www.pacificenvironment.org

The Case Against The Case Against Liquefied Natural Liquefied Natural

Gas in OregonGas in OregonRory CoxRory Cox

California Program DirectorCalifornia Program Director

Pacific EnvironmentPacific Environment

Map of Western States Map of Western States Natural Gas PipelinesNatural Gas Pipelines

Electricity GenerationElectricity Generation

California, 2004California, 2004 Oregon, Oregon, 20032003

Data from California Energy Commission

Oregon Department of Energy, Biennial Energy Plan

Natural Gas Consumption, Natural Gas Consumption, Western States, December Western States, December

20052005

0

50,000

100,000

150,000

200,000

250,000

California Oregon Washington

Million cubic feet

Idaho Nevada

Source: Energy Information Agency, U.S. Dept. of Energy.

What is Liquefied Natural What is Liquefied Natural Gas?Gas?

Natural gas is extracted Natural gas is extracted through underground drilling through underground drilling overseas.overseas.

Chilled to -260 degrees Chilled to -260 degrees Fahrenheit.Fahrenheit.

Moved in huge tankers across Moved in huge tankers across the ocean.the ocean.

Re-gasified at coastal import Re-gasified at coastal import terminals.terminals.

Sent into gas grid, or to Sent into gas grid, or to electrical power plant.electrical power plant.

Proposed Liquefied Natural Proposed Liquefied Natural Gas TerminalsGas Terminals

Source: California Energy Commission

Industry Claims About Industry Claims About LNGLNG

“North America's demand for natural gas is growing, yet production in the lower 48 of the United States is decreasing. “

-Sempra Energy “(LNG is) reliable and clean fuel to protect the environment.” – BHP Billiton “The LNG industry has one of the best safety records in the

energy business.” – Chevron-Texaco

Sempra and Shell’s proposed Costa Azul project, Baja California (now under construction

A Tale of Two GraphsA Tale of Two Graphs

Source: Energy Information Agency, U.S. Department of Energy

Source: Sempra Energy

Is There a Real Demand for Is There a Real Demand for Additional LNG in the U.S.?Additional LNG in the U.S.?

• What the Department of Energy says:What the Department of Energy says:• U.S. domestic production will increase by U.S. domestic production will increase by

About 20% from 2001 to 2025, in response to About 20% from 2001 to 2025, in response to 1.8% per year assumed growth rate in demand;1.8% per year assumed growth rate in demand;

• Canadian imports will fluctuate, though remain Canadian imports will fluctuate, though remain relatively constant from 2001 to 2025;relatively constant from 2001 to 2025;

• Primary growth area is electric power Primary growth area is electric power production.production.

• Similar scenarios repeated in industry press, Similar scenarios repeated in industry press, and by Wall Street analysts.and by Wall Street analysts.

The Fictional Shortage of The Fictional Shortage of ‘05‘05

December ’05 – ’06: Gas Prices Hit $16 December ’05 – ’06: Gas Prices Hit $16 per MMBTUper MMBTU

Utilities Blame Hurricanes, Tight Utilities Blame Hurricanes, Tight SuppliesSupplies

March ’06 Mid-Western Attorneys March ’06 Mid-Western Attorneys General Report: Prices Driven Complex, General Report: Prices Driven Complex, Deregulated Market, NOT Shortages.Deregulated Market, NOT Shortages.

Spring ’06: Gas Storage is at Record Spring ’06: Gas Storage is at Record Highs, Price Tumbles to about $6.Highs, Price Tumbles to about $6.

Is There a Real Demand for Is There a Real Demand for LNG in California?LNG in California?

Synapse Energy Synapse Energy Economics: Future demand Economics: Future demand can be met through can be met through conservation and new conservation and new renewable energy sources.renewable energy sources.

CEC: Efficiency can save CEC: Efficiency can save 20,000 GWh per year by 20,000 GWh per year by 2013; Renewables 55,000 2013; Renewables 55,000 GWh per year by 2010. GWh per year by 2010.

These two are roughly These two are roughly equivalent to the output of equivalent to the output of two LNG terminals.two LNG terminals.

CA Energy Action Plan CA Energy Action Plan prioritizes clean energy prioritizes clean energy and conservation.and conservation.

CA Political Climate Favors CA Political Climate Favors Clean Energy, but industry Clean Energy, but industry spending over $5 million spending over $5 million on lobbying and PR effort. on lobbying and PR effort.

Does LNG Protect the Does LNG Protect the Environment?Environment?

Sakhalin, Russia: Largest Sakhalin, Russia: Largest Integrated Oil and Gas Project in Integrated Oil and Gas Project in the World.the World.

Largest LNG Export terminal in Largest LNG Export terminal in the World.the World.

Western Pacific Gray Whale: less Western Pacific Gray Whale: less than 100 remaining.than 100 remaining.

Impacts of offshore drilling: Impacts of offshore drilling: Noise, Drilling Muds, Danger of Noise, Drilling Muds, Danger of Oil SpillsOil Spills

Pipeline Crossings Impact Salmon Pipeline Crossings Impact Salmon SurvivalSurvival

Dumping of Wastes Endangers Dumping of Wastes Endangers Rich Local Fisheries in Aniva BayRich Local Fisheries in Aniva Bay

Dredging Fisheries-Rich Dredging Fisheries-Rich Aniva BayAniva Bay

Social Unrest in SakhalinSocial Unrest in Sakhalin

Indigenous peoples’ Indigenous peoples’ protest, northern protest, northern Sakhalin, January 2005Sakhalin, January 2005

Protest outside LNG Protest outside LNG plant construction plant construction site, February 2006site, February 2006

Social and Environmental Social and Environmental StandardsStandards

European Bank for Reconstruction European Bank for Reconstruction and Development acknowledged that and Development acknowledged that Sakhalin-II has violated its standardsSakhalin-II has violated its standards

Reports demonstrate that Sakhalin-II Reports demonstrate that Sakhalin-II violates Equator Principles violates Equator Principles (voluntary social and environmental (voluntary social and environmental guidelines for project finance banks)guidelines for project finance banks)

Does LNG Protect the Does LNG Protect the Environment?Environment?

Impacts on ClimateImpacts on Climate Gas pipeline leaks common, 2.3% of gas Gas pipeline leaks common, 2.3% of gas

lost.lost.

18 to 22 % of methane lost in extraction, 18 to 22 % of methane lost in extraction, liquefaction, shipping, and re-gasification.liquefaction, shipping, and re-gasification.

CO2 Emitted from LNG tankers.CO2 Emitted from LNG tankers.

Methane: Warms planet 20 times greater Methane: Warms planet 20 times greater than CO2.than CO2.

Burning Natural Gas at power plant emits Burning Natural Gas at power plant emits CO2. CO2.

Cumulative impact: LNG is only a marginal Cumulative impact: LNG is only a marginal improvement over burning coal or oil.improvement over burning coal or oil.

IPCC: In 1995, said GHG’s must be cut by IPCC: In 1995, said GHG’s must be cut by 70% in 100 years. Now some members 70% in 100 years. Now some members saying that must be accelerated to 10 saying that must be accelerated to 10 years.years.

Is LNG Safe?Is LNG Safe?•Sandia Study 2004: Attack on LNG facility could cause major injuries within 1/3 of a mile; 2nd degree burns more than one mile away.

•Richard Clarke: LNG Tankers are known terrorist targets.

•Skikda, Algeria: At least 26 killed, windows shattered up to 7 miles away in 2004 accident.

•LNG liquefaction facility built by Halliburton.

Skikda, Algeria, January 2004

LNG: Consumers Pay the LNG: Consumers Pay the PricePrice

•LNG Investment Dependent on Long Term, Rate-based Contracts With Utilities.

•Cost of Infrastructure Passed on to Ratepayers.

•Cost of Foreign Extraction Passed on to Taxpayers Through Export Credit Agencies.

•September 2004: California Public Utilities Commission Approved Sempra’s Request for Rate Basing of Baja Project.

•Construction Began Soon After.

Sempra’s Costa Azul project, Dec. 2005

LNG = Higher Utility LNG = Higher Utility BillsBills

NG vs. LNG US prices

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

Year

Pri

ce (

$)

NG

LNG

•LNG More Expensive than domestic gas.

•Global Competition from China, India, Europe will Drive up Cost.

•LNG prices have risen

Source: Community Environmental Council

LNG LNG

When Will the Bridge Be When Will the Bridge Be Done?Done?

“…“…I call for the use I call for the use of methane as the of methane as the transitional fuel, the transitional fuel, the bridging fuel bridging fuel between our between our dependence on dependence on fossil fuel and fossil fuel and moving to solar moving to solar energy.”energy.”

Barry Commoner, Barry Commoner, 19891989

(17 Years Ago)(17 Years Ago)