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Fracking Gives New Meaning To California’s Rejecting LNG:

California could have three or more facilities receiving liquefied natural gas (LNG) today, but for massive popular resistance to the prices and possible dangers they might have brought. If those plants had been built, the phenomenon of fracking would mean something very different than it now does.

Over the last 10 years, potential LNG sites were killed in locales as varied as Humboldt Bay near Eureka, north San Diego County, Santa Monica Bay, Ventura County and Long Beach.

As these were all proposed, Californians were told they faced the threat of acute natural gas shortages, even though the state’s total gas consumption remained steady even as population increased by about 3 million during the century’s first decade.

So it became clear that if there were to be a shortage, it probably would be the creation of the state Public Utilities Commission, which almost inexplicably instructed the state’s big utilities to give up about one-third of their longtime reserved quantities of natural gas coming from places like Texas and Oklahoma.

This never happened, as giving up that gas was contingent on the import of LNG, natural gas converted into a sub-freezing liquid, to be brought here by tanker from distant points like Indonesia and Australia.

Because of populist resistance, the multi-billion receiving plants and their attendant fleet of equally pricey tankers do not now exist. But such plants and ships were imposed on other parts of the country, most notably the Gulf Coast and Eastern Seaboard.

Now many of those importing facilities are hastily being converted into liquefaction plants that will soon export the ultra-cold and highly volatile gas rather than bringing it in.

Even in places like Oregon and the coast of British Columbia, where three sites have been targeted, spots originally seen by developers as ideal for importing gas are now being pushed for exports. The Oregon facilities were originally planned to be an end run around California’s rejection of LNG importing plants.

All this sudden interest in exporting LNG to places like South Korea and Japan, which now get most of their gas from Indonesia, is the result of fracking in shale rock formations, which has created a vast surplus of natural gas in America. Fracking involves blasting water, sand and chemicals deep into the ground to loosen oil and gas bound into some kinds of rock.

In California, the U.S. Energy Information Agency (EIA) estimates one geologic feature by itself – the Monterey Shale formation – may hold a minimum of 15 billion barrels of crude oil and enough natural gas to fuel this entire nation for as much as three years. How much is 15 billion barrels of oil? About one-tenth the known reserves in Saudi Arabia.

If the gas in the Monterey formation alone were fully exploited and added to what’s now being produced in places like Wyoming, West Virginia and North Dakota, the United States could quickly become the world’s second leading natural gas exporter.

The federal government is a big cheerleader in the fracking and LNG export movement. A December EIA report claimed exporting LNG would have “large net economic benefits in spite of higher domestic natural gas prices.” So the government has admitted that exporting LNG will lead to higher gas prices in America, even as it creates jobs.

But in part because there are no exporting and gasification facilities here, California shale has not been fracked to nearly the extent similar formations have in other states.

This has had several effects, positive and negative: It has kept safe most drinking water aquifers – known to have been polluted by fracking in Wyoming and West Virginia. There has also been less risk of setting off earthquake faults, a possible fracking side effect that has yet to be either verified or disproved.

On the minus side, California has not seen the kind of jobs boom that now puts once-blighted North Dakota near the bottom of national rankings in unemployment. The shale oil boom in that state’s badlands spurred the largest employment boost in Dakota history, with tens of thousands of workers moving in from elsewhere.

Parts of California that now suffer the state’s most severe unemployment, most notably areas in the west San Joaquin Valley, could see huge growth if fracking went big-time here. But the only way that’s likely to happen, given the cost of the operation, is if California allows construction of LNG export plants in the same sorts of areas once considered for liquid gas imports.

As things now stand, the main market for California-produced natural gas is right here in California. But gas piped in from other states remains cheaper than gas from fracking, even if the fracking is nearby.

All of which means the state’s populist rejection of LNG imports during the early and mid 2000s reverberates heavily today, and we’ll all have to stay tuned to find out if that’s a good thing or not.

 

in Opinion
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