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LNG Promoters Try End Run Through Oregon:

It’s been hard times lately for promoters of liquefied natural gas (LNG) receiving terminals along the California coast.

As far back as 1982, a Chumash Indian lawsuit combined with a worldwide glut of natural gas quashed the first proposed LNG project, planned for Pt. Conception in Santa Barbara County. About two years ago, another LNG plant at Humboldt Bay near Eureka died because of strong local opposition.

Then the state Lands Commission shocked the Australian energy firm BHP Billiton by nixing its planned terminal off the southern coast of Ventura County. Meanwhile, the City of Long Beach has intermittently resisted plans for a similar facility in its busy harbor.

And last summer, after the Lands Commission allowed expansion of a pipeline from Mexico to bring some LNG into California from an almost completed plant built by San Diego-based Sempra Energy near Ensenada in Baja California, Lt. Gov. John Garamendi, the commission chairman, said that relatively small amounts of LNG ought to be enough to satisfy all potential California needs in the foreseeable future.

So what’s an LNG promoter to do? More than $100 million blown on sheer futility as LNG has gone virtually nowhere in California despite the backing of Gov. Arnold Schwarzenegger, the state Public Utilities Commission, and the state Energy Commission. Still, the promoters desperately want in on this state’s market, where consumer gas prices remain higher than almost anywhere else in North America.

Enter Oregon. Even before their recent setbacks in California, the LNG companies were seeking a back-door way into the state. These are companies with agreements to drill for natural gas in faraway locales like the Darwin Peninsula of Australia and the waters off some Indonesian islands, supercool it to a subfreezing liquid, and then ship it across the Pacific Ocean to plants where it can be rewarmed to a gaseous state and pumped into existing natural gas pipelines.

So far, promoters like Houston-based NorthernStar Natural Gas and the Canadian Fort Chicago energy firm have made five proposals to build LNG receiving facilities along the picturesque Oregon coast, from the mouth of the Columbia River at Astoria to the waters off the small but lovely town of Coos Bay.

If all were built, they would bring in more than five times the amount of natural gas Oregon can consume anytime in the next 50 years.

Ken Zimmerman, an analyst of resource markets with the Oregon Public Utilities Commission, reported in late summer that three-fourths of the gas coming through any LNG receiving facility in Oregon would likely end up in California.

Garamendi and the California Lands Commission would have no authority to forbid this, so long as gas from LNG entered pipelines bringing gas to California at a point outside this state. Only the California Public Utilities Commission could stop it then, and then only on grounds that the LNG would be too expensive. PG&E Corp., owner of California’s largest utility, is a partner in one of the proposed spur pipelines that would bring gas from LNG ports to the main line carrying Canadian gas to this state.

For sure, LNG would likely cost more than the conventional gas supplies now coming here from Texas, Oklahoma, Colorado, Wyoming, and the Canadian province of Alberta.

The costs of supercooling gas, building and operating ships to carry it, and building the needed receiving and rewarming facilities virtually guarantee it will cost more than existing supplies arriving via pipelines.

But the California PUC has been a patsy for LNG promoters for decades, okaying virtually every hairbrained scheme they’ve proposed. That commission is unlikely to stop anything harmful to consumers.

Still, there’s nothing to prevent Californians from campaigning in Oregon against that state’s approving any LNG plant. “I’m willing to go anywhere to provide information on LNG issues and share my knowledge with anyone that needs it or wants it,” says Garamendi. “It’s the role of government to protect consumers from market manipulation. Manipulation definitely might take the form of companies trying to substitute high-priced gas for low-priced gas.”

In short, the LNG promoters plainly hope that Oregon officials will be as malleable to their wishes and their financial blandishments as the California PUC has been.

They may be wrong, but if not, maybe Californians like Garamendi can do something about an obvious end run around this state’s ability to set its own energy policies.

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