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    CA Public Utilities Comm'n Designates Port/WLB Site As One of Three CA Connection Points For New Natural Gas Supplies From LNG

    (Sept. 3, 2004) -- In a 3-2 vote, the CA Public Utilities Commission (CPUC) has voted to promote increases in CA's Liquefied Natural Gas (LNG) supply by drafting rules that would include three connection points to link up with CA natural gas utilities (after the LNG is regassified, no longer liquid)...including the "Salt Works Station" site near the Port/WLB.

    The "Salt Works Station" site has previously been identified by LB's municipal Energy Dept. as the end point for a not-yet-built pipeline that could convey natural gas derived from an LNG facility proposed in the Port of LB by a Mitsubishi subsidiary...where it could be regassified and then connected with So. Cal Gas natural gas pipelines.

    The CPUC identified two other connecting points for the state: Otay Mesa (near San Diego) and Center Road Station (near Oxnard)...both of which are near locations where offshore LNG receiving facilities have been proposed (Baja Mexico and near Ventura). The Port of LB is currently the only CA location with an application pending to build an onshore LNG facility. (Two previous onshore locations in northern California were dropped amid local opposition.)

    In a written release, CPUC described its designation of receipt points for access to imported Liquefied Natural Gas (LNG) "a key step in locking in contracts now for natural gas that will come on-line in the next few years."

    If built, a pipeline from a Port LNG receiving site to the "Salt Works Station" interconnecting point could provide a cash cow for LB City Hall...since LB's municipal utility could charge a franchise fee for use of the pipeline.

    The specific LB aspects of the arrangement were not discussed by PUC Commissioners at their Sept. 2 meeting. The PUC order, which instituted a rulemaking to "establish policies and rules to ensure reliable, long-term supplies of natural gas to California" focused on what it called an urgent need to boost CA's LNG supplies. It was supported by PUC Commissioners Peevey (author), Brown and Kennedy. Commissioners Lynch and Wood dissented.

    In a release issued through its public affairs office, CPUC said that by "streamlining the contract approval process for California utilities, the PUC immediately increased Californiaís access to natural gas supplies by as much as 500 million cubic feet per day. In addition, the PUCís Decision designated receipt points for access to imported Liquefied Natural Gas (LNG) -- a key step in locking in contracts now for natural gas that will come on-line in the next few years."

    In the release, CPUC Commissioner Susan Kennedy said, "The time to act is now" adding that the "decisions we make today and in the coming months will determine whether there will be another energy crisis in California, and Iím going to do everything I can to prevent that crisis from happening."

    The CPCU took three major actions: authorized utilities to purchase natural gas from a wider range of supply basins; put in place up-front standards for capacity acquisition (similar to AB 57 requirements on electricity) and established receipt points for LNG and ordered utilities to interconnect with LNG facilities when they are built.

    "LNG is not expected to come on-line until 2006-2007, but the contracts for those supplies are being negotiated now. By establishing the receipt points now, the Commission sent the signal that LNG suppliers will be able to deliver their gas to California," the CPUC release said.

    Commissioner Kennedy said in the release that states will be competing to meet their natural gas requirements with LNG, and "If we donít create the market for natural gas here in California today, that gas will go elsewhere."

    Jeff Adler of Adler Public Affairs, LB spokesman for the Mitsubishi subsidiary Sound Energy Solutions, told

    "The PUC's action doesn't come as a surprise. It's something we've been aware of. We anticipated there would be and should be other sources for entry of regassified LNG into the system. It doesn't change anything concerning our project and we still believe there's going to be a need for our project. For us this isn't big news. It does not obviate the need for the project and we're continuing our efforts to plan and entitle it."

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