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The LNG scramble

August 22, 2006

WHAT'S BETTER FOR CALIFORNIA, a liquefied natural gas terminal in the port of Long Beach that could potentially kill thousands of people in the event of a leak and fire, or a floating terminal beyond Oxnard that could cloud the coast from Malibu to Santa Barbara with tanker exhaust fumes? How about a system using submerged pipes and buoys that unloads natural gas after it has been converted from liquid form on a specialized ship?

If you don't know the answer, that's OK. Nobody else does either. But that won't stop state and federal planners from making blind decisions that could affect the lives of millions of people.

Liquefied natural gas is an important energy source that burns cleaner than oil or coal. Currently, however, it is very hard to import to California. The gas is supercooled to a liquid state, allowing for transport on tanker ships, but the state has no terminals at which the tankers can unload. There are five proposals from energy companies to build such terminals -- but although the state could use one or possibly two LNG terminals, it doesn't need five.

There is a common-sense solution, but it depends on logic, rather than politics, winning the day in Sacramento. That means it's in trouble.

Last year, state Sen. Joe Simitian (D-Palo Alto) sponsored a bill calling on a state energy commission to study all the LNG terminal proposals and rank them according to such criteria as their effect on the environment, public health, safety and security, as well as the degree to which they would meet California's energy needs and their relative economic benefits. Without such a study, regulators and politicians are likely to approve the projects that get out of the gate first and have the most generous lobbyists, rather than the ones that are best for the state.

Simitian's bill, SB 426, was approved by the Senate and barely squeaked through the Assembly in 2005. But the legislative session ended before the Assembly and Senate versions could be reconciled. Now the bill is back, but its future is uncertain.

Lobbyists for the energy companies seeking to build terminals have had an extra year to wield their influence. Organized labor is also now standing in the way because the partnership aiming to build the Long Beach terminal has agreed to use union labor for construction. These narrow interests don't like the bill because a study might rule out their projects. With less than two weeks to go in the 2006 session, Simitian's bill is in danger of being buried in a committee until next year -- by which time regulators may already have made critical decisions.

LNG terminals are not ordinary projects. They sometimes use untested technology, they're potentially dangerous and they involve giant tankers that spew air pollution. Which is why decisions about when and where to build them are best made with as much evidence as possible.

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