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    News in Depth / Perspective

    Tale of Three Cities: Plans For Onshore LNG Facilities Dropped in Two CA Cities, While in LB...

    (March 19, 2004) -- Plans for an onshore Liquefied Natural Gas terminal in Eureka, CA in northern California's Humboldt County have been abandoned amid community opposition.

    "Based on feedback from the local community and public officials, we believe this decision is best for all parties," said Calpine Vice President Ken Koye in a company release announcing the firm is ceasing its development activities for the project. The release added that the company "values its relationships with the communities where its plants are located. While there can be differences of opinion, Calpine seeks a clear majority of support for proposed projects."

    In 2003, plans for an LNG facility in Vallejo, CA -- on a former Mare Island Naval Shipyard site -- ceased amid community opposition.

    Meanwhile, an onshore LNG facility proposed to be located within the Port of LB -- part of the nation's busiest port complex -- is now to our knowledge the only onshore LNG facility still being considered in CA.

    Offshore LNG facilities have been proposed near Port Hueneme off the Ventura County coast near Oxnard.

    LB writer Bry Myown, a critic of the LB proposal, told, "I salute the people of Eureka as well Vallejo and I'd welcome their assistance in educating our City Council." invited LB representatives of Sound Energy Solution to comment on the developments in Eureka in connection with this article.

    As previously reported by, staff of the CA Dept. of Fish and Game told an Assembly committee on Feb. 24, 2004 of potential environmental impacts of the onshore Humboldt County LNG site...but didn't cite similar concerns about the Port of LB site. Fish and Game staff also cited environmental issues related to offshore LNG facilities, similar to those applicable to other offshore platforms. The CA Dept. of Energy has posted Fish and Game staff's power point materials on the energy agency's web site.

    Earlier this week, the city of Harpswell, Maine rejected a proposed LNG facility, and as previously reported by in January, Alabama's Governor sent a letter to the Federal Energy Regulatory Commission (FERC) objecting to the issuance of permits related to the proposed construction by Exxon-Mobile of a Liquefied Natural Gas (LNG) facility in Mobile Bay "without an adequate independent, individualized, site specific safety study first being completed and considered."

    In May 2003, as first reported by, the LB City Council voted -- in less than 90 seconds -- to enter into a Memorandum of Understanding with Mitsubishi subsidiary Sound Energy Solutions to help facilitate the project. The Council action did not formally approve the project, but two months earlier, a press release from the Port of LB quoted LB Mayor Beverly O'Neill and City Manager Jerry Miller as supporting the project.

    In March 2003 (as previously reported by, a Port of LB press release quoted LB Mayor Beverly O'Neill as saying, "This proposed project could be a major benefit to the Long Beach environment and the economy, while giving us the potential for lower natural gas costs for our residents and business."

    The Port's release quoted Acting City Manager Gerald Miller as saying, "As the port of entry, Long Beach could be assured of a reliable long-term source of natural gas. This would give us the opportunity to stabilize our prices." It also quoted Harbor Commission President John Hancock as saying, "The LNG terminal would provide the state with a cost-competitive alternative source of natural gas, while creating additional jobs and revenues at the port."

    The Council vote facilitating the project's advance paralleled actions by the Port of LB's non-elected (Mayor-named, Council-approved,) Board of Harbor Commissioners...which in May 2003 OK'd a Letter of Intent and Summary of Terms with the Mitsubishi subsidiary Sound Energy Solutions (SES).

    The Letter of Intent gave SES the exclusive right to pursue developing the LNG receiving terminal at the site until their earlier of (1) the time SES determines the project isn't feasible; or (2) the Federal Energy Regulatory Commission (FERC) denies the project; or (3) 37 months after the date of the letter. The Summary of Terms indicates the Port would assign SES a berth and backlands consisting of roughly 27 acres for a term of 40 years.

    An agendized memo to Harbor Commissioners from Director of Port Properties Kathryn McDermott indicated "the process for obtaining permits for this project differs from other types of commodity terminals, as the Federal Energy Regulatory Commission (FERC) regulates LNG. We anticipate an extended permitting and approval process conducted by FERC, in additional [sic] to permitting and approvals required by PoLB [Port of LB] and other governmental agencies."

    And in a story -- reported first by -- documents obtained under state freedom of information law by LB activist Myown show that Mayor O'Neill wrote to U.S. Senator Dianne Feinstein in June 2003, stating in pertinent part:

    "We have met with SES officials, and like the officials of the Port of Long Beach, believe the LNG facility can be operated safely and provide many benefits for Long Beach, the region and the entire state. Therefore, we support construction of the LNG terminal in the Port of Long Beach, subject to a rigorous environmental review and permitting process, and we respectfully request that you facilitate a federal approval process that would allow terminal operations to begin in 2007 as scheduled."

    The Mayor's letter to Senator Feinstein makes no reference members to the City Council...who set policy for the City of Long Beach.

    To view coverage of the Mayor's letter, click here.

    A few months before Mayor O'Neill (who has sought more federal tax dollars to increase security at the Port of LB) indicated her support for locating an LNG facility within part of the nation's busiest port complex, Bechtel Enterprises and Shell Gas & Power dropped plans for an LNG import terminal and storage facility on Mare Island near Vallejo, CA amid community opposition. In an ironic parallel to LB, the Vallejo site was a former U.S. Naval Shipyard, closed in the 1990s.

    In May 2002, the Vallejo City Council gave its city manager authority to enter into an exclusive right to negotiate for a project feasibility study for the project., a cybernews outlet, covered the LNG story in detail. Supporters of the project included business and union groups which argued the facility could provide jobs and tax revenue. Opponents raised concerns about safety, pollution and the possible impact on other businesses and the city's image...and created an internet web site to communicate on a mass level.

    Vallejo City Hall delayed its feasibility study until what it called an independent health and safety study was conducted which claimed risks were unlikely. A separate Vallejo City Hall-backed study contended the LNG project would bring economic benefits.

    Using the internet, opponents cited other data, argued that risks of fire and environmental contamination were too great and advocated alternative uses including light industrial and recreational development.

    Ultimately, the Vallejo City Council didn't conduct a feasibility study; on January 16, 2003, Shell Gas and Power announced it was leaving its partnership with Bechtel and on January 30, 2003 Bechtel decided to suspend further work on the project.

    As previously reported by (which has reported the LNG story in detail for nearly a year) on May 13, 2003 the LB City Council voted to authorize LB's City Manager to execute a Memorandum of Understanding (MOU) with the Mitsubishi subsidiary (SES) regarding an LNG terminal and regasification facility on roughly 27 acres of land at the southern end of the eastern part of the general area where the LB Naval Shipyard once stood (Port of LB Pier T).

    LB Councilmembers were given a city staff report from LB Energy that indicated the MOU pertained to discussions about a future long-term gas contract and the feasibility and development, financing, construction, operation and maintenance of gas pipelines to the proposed LNG facility. It also said the MOU would also assist SES in its ability to market the potential of an LNG terminal in Southern California to potential customers and to regulatory agencies.

    The area proposed for the LNG terminal at the Port of LB is (unofficially) roughly two miles west & southward of LB City Hall and the "Pike at Rainbow Harbor" and slightly less than this from the Aquarium of the Pacific.

    The following is a transcript (unofficial, prepared by us) reflecting what took place:

    City Clerk Herrera: Item 26, Report from Long Beach Energy regarding the Memorandum of Understanding between Long Beach Energy and Sound Energy Solutions.

    [Audible off mike: Move to Authorize. Second.]

    Mayor Beverly O'Neill: It's been moved and seconded, but I do think we need a few comments on this. I think Liquefied Natural Gas is of great interest, so there doesn't need to be a extensive report. Mr. City Manager, Gerry Miller.

    City Manager Miller: Thank you, Madam Mayor and Councilmembers, and Mr. Chris Garner our Director of Long Beach Energy will provide that brief staff report. Thank you.

    Mr. Garner: Thank you. What you have before you tonight is simply a document that we want to enter into with SES, Sound Energy Solutions which is a wholly owned subsidiary of Mitsubishi, that is proposing a Liquefied Natural Gas terminal down in the Port of Long Beach. And what we're looking at doing is negotiating a gas supply deal, long term, somewhere along the line of 20, 30, 40 years with Sound Energy Solutions. And the other component would be the pipeline that would connect the terminal to our pipeline system and to the Southern California Gas Co. pipeline system. Thank you.

    Mayor O'Neill: Are there any comments on this?

    Council: [silence]

    Mayor O'Neill: This agreement is a good agreement.

    Council: [silence]

    Mayor O'Neill: Thank you very much. Please record your vote on item, what were we on, 26.

    Clerk: Motion carries unanimously. [9-0, Yes: Lowenthal, Baker, Colonna, Carroll, Kell, Richardson, Reyes-Uranga, Webb, Lerch].

  • Total elapsed time between Clerk announcing item and motion and second: 1.8 seconds.
  • Total elapsed time between Clerk announcing item and Council vote: 1 minute, 27 seconds.

    In a segment on the City Hall-produced TV program "Heart of the City" (which aired repeatedly in January 2004 on LBTV cable channel 8), 1st district Councilwoman Bonnie Lowenthal -- whose district adjoins the Port -- chatted with LB Harbor Commissioner Mario Cordero and Port of LB Executive Director Richard Steinke about Long Beach Port-related matters...including the LNG facility proposed for the Port.

    In November 2003, Councilwoman Lowenthal travelled to Asia with officials of the Port of Long Beach, including Commissioner Cordero and Executive Director Steinke, and the parties refer to the trip during their televised discussion.

    1st district map.gen'l LNG areaCouncilwoman Lowenthal's district is shown in the yellow portion of the map to the right.

    The general area for the proposed LNG facility is roughly indicated in red, and a more detailed map with site configuration can be viewed on the SES web site at proposed LB LNG site.

    [begin text]

    Councilwoman Lowenthal: Would you like to talk a little bit about Japan? We went to see the LNG facility there, and because we are contemplating one here I think that might be really interesting for our viewers.

    Mr. Steinke: I think I was, again, very impressed with the facility that we saw. We saw not only an LNG facility, a receiving facility, but it was attached to a power plant. A great percentage of the energy produced in Tokyo Bay for the residents in Tokyo and around Tokyo is through LNG. It's a proven technology for them. They're very comfortable with it.

    And we went to see a Mitsubishi facility and that is the entity that we have a letter of agreement with, so we wanted to see how it was successfully done in Tokyo. We had a good meeting with Mitsubishi to understand that, but I think that that really is one of the new energy sources in the future, at least for the west coast of the United States and we're looking forward to moving forward in the process.

    We have a long way to go through environmental studies, the Federal Energy Regulatory Commission has a significant involvement, the state will be involved too, but I think we saw a glimpse of what we might be able to see: a clean technology, something very good for the city as well as the Port.

    Councilwoman Lowenthal: Now the ship that we saw unloading that day, was the fuel for that ship also LNG?

    Mr. Steinke: I believe that ship also ran on LNG which, again, would produce very few ship emissions, and so that's another impressive aspect of LNG carriers, is not only do they transport LNG but they run on LNG to burn the fuel in their engines.

    Councilwoman Lowenthal: Mario, were you going to say something about the LNG?

    Harbor Commissioner Cordero: Well I just want to also indicate that with regard to the Port of Long Beach, you know the [Port of LB] "Healthy Harbor" initiative addressed three basic elements here: air quality, water quality and concern for wildlife. And with that, I'd like to emphasize how, my impression when we left is that Long Beach, this Port here, we are taking the lead, or we have taken the lead, with regard to environmental issues.

    And in relating this to these latest alternative fuel options that we're exploring, moving forward with the LNG, it's an exciting development because once that comes into fruition, it would be the first LNG port facility in the west coast of the United States. And that to me says a lot, not only about this Port but about this city. Again, another example how they take the lead with regard to some of these alternative fuel projects.

    Councilwoman Lowenthal: N=w the Boston LNG facility has been there for how many years?

    Mr. Steinke: Probably about twenty years.

    Councilwoman Lowenthal: Same as Tokyo.

    Mr. Steinke: That's right.

    Councilwoman Lowenthal: And you never hear about it, and that's a good thing.

    Mr. Steinke: That's true.

    Councilwoman Lowenthal: That's a good thing.

    Mr. Steinke: That's true.

    As also previously reported by, the web site of Boston area Congressman Ed Markey (D., MA) contains an entire web page devoted to the subject: Cong. Markey web page re LNG.

    The Mitsubishi subsidiary SES, which seeks to build the LB LNG facility, devotes part of its web site to comparing its proposal with the Boston area facility and a company FAQ also discusses homeland security issues. SES web site FAQ (scroll to Q & A re facilities that most resemble the LB proposed facility, and further for other issues.).

    For a compendium of coverage of the LNG issue, see Coverage of LNG Terminal Proposed in Port of LB

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