Thomas D. Elias: Oregon LNG plant costly for California

A major raid on the pocketbooks of millions of California consumers is now under way in Clatsop County, Ore., near the mouth of the Columbia River.

No, it is not the fault of Oregonians, despite their longtime slogan, “Don’t Californicate Oregon.” Residents of Clatsop County voted by a 2-1 margin last fall to reject the plans to build a huge liquefied natural gas (LNG) receiving facility at Bradwood Landing, about 20 miles inland from the Pacific Ocean.

Major state figures like Gov. Ted Kulongoski and U.S. Sen. Ron Wyden, both Democrats, oppose the project. So does Washington Gov. Christine Gregoire. None of that matters much either to the current Federal Energy Regulatory Commission, whose five members all are appointees of President Bush, or to NorthernStar Natural Gas. One day after Clatsop County voted down the Houston-based company’s proposal via a local ballot proposition, FERC gave tentative approval to the LNG plant. Not until after it was clear that Barack Obama would be the next president, able eventually to replace all of them, did FERC commissioners relent a bit and schedule another hearing on the Bradwood facility.

LNG on this scale is natural gas supercooled into a liquid state near the wells where it is drilled, then shipped across oceans to receiving plants where it is warmed back into a gas and placed into pipeline networks for use in homes, industry and commercial buildings. At least three-quarters of Bradwood’s gas would eventually reach California, according to estimates by Oregon utility regulators.

Question: Why does California need this gas? Answer: It doesn’t right now, but might if a 2004 decision by the state Public Utilities Commission remains in effect, allowing big California utilities like Southern California Gas and PG&E to give up as much as one-fourth of the supply that now comes here from domestic sources in Texas, Oklahoma and Colorado.

That decision was sought both by the gas companies and would-be LNG developers, who have so far been stymied in their attempts to build receiving facilities in California. So far, the only LNG coming to California anytime soon will be part of what arrives at the Costa Azul receiving plant in Baja California, Mexico, recently completed by Shell Oil Co. and Sempra Energy.

Meanwhile, NorthernStar is pursuing yet another LNG plant, this one on a converted oil platform off the coast of Ventura County. The public face of both projects is Joseph Desmond, vice president of external affairs for NorthernStar. Desmond served one year as chairman of the California Energy Commission before his appointment by Gov. Arnold Schwarzenegger was rejected by the state Senate because of his close ties to the LNG industry. During that year, he successfully pressed for the key California PUC decision allowing LNG into California.

Why is all this important to Californians? In a word, money. Domestic supplies of natural gas arriving via existing pipelines require no major new investment, while new LNG facilities would cost billions of dollars. Building one LNG tanker (and about six are needed to service one receiving facility) costs more than $1 billion. Liquefying and receiving plants also cost multiple billions.

That money would be included in whatever price consumers pay for the natural gas. NorthernStar and other LNG promoters deny it, but the project costs alone could tack as much as one-third onto whatever the going daily price is for natural gas. Plainly, promoters like NorthernStar figure to make a killing off these projects, all at the expense of consumers.

Most Oregon citizens and officials don’t want a plant imposed upon them that will mainly supply an artificially created need in California. So it’s high time California’s two U.S. senators and other state officials became active in fighting not only LNG along the California coast, but also in Oregon. That is, if they care about the well-being of California residents and businesses.

Thomas D. Elias writes on California politics and other issues. E-mail him at tdelias@aol.com.