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Ventura County Star | July 4, 2006

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Clearwater Port hires attorney Jeff Gorell

Clearwater Port LLC , a safe, environmentally sound proposed liquefied natural gas terminal proposed on an existing platform 12.6 miles off the Oxnard shore, has hired former Ventura County Deputy District Attorney Jeff Gorell.

Gorell will serve as director of government and community affairs.

Gorell has experience at the local, state and federal level. From 1999 to 2006, he advocated before the California Superior Court as a deputy district attorney for Ventura County.

Gorell is active in local public policy, serving on the BRAC committee to save Ventura County Navy Base, and the board of directors of the American Red Cross of Ventura County. Gorell also worked in Navy crisis management and public affairs before becoming a reserve intelligence officer, and as a speech writer and deputy press secretary in the California governor's office.

Clearwater Port LLC will convert an existing oil-drilling platform into a receiving/regasification terminal. It is expected to begin operations in 2010. Clearwater Port's offices are on the ninth floor of the Morgan Stanley building at 300 E. Esplanade Drive, Suite 900, Oxnard.

 

Ventura County Star | June 6, 2006

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Two more companies plan LNG proposals
Woodside, NorthernStar are expected to file applications for facilities soon
By Charles Levin

Two more companies are close to filing applications with state and federal officials for liquefied natural gas facilities off the Los Angeles and Ventura County coasts. Australia-based Woodside Natural Gas Inc. will submit an application within two months with the California State Lands Commission and the U.S. Coast Guard for a deep-water port license, company officials said recently.

NorthernStar Natural Gas expects to file a similar application within a few weeks, officials with the Houston-based company said.

BHP Billiton, also of Australia, is furthest along in the regulatory process for what could be Southern California's first liquefied natural gas facility. The mining firm hopes to build a floating gas port 13.8 miles off the Oxnard coast. Gas would be piped ashore to the Reliant Energy plant near Ormond Beach. Another pipeline would carry the gas to a Southern California Gas Co. facility in Somis.

The three proposals are among nearly 40 nationwide, including two in Long Beach and one in Oregon. Another project in Baja California is under construction. Woodside and NorthernStar would be subject to the same environmental review and public hearings as BHP Billiton. Gov. Arnold Schwarzenegger would have the final say on any project, and he has indicated support for the idea of liquefied natural gas facilities off the Ventura County coast.

Proponents of liquefied natural gas, including energy companies and business interests, say the fuel is safe, clean-burning and critical to meet state energy shortages.

Opponents have focused their energies so far on BHP Billiton's proposed Cabrillo Port, saying it would threaten air, water and marine wildlife resources and be an attractive target for terrorism.

Critics seem somewhat reserved about the Woodside and NorthernStar proposals because there's less information about them.

"They should all be run through the gauntlet of legislation," said Susan Jordan, executive director of the California Coastal Protection Network.

Jordan opposes liquefied natural gas facilities, but in case California goes in this direction, she's supporting SB426, a bill by state Sen. Joe Simitian, D-Palo Alto. The bill would evaluate and rank different liquefied natural gas proposals based on how well they would meet state energy needs and safety, health and security requirements. It would restrict the governor to approving only the top two proposals, Jordan said.

Woodside's OceanWay Secure Energy facility would rely on a submersible buoy 21 miles from Point Dume. Unlike the other two local proposals, where liquid gas would be converted back to gaseous form aboard floating ports, Woodside's project calls for the conversion to occur on specially designed tanker ships. An undersea pipe would carry the gas from the buoy to a location near Los Angeles International Airport, where it would connect to Southern California Gas Co.'s network.

Woodside President Jane Cutler said the project is safe and environmentally sound, citing location as a key reason. The buoy would sit outside shipping lanes, the Channel Islands National Marine Sanctuary, ferry routes to Catalina Island and a weapons-testing area for Naval Base Ventura County, Cutler said.

In the event of inclement weather, tankers could delay shipments or leave the buoy, Cutler said.

"We do see it as a logical and sensible option," Cutler said, adding that the company over the past 17 years has shipped more than 2,000 cargo loads of liquefied natural gas to Asia, Japan and China without incident.

The facility could open by 2011 or 2012, depending on the availability of Australian gas reserves, Cutler said.

NorthernStar's Clearwater Port project would renovate Platform Grace, a former offshore oil platform owned by Venoco, into a gas-conversion facility. NorthernStar has acquired an option to either buy or lease the platform, which sits 12.6 miles off the Oxnard coast, said Jeff Gorell, a company spokesman.

The project was first proposed by Crystal Energy, which was recently bought by NorthernStar.

Platform Grace has weathered California's worst storms since it started operating in 1979, Gorell said. "It is an icon on the California coast," he said, and the project "doesn't add anything additional to the skyline."

Clearwater Port could open in 2009, Gorell said.

"We look forward to the rigorous scrutiny that we'll get in the permitting process," he said, adding that he knows that opposition to liquefied natural gas facilities in Oxnard runs strong. "We understand there's a certain segment of the community we won't win over, but we'll try."

 

Los Angeles Business Journal | May 22, 2006

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Five Southland LNG Projects Seek Approval
By Howard Fine

After years of high natural gas prices and periodic shortages, the race is on to develop liquefied natural gas import facilities along the Southern California coast.

Five proposals are in the works to have tankers bring liquefied natural gas, or LNG, to the Southern California coast, where the supercooled liquid would be converted back into gas and then piped to the region's existing natural gas network.

But the burgeoning interest in building import facilities may be too much of a good thing. Industry experts say the market cannot bear all five import facilities coming on line over the next decade and that a shakeout is inevitable.

"California's demand for natural gas is only growing about 2 percent per year. Based on that, we need a couple of additional facilities along the entire West Coast," said Claudia Chandler, assistant executive director of the California Energy Commission. "I don't foresee all five of these facilities would be built. It would glut the market and wouldn't be economically feasible."

Three of the five proposals are along the Los Angeles County coast, including a highly controversial terminal inside the Port of Long Beach and two offshore proposals that surfaced in the last few months. The other two are several miles off the Ventura County coast. All still need state and federal approvals, which is a years-long process.

In addition, Sempra Energy, parent of Southern California Gas Co., is already building an LNG terminal in Baja California, that's slated for completion in early 2008.

Indeed, these five proposals are among dozens nationwide that have sprung up over the last few years as natural gas prices have soared. Only four receiving LNG terminals currently exist in the U.S.: three on the east coast and one in the Gulf region.

Even if the domestic market could support all these additional facilities, there's concern that there may not be enough natural gas around the world to ship to all those terminals. Not a single LNG shipment from the spot market arrived on U.S. shores in March, according to the U.S. Department of Energy.

What's more, rapidly rising construction costs are putting pressure on the project developers. For instance, the cost to build the LNG terminal at the Port of Long Beach has nearly doubled from $400 million three years ago to about $750 million today, thanks to much higher steel and concrete prices.

And this is before taking into consideration the intense environmental and community opposition to some of these projects. Concerns about the safety of handling a highly flammable fluid or gas and of environmental contamination have dogged the projects from the get-go, with some critics saying none of these import terminals should be built.

The LNG process is expensive, but high natural gas prices have made it financially feasible. As a result, proposals for LNG terminals have blossomed. Demand for natural gas also has spiked in recent years largely because it is a clean fuel. In California, half of the natural gas used is as fuel for power plants.

Industry officials contend LNG terminals and tankers are safe, but a major accident in Algeria two years ago that killed 30 people outside an LNG facility there sent shock waves through this country.

All of this is prompting intense jockeying for permit approvals and to position the projects as safe and environmentally benign.

Here's a rundown of the five proposals along the Southern California coast.

Terminal at Port of Long Beach

The first project out of the gate and the farthest along in the approval process is also the most controversial.

Three years ago, Tokyo-based Mitsubishi Corp. reached an agreement with the Port of Long Beach for the exclusive right to develop the West Coast's first liquefied natural gas receiving terminal on 27 acres of vacant land at the south end of Terminal Island.

Tankers carrying liquefied natural gas would dock at the terminal and offload their fuel into receiving tanks. The fuel would then be regassified onsite and loaded onto trucks and trains for distribution throughout the region. The facility, which was initially projected to cost $450 million, would be able to process up to 68 million barrels of LNG per year.

Mitsubishi initially formed a Long Beach subsidiary, Sound Energy Solutions, to develop the terminal. Last year Houston-based oil giant ConocoPhillips joined Mitsubishi as a 50/50 partner in the project.

The project is well along in the permit process. Last fall, a draft environmental impact report and statement came out, followed by months of hearings and public comments. According to SES spokesman Seiichi Tsurumi, a final draft of the environmental report is now being prepared and should be ready later this year. Then it will be up to the Federal Energy Regulatory Commission to grant final approval, sometime next year. Construction would take another couple years.

However, the project is hotly contested. Environmental and community opponents claim it's inherently unsafe to place an LNG facility so close to a major population center - 85,000 people live within a three-mile radius of the site and 400,000 within a five-mile radius. They point to the tremendous potential for damage and fatalities from either a terrorist attack, a natural disaster (earthquake or tidal wave) or an accidental release of LNG.

The most serious danger, according to a 2005 California Energy Commission report, is a "pool fire," in which LNG spills and then is ignited. "A pool fire is intense, burning much hotter and more rapidly than oil or gasoline fires.Its thermal radiation may injure people and damage property some distance from the fire itself."

That has prompted critics to say that placing the project near so many people is irresponsible. "In the event of a catastrophic disaster, you do not want such a facility near where half a million people could be affected," said Bry Myown, a community activist who is now running for a seat on the Long Beach City Council.

Amidst all this, the project was the subject of a jurisdictional squabble between the state of California and the federal government. For landside LNG terminals, the Federal Energy Regulatory Commission traditionally has had the lead authority. But because of the controversial nature of this project, the state wanted veto power. In last year's energy bill, Congress affirmed FERC's supreme authority.

But given the intense opposition to this project, if the federal government gives its approval, lawsuits from community opponents and environmental groups are a virtual certainty.

Malibu offshore terminal platform

This massive offshore project with connecting pipeline into Ventura County is moving through the permit process, but has sparked fierce environmental opposition, too.

Wary of the controversy over an LNG terminal in the middle of a crowded harbor, Melbourne, Australia-based mining and resources giant BHP Billiton Ltd. in early 2004 proposed building a 225,000-square-foot floating terminal - called Cabrillo Port - about 14 miles south of the Los Angeles/Ventura county line.

Ships bearing LNG from BHP Billiton's Australian natural gas fields would dock at the platform and offload their cargo into storage tanks. The LNG would then be regassified on the platform and piped to shore through a pipeline under the sea bed. On land, the underground pipeline would pass through much of Ventura County to hook up with a Southern California Gas Co. pipeline node between Santa Paula and Camarillo. A pipeline extension would also go through Santa Clarita.

When first proposed, the project cost was pegged at about $575 million; it has since soared to $800 million, according to BHP spokeswoman Kathi Hann. That would make it the most expensive of the five proposals.

As for the timeline, a draft environmental impact report was released last year and, after public comment, a revised report has been issued. The offshore platform needs approval from the State Lands Commission and the U.S. Coast Guard Maritime Association, which will be releasing a final report this summer. Hann said the permits could come late this year or early next year. Construction would not begin until 2009, after completion of final design work. The first gas delivery would not come until 2011.

"Because there is no shipyard in Southern California capable of building anything this size, we're going to have to build it elsewhere and then ship the platform here," Hann said.

But that assumes the project can overcome substantial environmental opposition. Critics say that an LNG release from the platform could cause damage to passing ships and to marine wildlife. They also contend that storage and regassification would also cause substantial air emissions - 270 tons of smog-forming chemicals pumped into the region's atmosphere per year, according to a fact sheet from the Environmental Defense Center.

"In Ventura County alone, emissions from the normal operations of the Cabrillo Port would give BHP Billiton the distinction of being the worst polluter by a factor of two over the county's current top emitter," the fact sheet said.

BHP Billiton's Hann said that the offshore platform and all the ships calling on it would run on natural gas, which burns cleaner than most diesel fuels. "This project is going through an exhaustive and thorough environmental review," she said.

Nonetheless, once permits are granted, lawsuits from environmental groups are likely. They could be joined by opponents from the Oxnard/Camarillo area concerned about both the presence of a large offshore terminal and pollution.

Oil platform conversion

This effort to take an old oil platform west of Oxnard and convert it to an offshore LNG terminal with a pipeline to shore is going through some fine-tuning and may have to compete against other proposals for reusing that platform.

Two years ago, Houston-based Crystal Energy LLC filed an application to turn the shuttered Oil Platform Grace 13 miles west of Oxnard into an LNG import and regassification facility. By using an existing platform and existing right of way for a new pipeline right next to another pipeline leading to shore, Crystal Energy hoped to keep costs down while reaping the safety advantages of an offshore project, which it dubbed Clearwater Port.

Crystal Energy received a major boost in late 2004 when Australian natural gas giant Woodside Energy Ltd. agreed to join as a partner. Woodside not only brought deep pockets to the venture but also a guaranteed supply of natural gas from its extensive Australian fields.

But less than a year later, as the project was just beginning to go through the environmental approval process, Crystal Energy and Woodside parted ways, with Woodside deciding to pursue its own venture off the Southern California coast (see below).

Meanwhile, Crystal Energy was not the only entity eyeing the abandoned oil platform. The National Marine Fisheries Service proposed using the platform as a test saltwater fish farming project, while Denver-based Venoco Inc., which owns the platform, informed investors last year that it's considering renewing oil production there.

All of these proposals have been met with opposition from some environmental groups that want to dismantle the platform.

Last week, Clearwater Port spokesman Charles Stringer said Crystal Energy's application was being fine-tuned and would be resubmitted to the California State Lands Commission and the U.S. Coast Guard later this summer. The project could deliver its first gas supplies into the Southern California Gas Co. network by 2010, he said.

Stringer put the estimated cost of the project at $500 million.

Buoy project

This proposal unveiled just two months ago may be late out of the starting gate but has captured the attention of environmentalists and other LNG critics as the least intrusive facility planned to date.

Instead of a giant onshore terminal or offshore platform, Australian natural gas giant Woodside Energy Ltd. has proposed anchoring a buoy to the seabed about 22 miles south of Point Dume and 23 miles west of Palos Verdes. Then Woodside ships bearing LNG would dock at the buoy, regassify the LNG and transfer it to a pipeline that would go under the seabed.

After bypassing underwater canyons prone to landslides, the pipeline would hit the shore near Los Angeles International Airport and hook up to a Southern California Gas Co. pipeline distribution node.

Woodside spokesman Sondra Magness said a cost for the project has not been established, nor has a permit application been formally submitted to the U.S. Coast Guard and the State Lands Commission; that's expected later this summer.

Once the application is submitted, Magness said it would take 18 months to two years for permits to be issued, including one from the City of Los Angeles to run the pipeline underneath LAX. Then Woodside would need another couple of years for construction. She said it's possible the first gas could be delivered to the Southern California Gas Co. pipeline network by 2011.

Woodside's proposal has some major advantages: the buoy costs a lot less than a massive platform. And only the occasional ships docking at the buoy would be visible from shore. There are also fewer air emissions because the gas is only transferred to a pipeline, not stored on site.

"Woodside's technology appears to be the best of the five proposals from an environmental standpoint," said LNG opponent Bry Myown, who was quick to add she was not endorsing the proposal.

But coming so late to the table, Woodside would need other proposals to fall by the wayside before it could become reality.

"In this process, the first projects to get licensed are in the best position to move forward," said the California Energy Commission's Chandler.

Long Beach again

With opposition mounting against the Mitsubishi/Conoco-Phillips onshore terminal at the Port of Long Beach, another late entrant has set its sights on the Long Beach area. But right now, it's little more than a concept in search of a location that might never see the light of day.

In April, Tidelands Oil & Gas Corp. - a small San Antonio-based company that's traded on the pink sheets - announced it was forming a subsidiary, Esperanza Energy LLC, and putting together a team to explore the feasibility of siting an LNG receiving facility off the coast of Long Beach. Few other specifics were provided at the time.

Last week, Esperanza spokesman Matt Klink said the project would likely involve a buoy similar to the Woodside proposal and would be located "well outside the breakwater" guarding Long Beach Harbor.

But Klink would offer no timeline for the project. "When our due diligence is done, we will be ready," he said.

Not surprisingly, he also said no cost estimate was ready at this time.

Given the small size of Tidelands Oil, its late entry and the vagueness surrounding its proposal, most LNG industry watchers say this project is not likely to survive the rigorous approval process, especially given so many other competitors eyeing the Southern California market.

 

Ventura County Star | April 29, 2005

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Economist backs offshore LNG idea
By Timm Herdt

SACRAMENTO — An economist hired by a business-backed coalition that advocates bringing liquefied natural gas to California said Thursday that a single, midsize LNG terminal along the coast could drive down natural gas prices in the state by from 10 percent to 20 percent.

Peter Romero, a University of Oregon economist who once served as former Gov. Pete Wilson's top economic adviser, said such a reduction in gas prices would lead to the creation of as many as 50,000 new jobs and add up to $4.6 billion to California's gross domestic product.

"Numbers like that are equal to one to three months of the economic growth in the entire state, so that is not chump change," Romero said.

Natural gas prices in California have been as much as four times higher than the national average in recent months and have doubled since 2002, according to a California Energy Commission study released in February. Although it is also the fuel most commonly used to heat households, the two biggest uses are for electricity generation (33 percent) and industrial use (32 percent).

Out of concern over high energy prices for electricity and gas, a coalition of industry groups, led by the California Manufacturers and Technology Association, the state Chamber of Commerce and the Silicon Valley Manufacturers Group, has formed an advocacy organization called Californians for Clean Affordable Safe Energy to push the case for importing liquefied natural gas.

That group commissioned Romero to conduct the economic study of LNG's potential effects on state gas prices.

California imports 85 percent of its natural gas, all via pipeline from sources in North America, mostly in the Southwest and the Rocky Mountain states. Because the gas in its natural state can be imported only through pipelines, importing gas from Asia and the Middle East would require the construction of terminals to receive gas in its liquefied form shipped in tankers.

Having one or more LNG terminals along the coast, Romero said, "would turn the disadvantage of being on the coast isolated from U.S. gas fields into an advantage, being on the coast and accessible to Pacific Rim gas producers."

Different energy companies have proposed four separate LNG terminals on or off the state's coast and two others off the coast of Baja California in Mexico.

Two of the proposals are for sites off the Ventura County Coast -- a floating terminal proposed by Australian energy firm BHP Billiton and a conversion of an existing oil platform proposed by Crystal Energy.

Last week, a coalition of environmental groups announced support for legislation that would require the Energy Commission to review and rank the current proposals, rather than allow the site-selection process to be determined by whichever energy company can first make its way through the web of regulatory procedures.

The Energy Bill approved by the House of Representatives last week would grant exclusive permitting authority for onshore LNG plants to the Federal Energy Regulatory Commission.

 

Los Angeles Times | May 24, 2006

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Proposed liquefied gas projects

The West Coast's increasing appetite for natural gas has led to proposals for five California reciecing points, including one as yet unspecified location off the north coast. California consumes an average of 6 billion cubic feet of natural gas per day, 87% of it imported. Project opponents have voiced safety and pollution concerns. Here is a look as where the five California and three Baja California proposals stand: