Cabrillo Port LNG Terminal Still Sailing Through the Process

• Governor Technically Still Has to Say Yea or Nay to ‘Ghost Ship’ by May 21

BY HANS LAETZ

Nearly a full month after BHP Billiton’s proposed liquefied natural gas terminal was all-but-killed by state agencies, the company still says it will not give up the ghost.

A company spokesman issued a terse “We have nothing to update” response Monday, when asked if the Australian company was preparing the documents necessary to appeal the California Coastal Commission’s decision to the federal government. The commission will not formalize its 12-0 rejection of the Cabrillo Port plan until its July meeting, giving the company until mid-August to decide whether to formally try to resuscitate its plans.

That puts all eyes on Sacramento, where Gov. Arnold Schwarzenegger must decide by May 21 whether to reject the Malibu LNG port, or send it back for redesign. The governor does not have any power, analysts say, to override the two agencies that killed the project’s current design plans.

Schwarzenegger is required by federal law to continue to process the project’s permit application, even though the company’s proposed Cabrillo Port does not now have a legal right to anchor, has no mandatory environmental study about its hundreds of tons of air pollution, and has no way to unload any cargo.

The governor, whose associates have several close ties to the LNG industry, has voiced support for greater LNG use in California but is playing his cards close to his chest on Cabrillo Port.

“I suppose the governor could approve the project in concept, but send BHP Billiton back to solve its problems with the State Lands Commission and the FEIR (Final Environmental Impact Report),” said Coastal Commission legislative analyst Alison Dettmer. Reopening the EIR would require extensive additional scientific work, public hearings and another vote by the two commissions, which could take more than a year.

By a 2-1 vote last month, the Lands Commission rejected the company’s request to lease state lands and approve its three-year-long, multimillion-dollar FEIR. Environmental lawyers say the State Lands Commission vote would likely withstand any possible court challenge. That decision was echoed 12-0 by the Coastal Commission, when it said Cabrillo Port unacceptably violated environmental laws in more than 20 important areas.

“I do not view my job as finished until the governor vetoes Cabrillo Port,” said Susan Jordan, executive director of the California Coastal Protection Network. Coastal Advocates, the group of Malibu LNG opponents, continues to urge its members to let the governor know about Cabrillo Port’s negative impacts.

And lawyers at the Environmental Defense Center continue to work on lengthy legal opposition comments to the federal licensing process, even though the U.S. Maritime Administrator and Coast Guard are as of now legally blocked from issuing the federal permits.

“We shouldn’t have to work on our comments for MARAD (the Maritime Administration) and the Coast Guard when they are legally precluded by California’s action,” said EDC lead attorney Linda Krop.

Company spokesman Patrick Cassidy declined comment from his Houston office, other than citing past statements that the company would “respect the regulatory process.” Those past statements were purposefully vague as to whether that would mean filing an appeal and a possible lawsuit.

Like everything else about Cabrillo Port’s current status, even the appeal is uncertain. Cassidy has said the company cannot file the appeal until the Coastal Commission takes a second vote to send a formal notice to Washington, but Krop says federal law states the 30-day clock starts when the feds “learn” of the state’s action. Since the federal law is brand new, attorneys are not sure when that clock starts.

“I personally think that what the Coastal Commission has to do in July is merely a formality,” said CCC staffer Dettmer. “But I am also assuming that BHP Billiton is going to appeal to keep their options open.”

Cabrillo Port’s weaknesses and failures, as detailed publicly by members of the two state commissions when they rejected the plan, have not been lost on other LNG hopefuls off the California coast. And a state senator who nearly won passage of an LNG bill in the state legislature last year is back with an even tougher proposal that he has introduced this year.

State Sen. Joe Simitian, D-Palo Alto, wants the state to enact very stringent standards for gas terminals along the California coast. His bill last year would have subjected the five active LNG port applications to a competitive hearing, and would have required an assessment as to whether LNG imports would drive consumer gas prices down, something that some analysts say would not happen.

“The message for the LNG industry here is be careful what you wish for because you just might get it,” Simitian said in a phone interview. “They told us it was improper to judge each project against the others, and that they would prefer to be judged against a firm set of criteria.

“Well, that’s what we’re giving them.”

Simitian’s new version of the LNG measure, SB 412, would require the governor to reject any terminal that significantly violates California environmental rules, taking away the governor’s leeway to approve a project because its overall benefit to the state outweighs its negative impacts.

Simitian said his bill failed at the very last minutes of the legislature’s term last year, but he expects passage this year. He said he has not yet talked to the governor’s office to see if it is acceptable to him.

Statewide LNG politics are of great import to Malibu, which is close enough to be directly affected by three of the four LNG terminals proposed for the California coast. Although BHP Billiton’s project off Malibu’s north end appears dead, other projects are about to be proposed for 12.6 miles off Oxnard, 22 miles off Malibu, and 15 miles off San Pedro. A fifth proposal, in Long Beach Harbor, was killed by that city but project proponents have filed a lawsuit.

NorthernStar Energy, a small company that also is proposing an LNG terminal in Oregon, is readying its paperwork for converting an unused oil platform 12.6 miles off Oxnard Shores into an LNG regasification terminal. Two LNG carriers at a time would dock near the rig and unload the cryogenically cooled liquid into vaporizers on the structure.

Those vaporizers would usually use warmth from the air to bring up the temperature of the -260 degree LNG, and convert it back into natural gas. That process is expected to be much less polluting than the combustion process that BHP Billiton would have used.

Exact emission levels for the project, about 30 miles upwind of Malibu, have yet to be determined. Joe Desmond, spokesman for what the company calls Clearwater Port, said the two main air pollution controversies at Cabrillo Port—whether the project would meet onshore smog regulations, and whether so-called hot gas would be brought ashore—have not been settled.

“A lot of lessons have been learned as we watched the hearings for the Billiton project,” Desmond said. “We had people at the hearings, and we know there have been some very good data sets for us to meet.”

The 50-year-old oil rig has been extensively examined and would be safe, Desmond said. LNG tankers would tie up to a floating dock near the tower, and would not put lateral stresses on the rig.

Desmond, a former state regulator, said NorthernStar has monitored the opposition to Cabrillo Port and learned. “We take a holistic look at the whole process, and we will work with advocates for the coast in designing our project,” he said. “This doesn’t have to be an adversarial relationship.”

NorthernStar also has plans for a floating LNG terminal 25 miles off Oceanside, but Desmond said that plan, called “Project Orion,” is on indefinite hold.

Closer to Malibu, another Australian company has plans to unload natural gas 22 miles off Point Dume. But Woodside Natural Gas officials plan to do away with two aspects of an LNG terminal that most rankled Malibu residents: smog and a large floating terminal.

Woodside’s proposal, which it markets as Ocean Way LNG Terminal, calls for a pair of buoys connected to natural gas pipelines that would come ashore at Los Angeles International Airport. The buoys would rest 100 feet below the ocean surface when not in use, and would be snagged and raised by LNG tankers to transport gas.

The tankers would carry their own regasification equipment, and like the Oxnard rig would use ambient air to warm the LNG. Some fuel would occasionally be burned to speed up the process, but Woodside officials anticipate that it would create about two-thirds less smog than would BHP Billiton’s Cabrillo Port.

Woodside officials are quick to point out that no large storage ship would be anchored at the site, located about halfway between Point Dume and Catalina Island. They have in the past even bristled at the term “LNG terminal,” as the ships would regasify the LNG on-board, and would unload natural gas into a buoy, which they said is not a terminal in the traditional sense of the word.

The Woodside project’s lead agencies will be the Coast Guard and the City of Los Angeles because the charter city owns the beach where the pipelines would come ashore. Clearwater Port, however, requires pipelines on state lands, as does the Cabrillo Port project, and will be decided by the State Lands Commission and Coast Guard.