US: FERC Claims Jurisdiction on Gas Plant

Publisher Name: 
Los Angeles Times

Federal energy regulators said Thursday that they --
rather than California officials -- have the ultimate
say over whether a proposed gas plant should be built
in Long Beach, setting the stage for a jurisdictional
tug-of-war over a plant that critics say could
endanger nearby residents.

At stake is the building of onshore liquefied natural
gas terminals in California as energy companies rush
to build more than 30 such facilities nationwide.

The Federal Energy Regulatory Commission is
responsible for where onshore California LNG plants
are built, a spokesman said. "The siting of the
facility is ours," said Kevin Cadden, the agency's
director of external affairs, in a telephone interview
from Washington, D.C.

But the California Public Utilities Commission claimed
that responsibility this week in a move that worries
supporters of the $400-million terminal that
Mitsubishi wants to build at the Port of Long Beach.

Some city residents and environmental groups say they
would feel more comfortable if California -- not the
Bush administration -- scrutinized the proposal.

In another development, Long Beach City Atty. Robert
E. Shannon said the City Council will take a position
on the LNG plant. Earlier, officials said the council
was not expected to vote on the proposed facility,
which already is backed by the city's port authority.

Some residents have complained that council members
already gave tacit approval to the project by
authorizing the city manager to start negotiations
with Mitsubishi to buy its imported gas.

But, Shannon said Thursday, "There have been some very
significant safety issues raised, and it's very
obvious that they need to be explored before anything
substantive takes place here."

The port has granted a Mitsubishi subsidiary, Sound
Energy Solutions, the exclusive right to pursue plans
to build the first such facility on the West Coast;
four other terminals are operating in the United
States.

No LNG terminals have been built in recent years. But
rising gas prices and a declining domestic gas supply
are driving new interest nationally in importing LNG
from countries around the world. A number of other
countries have imported LNG for decades.

To make LNG, exporters chill natural gas to minus 260
degrees Fahrenheit, transforming it into a clear
liquid that takes up only a fraction of the space of
the substance in gaseous form. That means it can be
transported by ship rather than pipeline.

Mitsubishi would convert the LNG back to gas at the
Long Beach terminal, producing 700 million cubic feet
of natural gas each day.

Some city officials and environmentalists find the
proposal particularly attractive because Mitsubishi
also would provide LNG to fuel port yard equipment and
other vehicles that currently burn diesel fuel, a
suspected carcinogen.

The project attracted little public attention in Long
Beach until a Jan. 19 explosion at an LNG export
facility in Skikda, Algeria, killed 27 people.

Some scientists familiar with the highly flammable
nature of LNG say they do not believe the terminals
should be built within two to three miles of populated
areas. Other scientists counter that modern LNG plants
contain safeguards that would rule out a repeat here
of the Algerian accident.

The federal energy board has promised to review the
Long Beach plan carefully. But in a motion filed
Monday with the agency, the state Public Utilities
Commission raised questions about plant safety and the
site's proximity to earthquake faults.

In the motion, the state commission asserted its right
under state and federal law to approve the project,
and said it had been trying since October to make
Mitsubishi apply for PUC certification. It also
questioned whether the federal energy agency has
jurisdiction over the project, because the facility
would not provide interstate shipments of gas, which
normally are regulated by the federal government.

However, Cadden, the FERC spokesman, said any facility
used to import LNG falls under the agency's
jurisdiction. Asked if the state commission also has
authority, Cadden said: "I wouldn't presume to talk
about what statutory authority California has."

Thomas Giles, executive vice president of the
Mitsubishi subsidiary, said the firm has no immediate
comment on the dispute. "We haven't had an opportunity
yet to talk to FERC or fully understand what position
FERC intends to take," he said.

Patrick Power, an Oakland-based attorney specializing
in utility affairs who represents the Long Beach-owned
energy utility, said several projects proposed in Baja
California could import LNG into California.

He said he was concerned that if the PUC entered the
approval process, it could set in motion a series of
events that "could have the unintended consequence of
steering the outcome away from what would be the best
project: the Long Beach project."

He added that he was confident that federal regulators
would not approve a project unless they thought it was safe.

AMP Section Name:Money & Politics