new regulatory approach" that "remove[d] economic and regulatory barriers to the development of onshore LNG import terminals."

Further, a bill expected to be introduced early in the next session of Congress would cement in law the regulatory agency's role as the sole authority over LNG terminals.

Some high-ranking members of Congress have already weighed in on the issue, however. Last month in a giant congressional appropriations bill, three paragraphs granting FERC authority over state powers to site LNG facilities were slipped in without debate by Republican leaders. Senate Energy Committee Chairman Pete V. Domenici, R-N.M, slipped the LNG provision into the massive spending bill, an aide to the senator told the Los Angeles Times this weekend.

Several officials who have opposed LNG projects, such as Sen. Lincoln Chafee, R-R.I., and Rep. Barney Frank, D-Mass., were unaware of the change. Although the language would not carry the weight of law, it puts the leaders on record in favor of FERC's position on the matter.

The agency's power grab comes at a propitious time for the industry. With natural gas demand expected to rise dramatically during the next 20 years according to the Energy Information Administration, FERC officials justify their role by saying that an uptake in the LNG trade can increase supplies, especially in big consumer regions like New England.

"I think it helps customers a lot to give them cheap gas," said Wood. "It is a supply and demand response. The demand has gone up because of the positive environmental attributes, so the supply has to go up."

More than 40 LNG projects are currently slated for all of North America, dotting the Pacific and Atlantic coastlines of the United States.

LNG is the liquefied form of natural gas. Cooled to below minus 260 degrees Fahrenheit, LNG takes up 1/600th of the volume of natural gas in its vapor form. Pumped into enormous tankers—some large enough to fuel ten million homes for a day in one shipment—LNG is imported from countries as near as Trinidad and Tobago, America's biggest LNG supplier, or as distant as Algeria, Nigeria, and Qatar.

Proponents argue that LNG is a clean fuel and that better shipping technology and the high prices for domestic natural gas make it an attractive option for Americans.

Critics worry about the safety risks— including potential terrorist attacks—associated with LNG facilities. If a spill from an LNG tanker ignites, it could endanger surrounding communities, according to several experts interviewed by the Center.

Although natural gas can only burn in a certain concentration in the air, most experts agree that a "pool fire"—an LNG tanker spill onto water that evaporates and ignites in the air—is the industry's most serious hazard.

"It will be like a gasoline pool fire," said Jerry Havens, a professor at the University of Arkansas. "LNG will evaporate much faster and it will burn much hotter."

"It is highly unlikely that anyone could cause a spillage of all those tanks at one time," said Havens. "But if you could cause damage to one tank, and it caught fire, there is a potential for a very large fire that could endanger the rest of the ship."

"Some of these proposals are being proposed in my own hometown [Port Arthur, Texas], so I have a very strong personal interest in the security and the safety of these facilities," said Wood.

While there has not been a serious tanker spill, there have been 13 serious LNG terminal accidents worldwide, including a 1944 fire at an LNG plant near Cleveland, Ohio, that killed 128 people, according to the Congressional Research Service. The most recent accident was an explosion at Algeria's Skikda LNG terminal, killing 27 people, in January 2004.

Communities around the country cite those risks in opposing planned LNG facilities in their neighborhoods.

Meeting Behind Closed Doors From June 2001 to May 2004, FERC's current four commissioners had at least 83 private meetings, including meals, with executives and lobbyists representing oil and gas companies that are active in the LNG trade. The Center did not receive schedules for past commissioners during that period.

Wood accounted for at least 33 of those meetings with LNG interests, either by himself or with other commissioners. Among those Wood scheduled meetings with were lawyers and lobbyists representing some of the more controversial LNG projects in Massachusetts and California.

"I want to know what is going on before I read it in the paper," Wood told the Center for Public Integrity. "If we regulate you, we want to know what is going on. We want to hear it from you first."

Besides the private meetings with FERC's top brass, energy executives have pushed hard for new policy regarding LNG facilities at public sessions held by the agency. For example, FERC held a day-long public meeting with the National Petroleum Council, a federal advisory committee packed with oil and gas officials, to discuss speeding up the permitting process for LNG terminals.

Before the public meeting, Wood also had a private meeting that included his former boss, Jerry Langdon, a former FERC commissioner and now an oil executive, who was representing the NPC to discuss the report.

Langdon helped secure Wood's first job with Pres. Bush, writing in 1994 to the then Texas governor about his past legal advisor at FERC. Langdon and Martin Allday, another former FERC Commissioner, wrote to Bush, "Because we both have seen first-hand (in spades) the ability, integrity, energy and dedication to service that Pat Wood exemplifies, we recommend that you consider appointing him to the [Texas Public Utility Commission]. You simply could not do much better from our way of thinking."

Wood later recalled to the Dallas Morning News that the "letter was sitting on Bush's desk when I went in to see the governor after the inauguration."

"I have been in the energy industry since 1989," Wood told the Center. "You are going to know people. But the burden of mine is to make decisions based on what is good for the public."

The roughly 40 LNG facilities on the table nationwide include plans by such oil and gas titans as BP and El Paso Corp. As a group, 18 of the companies behind the proposals have made more than $31 million in campaign contributions and reported spending more than $227 million on lobbying the federal government since 1998.

Oil and gas companies not only lobbied on the LNG trade, but also for more focus on unconventional exploration technology, a proposed Alaskan natural gas pipeline, and many other provisions in a massive energy bill that is now stalled in Congress.

They've also donated heavily to like-minded legislators. Rep. Lee Terry, R-Neb., and the other nine lawmakers who co-sponsored a previous version of the bill increasing FERC's power, have received more than $794,000 in campaign contributions from the oil and gas industry since 1998.

President Bush, who has received more than $1.7 million from the oil and gas industry from 1998 through mid-year 2004, is also a proponent of LNG. His campaign Web site promoted LNG terminals to meet U.S. demands for natural gas.

Small Communities Targeted At the moment, the continental United States has only four LNG terminals—with another located in Puerto Rico—that can receive LNG and transform it back into gas for consumption.

Many of the new LNG facilities would be located near small communities like Fall River, Massachusetts, and Galveston, Texas—a tactic, critics say, designed to minimize opposition to the controversial facilities.

"I think it is no accident that the industry has chosen places like Fall River, which tend to be lower-income, working class communities where they don't expect educated opposition," said Mayor Ed Lambert. The New England mill town has tried to prevent a proposed LNG terminal from being built inside its city limits.

Fall River has enlisted several top political allies in its opposition to the LNG project, such as Gov. Mitt Romney, former presidential candidate Sen. John Kerry, D-Mass., and Sen. Edward Kennedy, D-Mass.

FERC says it holds hearings in local areas as part of the pre-filing process for LNG terminals sited nearby. "Many people are invited from the local area in the process and many do participate," Wood told the Center.

As part of the application process in some communities, FERC has held "technical conferences" with companies proposing LNG terminals as well. People can attend, but only if they sign non-disclosure agreements. In addition, records that could include potential hazards and safety risks to the area are sealed under a clause called "critical energy infrastructure information." Entire pages of LNG project documents have been exempted from public view.

Some of the private meetings were also part of the pre-filing process. "There are rules that limit informal meetings once an application has been triggered," Prof. Richard Pierce of George Washington University told the Center. Pierce, an expert on government regulation, explained that pre-filing has existed for more than 30 years at FERC and other government agencies as a means of expediting the approval process. Licensees are expected to communicate potential projects to the relevant regulatory agency, in this case FERC, through communications and meetings.

After an evaluation period, FERC typically seeks public comment. Bryan Lee, acting director of external affairs for FERC, suggested that public participation was not necessarily limited, since FERC holds public meetings and posts notices as part of the approval process. Becoming an official participant in the approval process requires a responsibility to contact and inform all involved parties; many members of the public, Lee suggested, may not be prepared to assume the mandated requirements. "You can't just zip out an email," Lee said.

Lee also pointed out that many of the companies had other business before the commission. "Just because the meetings had companies involved in LNG doesn't mean the meetings were about LNG." However, Lee was unable to specify which of the roughly 80 meetings the Center identified involved LNG or at what point in the process they took place. FERC did not provide an estimate of the number of meetings commissioners held with opponents of LNG projects.

The process, says Fall River Mayor Lambert, doesn't seem conducive to getting feedback.

"My sense has been that FERC's intent is to site these facilities and make them happen. They are not in the business of preventing them," he said.

Coast to Coast If the LNG companies expected cooperation from the targeted towns, they miscalculated. Local communities are marshalling opposition to the industry's liquefied natural gas plans.

In Harpswell, Maine, residents voted against an LNG facility being sited in their community, which has encouraged many developers to look north in Canada for new LNG terminals.

In St. Andrews, Canada, the town council has asked the local Passamaquoddy Tribe, which partnered with an energy company, to void its LNG proposal sited on nearby land.

In Mobile Bay, Ala., ExxonMobil shelved its plans for an LNG terminal after opposition from the state's governor, Bob Riley, as well as community residents.

Texans in Galveston voiced anger during a recent public hearing at BP officials who negotiated confidentially for community land to site a LNG facility nearby.

Organized by Greenpeace, a flotilla of California politicians and environmentalists protested ChevronTexaco's proposal for an LNG facility near the Coronado Islands, off Mexico's Pacific coast.

In Coos Bay, Ore., a citizen group, Coos County Citizens for Representative Government, has brought in independent experts to speak to residents about the potential dangers of a nearby LNG project.

Environmentalists and fishermen have expressed skepticism over a possible floating LNG facility in Long Island Sound, N.Y., a joint venture between Shell and TransCanada Corp.

But the industry is flexing some muscle. In Fall River, Gordon Shearer, the C.E.O. of the Weaver's Cove LNG project, a joint venture between energy consultants Poten & Partners and oil giant Amerada Hess, continues to push for his firm's facility. The Weaver's Cove project has hired Baker Botts, FERC Chairman Wood's one-time employer, to help make its case. The joint venture's attorney at the firm, Bruce Kiely, met privately with Wood twice during 2003—once for lunch in August and the second time to pre-file the project's application in December. Both Shearer and FERC Commissioner Suedeen Kelly were present at the December meeting.

Freedom of Information Act requests by the Center for Public Integrity for materials exchanged between FERC and Weaver's Cove representatives at Baker Botts have been held up by the agency. Upon the law firm's request, the records were labeled as "critical energy infrastructure information" and sealed from the public. FERC has yet to decide whether it will release the materials to the Center. On Monday, December 6, 2004, the Center filed suit against FERC to obtain the material.

FERC has since pressed for an LNG terminal in Fall River. Its application is one of the first to cross the agency's desk since the new LNG "open access" policy was announced in late 2002.

According to Mayor Lambert, FERC has minimized the danger by saying the risk of terrorism is small and manageable. "Says who? I think that is an outrageous statement to make in this post-9/11 world," said Lambert.

Practically speaking, Lambert also considers the project an impossibility. "Tankers cannot get past the old bridge," he told the Center. "The Massachusetts Highway Department has notified FERC that the new bridge will not be finished until 2010, which makes this application process an absolute farce. . . . Even if the bridge was not an issue, it would take six years of dredging to make this project feasible."

Weaver's Cove's representatives at Baker Botts dispute Lambert's safety charges and emphasize New England's need for natural gas.

Another high-profile battle is taking place in Long Beach, California. The California Public Utilities Commission has butted heads with FERC and Sound Energy Solutions, a subsidiary of Mitsubishi Corporation, which wants to build an LNG terminal in the city.

"We think there are a lot of safety concerns with this project because it is located in a densely populated area," Harvey Morris, CPUC's principal counsel, told the Center. "This particular facility is being sited on 'landfill,' which is the most unstable in regard to earthquakes. It is near twenty-seven different active earthquake faults, according to the project sponsor itself."

CPUC argue that it's the state—not the federal government—that is responsible for natural gas facilities, according to state law.

"We are basically being told that we do not even have the right to decide for the safety of our citizens, even though this does not involve interstate commerce," Morris said. "Where states have historically regulated intrastate gas facilities, FERC has no basis to regulate this and no basis to oust our authority."

FERC argues that regulatory authority "rests exclusively with the federal government."

In a March 2004 press release, the agency noted that it had "clarified its authority in an order responding to the California Public Utilities Commission's claim that California has jurisdiction over LNG facilities within its borders." CPUC has since demanded a rehearing of the decision.

The FERC chairman had a private meeting with lawyers representing SES to discuss "Mitsubishi LNG project jurisdictional issues" just over two months before the agency made the announcement.

"It was no different than the pre-filing meetings we have had all along," said John Burnes, one of the lawyers Wood met with.

SES's advocates also had another meeting with Wood in June 2003 to discuss the LNG terminal.

Burnes soon after co-authored an article in the trade publication, Public Utilities Fortnightly, praising FERC's decision as "a strong and decisive order" while taking apart CPUC's argument in June 2004.

One for the Future In 2002, LNG imports only constituted one percent of the United States' consumption of natural gas. But by 2020, LNG imports could climb to 20 percent of America's supply, according to energy analysts.

LNG delivers only a small percentage of natural gas in the U.S., but it is a staple in other nations around the world. For example, LNG provides nearly all of Japan's gas needs.

Though heavily favored by Washington, several LNG projects so far have been scrapped due to local opposition across America. Industry representatives complain of "NIMBY" syndrome, or "Not In My Backyard," from residents who live near proposed LNG sites.

"It is fair to say that a project of this order and magnitude will always come across this kind of opposition," said Gordon Shearer of Weaver's Cove. "We don't like coal, we don't like nuclear power plants, we don't like wind, and we don't like LNG, so what is the energy strategy for the New England region then?"

FERC still has its work cut out for it. Right now, 12 applications for LNG projects slotted across the country have been filed with the agency and more than a dozen are planned.

LNG's opponents are not letting up either. "I have said before we will bleed the project with a thousand paper cuts if necessary," Lambert told the Center. "Our confidence is growing."

THE world's biggest energy companies are preparing to fight it out for a stake in Libya's alluring oil and gas industry.

Of 122 companies that registered to apply for oil and gas exploration permits under the latest government licensing programme, 63 have been given the green light to submit bids, says Tarek Hassan-Beck, a top executive at the Stateowned National Oil Corporation (NOC).

The list is a roll-call of the world's top oil firms. BP, Royal Dutch/Shell, ChevronTexaco, ConocoPhillips and ExxonMobil are in the running, as well as smaller explorers such as Marathon Oil. Industry insiders expect China's State-owned energy companies to provide US and European rivals with stiff competition.

Tripoli's exploration drive will open the floodgates to billions of pounds in foreign investment in the oil and gas industry, which badly needs capital and modern technology if the authorities are to meet their ambitious target of almost doubling oil output to three million barrels a day by 2010.

Hassan-Beck also says the government is contemplating setting up a liquefied natural gas terminal at a cost of billions. Experts say BP and ExxonMobil, dominant players in the LNG business, are likely to be interested. Shell signalled its interest in such a venture in March. As Tony Blair met Libyan leader Colonel Gaddafi in Tripoli, the Anglo-Dutch major unveiled a tentative partnership with NOC, which it said could lead to 'integrated upstream and LNG-export projects'.

Occidental Petroleum, ConocoPhillips, Marathon and Amerada Hess, the US companies that were forced to withdraw from Libya in 1986 as relations between Washington and Tripoli nose-dived, are said to be close to negotiating the resumption of old production licences.

Delegates from several US firms said in Tripoli this week that they are keen to be involved in all areas of the country's energy business. That signals a determination to catch up with European rivals, including France's Total and Spain's Repsol YPF. Unfettered by US sanctions, they have already forged strong positions.

BP has yet to outline its Libya strategy but, given the pressures of replacing daily output of four million barrels of oil equivalent with new reserves, it is no surprise it is among those vying for exploration rights. The results of what amounts to an auction of potential oil and gas fields are expected in late January.

The Libyan investment climate has changed radically as the country has restores links with the West. Although some restrictions remain on the export of US equipment, sanctions have been lifted and Gaddafi has instigated a raft of free-market reforms.

WASHINGTON - (KRT) - In a surprise move, President Bush on Friday tapped a deputy treasury secretary and former chemical-engineering professor with limited energy-policy expertise to be his new energy secretary.

Bush asked Samuel Bodman, 66, to advance a second-term energy agenda that includes ramping up domestic-energy development to help the nation begin weaning itself from foreign - particularly Middle Eastern - oil and to push the president's energy plan, which went nowhere in Congress the past four years despite Republican control of Capitol Hill. One controversial proposal: Open the Arctic National Wildlife Refuge to oil drilling.

"We will pursue more energy close to home, in our own country and in our own hemisphere, so that we're less dependent on energy from unstable parts of the world," Bush said when introducing Bodman at a White House ceremony. "We will develop and deploy the latest technology to provide a new generation of cleaner and more efficient energy sources. We will promote strong conservation measures."

Bodman could face criticism because of his previous stewardship of a Boston chemical firm, Cabot Corp., which often ran afoul of federal and state environmental laws.

If confirmed, he would replace Spencer Abraham, a former Republican senator from Michigan, who also took the job with little experience in energy policy.

"In all of the conversations that I have heard, he was not there," said Bill Kovacs, the vice president for energy and environment of the U.S. Chamber of Commerce, the business lobby. "There's got to be a connection (to Bush or Vice President Dick Cheney) somewhere."

Cabot Corp. used to have a liquefied natural-gas division and supplied chemical fluids to the oil-drilling industry.

Some energy-industry insiders said Bodman's liquefied natural-gas experience was key because it was expected to be a larger part of future energy supplies and was promoted heavily by the Bush administration.

While natural gas prices continue to rise and remain volatile, a simple solution may just be decomposing in your local landfill. In a country where Northerners might have had to make a choice between buying Christmas presents and heating their home this winter, it seems unthinkable to burn off a potential power source, but that is what happens every day in landfills around the country. In fact, the average landfill produces about 2,000 cubic feet of landfill gas every minute. Considering the fact that there are more than 3,000 operating U.S. landfills, that's a lot of wasted energy.

Landfill gas is about 50 percent methane gas, a natural byproduct of waste decomposition. It can be easily removed and managed, collected through piping systems and siphoned out of the landfill. Most landfills shuttle the gas to flare stacks, with special technology to scrub emissions, then burn it off at superhot temperatures.

Some landfill managers began to wonder if the gas couldn't be captured, converted and stored as an energy source. Thus, methane farming was born.

Engineers from the Ventura Regional Sanitation District, a public agency that manages public landfills in Ventura County, have been farming methane gas at the Santa Clara, Coastal and Bailard landfills for years, converting the methane into electricity through a microturbine, then selling the electricity to Southern California Edison.

Today, these three landfills produce about 5.5 megawatts of power; that's enough electricity to handle the needs of 5,500 average homes. This process has proved so successful that VRSD engineers have just installed a microturbine power-generation station at Toland Road landfill in Santa Paula.

Toland's microturbine -- fueled solely by landfill gas -- generates about 70 kilowatts of power, enough electricity to power all the landfill's needs. Taking advantage of this "free" energy source, the landfill has begun replacing its petroleum-driven vehicles with electric vehicles, which can be recharged with power produced by the microturbine. These "clean-burning" vehicles do not contribute any waste products to the local airshed and complete the renewable energy loop.

The landfill plans to do even more in the future. There is a plan for Toland to be a stop on Gov. Arnold Schwarzenegger's Hydrogen Highway where hybrid garbage trucks would come to the landfill, dump their trash and then fill up their fuel tanks with hydrogen produced from landfill gas -- effectively closing the loop. These programs, which actually make it profitable to be environmentally friendly, represent a fundamental shift in the way environmental protection and economic outcome can be reasonably balanced.

For Toland's Waste-To-Energy, and other environmental programs, the landfill has won several national awards, including the 2004 Award for Excellence in Environmental Engineering from the American Association of Environmental Engineers and the 2003 Silver Award for Excellence in Landfill Management from the Solid Waste Association of North America.

Toland is not alone in its forward-thinking approach. In fact, according to the Landfill Methane Outreach Program, sponsored by the Environmental Protection Agency, there are more than 350 operational projects in 40 states producing more than 8 billion kilowatts of electricity per year. California is the leading state in this effort with more than 63 active projects and 43 projects working to come online. This is especially significant when you consider that each megawatt of generated electricity offsets the use of 93,000 barrels of oil.

In Ventura County, The Regional Energy Alliance, chaired by Supervisor Kathy Long, is committed to spreading the word about renewable energy. One of only a handful of such agencies in the state, the VCREA provides incentives to member public agencies to support energy-efficient programs and renewable energy opportunities.

Agencies such as VRSD, that are in the process of installing solar panels on their new Operations and Maintenance center at Toland Road landfill, are at the forefront of balancing environmental stewardship with economic opportunities.

-- Brian Brennan is mayor of Ventura and chairman of the board of the Ventura Regional Sanitation District. He is also a member of the Ventura County Regional Energy Alliance.

Odd-numbered years like the upcoming 2005 are normally times of political positioning in California. But no other potential candidates will be able to do much planning this year until or unless the enormously popular Gov. Arnold Schwarzenegger makes known his own plans about running for re-election or not.

With most politicians relegated to a waiting game very likely involving last-minute decisions, there is now some promise that next year will be one of substantive debate on two issues vitally important to California's future: electricity deregulation and liquefied natural gas.

After Schwarzenegger's autumn veto of a bill aiming to return the state to a regulated electricity system much like what prevailed before the deregulation debacle of three and four years ago, chances are the electricity debate will move from the Legislature to a forum Schwarzenegger and his business-oriented allies will soon control, the state Public Utilities Commission.

While the PUC may hold some public hearings before then, most Californians probably won't know specifics about what the governor and his commissioners plan for their electricity future until midyear at the soonest.

But the LNG debate could heat up much earlier in forums from Sacramento to county boards and city councils.

For there are now four active LNG plans in the works affecting this state, pushed by large firms that want to build enormous terminals along the coasts of Southern California, including Oxnard, and Baja California to import shiploads of subfreezing natural gas. This would arrive in liquid form from places like Australia, Indonesia, Sakhalin and the Middle East. The liquid would be warmed in those terminals until it returns to gaseous form, then steered into the state's existing gas pipeline system.

Pressure for the plants grew stronger all through last summer and fall, even though the issue drew little publicity outside areas targeted for the LNG terminals.

First, four Schwarzenegger cabinet members took an 11-day, all-expenses paid tour of potential LNG sources in Australia and Asia, most of it in the company of executives from big energy firms hoping to grease their way into massive new profits.

Then the PUC voted to let utilities like Southern California Gas, San Diego Gas & Electric and Pacific Gas and Electric accept gas from the terminals if they ever open.

Around the same time, the parent company of both SoCal Gas and SDG&E issued a dire forecast predicting massive natural gas shortages by 2020 unless LNG becomes a West Coast reality. San Diego-based Sempra Energy's study claimed natural gas production in the United States will drop by 50 percent from today's level.

Sempra, significantly, has all needed permits in place for the first of the four proposed LNG plants, sited in northern Baja. The obvious conflict of interest renders the company's forecast of coming gas shortfalls meaningless to some.

But Sempra maintains it is merely trying to serve its millions of Southern California gas customers. Even though the LNG terminals and the colossal tankers that would serve them figure to cost many billions of dollars (no one is sure yet just now many billions), the company maintains a recent doubling of the cost of ordinary natural gas means LNG would cost little or nothing more than current supplies.

If that's proved correct, the LNG debate would center mainly around issues of safety and air quality.

Sempra and other LNG promoters insist that plant safety has improved so much that repeats of a World War II-era accident that blew up an LNG plant in Cleveland, Ohio, or a multifatality accident last year in Algeria would be virtually impossible.

LNG advocates also claim assured continuing supplies of the clean-burning fuel would have air-quality benefits far greater than any harm done by emissions from the importing ships.

But would those supplies necessarily be assured, with gas coming in part from sometimes unstable Asian countries and with the possibility of terrorist strikes on tankers? Plus, LNG skeptics don't like making America even more dependent on foreign fuels, claiming conservation and development of renewable fuel technologies can bridge any gaps caused by lower gas production.

"It's not true that we will be in desperate straits without this fuel," Bill Powers, chairman of the Border Power Plant Working Group, told a reporter. He noted reports from the federal Department of Energy and California Energy Commission paint a far less threatening picture than Sempra's.

The California commission, for one, reported in 2003 that gas supplies will be adequate for the foreseeable future.

In the end, this dispute will likely boil down to money. Sempra and other energy companies want new plants because they should produce large profits. Consumer advocates believe tying the state to expensive LNG facilities will guarantee high prices even if supplies suddenly increase, as happened in the early 1980s, the last time a natural gas shortage was predicted.

In a year when it will be difficult for politicians to start working on their personal futures, maybe they'll be able to think about the energy future of the state. And if they think clearly, without undue influence from corporate-sponsored junkets and the like, they should find neither electric deregulation nor LNG in the best interests of California consumers.

-- Thomas D. Elias, of Santa Monica, is a columnist and author. His e-mail address is tdelias@aol.com.

An unlikely coalition convened in Washington today to take action against the country's increasing dependence on foreign oil sources.

Seeking input from environmentalists, 26 former national security officials -- many from the administrations of Ronald Reagan and George H.W. Bush -- urged President Bush to take action to reduce U.S. oil consumption. "The United States' dependence on imported petroleum poses a risk to our homeland security and economic well-being," they wrote in a letter to the president.

In 1974, 37 percent of the oil used in the United States was imported. By last year, that number had soared to 63 percent.

Terror Threat Adds to Urgency With domestic supplies of oil at a premium, the signers of the letter said the country will have to look elsewhere for solutions. They suggested "a major new initiative to curtail U.S. consumption through improved efficiency & and other available petroleum fuel alternatives." Such an effort, they said, should cost up to $1 billion over the next five years.

"This is not rocket science; this is within our grasp today," said Robert McFarlane, national security adviser to Reagan. He said the issue has become more urgent because of instability in the Middle East and threats posed by al Qaeda.

"I think in earlier years, we didn't face as organized a terrorist threat as we do today," McFarlane said.

The signers of today's letter say Bush clearly agrees with their main theme: The United States needs to wean itself from foreign oil.

"To put it bluntly, sometimes we rely upon energy sources from countries that don't particularly like us," Bush said in a February 2002 news conference.

Bush has called for cars that run on hydrogen instead of gasoline, but experts say that idea would take a decade or more to pay off.

The former security officials say fuel can be created much sooner from agricultural waste. They also look to innovations in aerospace to help improve fuel efficiency. In the future, they suggest, cars could be made from the same lightweight materials used in the most advanced aircraft. "We now have the fruits of that previous research available to be exploited," said Frank Gaffney, head of the Center for Security Policy think tank and former assistant secretary of defense under Reagan.

Imagining Oil Prices Beyond $100 a Barrel Many energy analysts warn, though, that change happens slowly. The issue of oil drilling in Alaska's Arctic National Wildlife Refuge, for example, simmered for decades before a sharply divided Senate voted this month to allow the plan. "I hope it goes though. But that will take years to develop," said Mark Baxter, director of the McGuire Energy Institute at Southern Methodist University. "So there are no short-term answers to our energy problem."

Consumers may resist change as well. Large sport utility vehicles remain popular. Sales of fuel-efficient hybrids are growing, but the number is still small.

But the clock is ticking. McFarlane, noting that oil at $55 a barrel was once unthinkable, worries about major oil shocks if the nation does nothing.

If something happens, he said, "we're not talking about oil at $100 a barrel; we're talking about well beyond that."

It's a pure travesty for a state agency to lock in a future of high prices for millions of California consumers when its specific mission is to protect those consumers.

Yet, that is just what a recent natural gas decision by the California Public Utilities Commission would do.

Besotted by the idea of high-tech foreign liquefied natural gas entering California via a group of coastal receiving terminals, the commission has authorized the state's largest gas companies to give up their rights to a huge amount of reserved space on two of the three largest pipelines now bringing gas into the state.

If the companies follow up this summer, as expected, natural gas prices will likely stay sky-high in California forever, exceeding even today's levels.

... "Natural gas is good, but there's a difference between importing it and using North American reserves as we transition to renewables," Powers said.

He said that natural gas demand decreased 5 percent in 2004 and that demand in 2002 won't be reached again until about 2014, according to the energy administration. He also suggested that market manipulation is more to blame for higher prices than low supply.

"Domestic production is up, proven reserves are up, and storage is up," he said. "There's nothing that suggests increased supply will lower prices."

... Meanwhile, a report earlier this year by Andrew Weissman, a Washington, D.C.-based energy analyst, said that the nation should wade carefully into the LNG import business, as it has the potential to drastically increase the U.S. trade deficit, which is already at record levels.

Weissman also said the widespread import of oil could negatively affect tax revenue.

"Supporting the construction of $100 billion or more in infrastructure elsewhere in the world rather than here in the U.S. and, over a period of years, sending $1 trillion or more in revenues overseas will have huge implications for federal, state and local tax revenues and for the value of the U.S. dollar," he wrote.

A sound, safe American energy plan requires solutions that make America stronger not weaker

Make America more self-sufficient not more dependent, make America safer not more vulnerable

LNG Danger To Our Communities TimRileyLaw.com 760-683-5898

Consumer Protection Attorney Tim Riley Warns About Liquefied Natural Gas

Energy Intransigence