Tuesday, November 30, 2004

Gas Traders Charged with Misconduct

Five gas traders were charged for allegedly filing fake reports related to California's 2000-01 Energy Crisis:

"The deeper we dig, the more that we will find of this misconduct," U.S. Atty. Michael Shelby said Monday. "Our markets depend on the truthfulness of the information that fuels them."

The penalty for conspiracy and wire fraud on each charge is up to five years in prison and a $250,000 fine. Each charge of false reporting carries up to five years and up to a $500,000 fine.

According to the indictments, Valencia and Singleton allegedly contacted each other in August and September 2000 and agreed to report fake trades to industry publications Inside FERC Gas Market Report and Natural Gas Intelligence. Under federal law, the government must prove that fake trades were reported, not whether they were published or affected markets.

Tuesday, November 23, 2004

Cal PERS pushes emissions standards

Hopeing to reduce automotive emissions, the State's retirement fund is telling GM it is a waste of investor funds to oppose California's strict emissions rules:

California Controller Steve Westly and Sean Harrigan, president of CalPERS, sent a letter to other board members Monday saying that carmakers were wasting shareholder money by fighting rules that might be adopted by states that account for 25% of the U.S. car market.

This year, California approved regulations requiring makers of cars and trucks to cut emissions of the heat-trapping gas starting with 2009 models, making it the first state to regulate exhaust tied to global warming. Automakers have threatened to file lawsuits blocking the standards.

"I'm deeply concerned that the industry's plans to fight new auto emission standards in our state could harm the long-term financial interests of share owners," Harrigan said in a statement. "Auto companies and their share owners are better served if share owner dollars are used to comply with these standards rather than fight them."

Thursday, November 18, 2004

Sempra LNG Project could lock in prices

Allowing a regulated utility with a questionable history of alleged price-fixing to control the market for Liquefied Natural Gas in California might not be a good idea, according to pundit Tom Elias:

In short, Sempra claims it might let its $1 billion plant and pipelines -- plus the expensive ships of BP and Shell -- sit idle if prices drop significantly. Just such a price collapse occurred when the previous LNG effort was abandoned in 1981.

"I don't believe for a moment that they would idle an LNG plant under any circumstance," says Doug Heller, executive director of the Foundation for Taxpayer and Consumer Rights. "We've learned too much through the energy crises to believe companies like this one will take the hit if their big gamble goes bad. We also risk locking ourselves into a new dependency on foreign fuel."

Heller referred to the record of energy companies during the electricity crunch early this decade, when the El Paso Co., owner and operator of the largest pipeline bringing gas to California, ran it far below capacity in order to drive prices up. At the same time, electricity generators were also manipulating the market, using methods that later resulted in several criminal convictions.

The solution, then, seems obvious. Find someone else to build an LNG plant.

L.A. Ratepayers paid for Political Advice

Did ratepayers of Los Angeles Department and Water and Power pay for political consulting on behalf of Mayor Hahn?

Public relations firm Fleishman-Hillard — which has been accused of overcharging the Los Angeles Department of Water and Power by $4.2 million — was in regular contact with Mayor James K. Hahn's office as it was allegedly bilking the department.

City Controller Laura Chick, who issued an audit critical of Fleishman, released billing records Wednesday showing that the firm's employees held lengthy meetings with the mayor's deputies while the DWP was charged thousands of dollars for those consultations.

Fleishman also worked with the mayor's office to plan news conferences that featured Hahn, the records showed.

And the firm wrote speeches and news releases for the mayor about DWP announcements and other media events, including Hahn's much-publicized 2002 trip to Asia.

"Were they doing work for DWP and getting paid by DWP? Or were they doing work for the mayor and getting paid by DWP?" Chick asked Wednesday.

At a time when LADWP is asking fo an 11% rate increase and struggling to invest further in clean-burning natural gas generation and green power, such abuses of power are unacceptable.

CARB to curb Deisel Emissions

State regulators are cracking down on diesel emissions:

The Air Resources Board has been trying to cut auto emissions by requiring manufacturers to improve fuel efficiency, precedent-setting efforts the industry has fought in court with the support of the Bush administration.

The board on Thursday will consider similar efforts for diesel-electric locomotives and both commercial and recreational boats that use diesel fuel, expanding on existing diesel regulations that govern land-based vehicles and stationary diesel engines.

“These (pollution) sources are almost totally regulated by the feds,” said board spokesman Jerry Martin. “It would be the first time we’ve ventured in to try to set regs for watercraft and railroads. We can’t regulate their emissions – but we’re going to try to regulate their fuel.”

Railroads and refiners remain neutral at this point...

Wednesday, November 17, 2004

Sempra charged with price manipulation

According to the Public Utilities Commission, Sempra, parent company of Southern California Gas, manipulated natural gas prices which precipitated the energy crisis in 2000-01:

A two-year investigation by the California Public Utilities Commission has concluded that a Sempra Energy utility knowingly manipulated the natural gas market during the state's power crisis of 2000-2001, causing higher prices for consumers.

The conclusion implicates Sempra in the widespread market rigging that investigators say played a key role in the crisis.

It calls for the Sempra utility, Southern California Gas, to refund all profits earned from gas trading during the period under scrutiny, about $29 million plus interest.

That gives a new name to those "big Texas energy companies" Gray Davis liked to blame for his demise...

Tuesday, November 16, 2004

LNG Proposal would extend Oil Platform Life

According to the US Department of the Interior, Minerals Management Service (MMS), there are 36 undeveloped leases in the Pacific OCS region.

Of these 36 leases, according to the September 2004 “Status of Leases and Qualified Companies”, a document produced by MMS, Delta Petroleum is listed as having financial interest in 10 of these aforementioned undeveloped leases. Lease numbers P-00320, P-00322, P-00409, P-00415, P-00416, P-00421, P-00452, P-00453. P-00449, P-00422 . These 10 lease interests were identified by cross referencing the lease numbers listed in the “Status of lease” document, which identified Delta as having a financial interest, with undeveloped leases identified in the undeveloped lease spread sheet also provided by MMS. Both links are provided below.

Delta Petroleum has previously been mentioned as a partner of Crystal Energy in the redevelopment of Platform Grace, off the coast of Ventura, as an LNG terminal.



In addition to the lease information, Crystal Energy's website has now removed reference of Delta Petroleum on the company’s website. Below is language removed from an archived older page, the sentence describing Delta as an investor is now gone.

“Crystal Energy, a privately held corporation, is headquartered in Houston, Texas with offices in Ventura, California. Crystal's principal shareholders are Small Ventures USA, L.L.C. (Founder and Owner - Mr. William O. Perkins III), Ram Energy Long-Term Trading, L.L.C. (a wholly owned subsidiary of the four billion dollar energy investment fund RAM Energy Trading, LTD.) and Delta Petroleum Corporation (a publicly traded oil and gas company with operations offshore of California).”

Also, in an MMS report dated September 2004, they list 6 platform projects for decommission, of which Platform Grace is one, and was projected to be decommissioned, i.e. removed, between 2015 and 2025 at a cost of 28 million.

If the platform becomes a LNG terminal, the possibility of having the platform physically removed from the landscape will certainly be tabled, because no one is going to spend possibly 400 million on a platform that would only be in operation for a little over 10 years. Thus if the terminal is not allowed, the platform goes away in possibly 10 years, or if it is approved, the platform remains for as many years as the terminal is profitable.

Aide: "Power Reforms on Track"

The LA Times reports on efforts to reform the State's power system in Sacramento:

California has fixed regulatory flaws that contributed to the energy crisis of 2000-01 and needs new power plants to ensure adequate supplies, the governor's chief energy advisor said Monday.

A rule adopted last month requiring utilities to have a 15% generating capacity surplus should lead to more supply contracts with plant developers, said Joe Desmond, Gov. Arnold Schwarzenegger's deputy secretary for energy.

Speaking at an investor conference in New York, Desmond said that developers could use such contracts to persuade lenders to back their projects.

The state also is forming a market in which power companies would be paid for keeping plants on standby, bolstering profits when electricity demand is weak, Desmond said, adding that investors have balked at building new plants partly out of concern that California's policies and power-market rules won't let generators recoup their costs.

Monday, November 15, 2004

Irvine Could Consider it own Utility

Despite a decision to stick with Southern California Edison, a new City Council in the Orange County City of Irvine would re-open the discussion to bring public power to the town:

"We will wait until the new council is seated, and if there is an inclination [to reconsider the issue], we will do it," said Mayor Larry Agran, who voted with Councilwoman Beth Krom to keep the proposal alive. The Irvine City Council is made up of the mayor and four members elected citywide.

The municipal utility issue was at the center of a political clash before the November elections. Outgoing Councilman Chris Mears accused Agran of promoting the utility in order to benefit a political ally who had a financial stake in the outcome.

Agran denied the accusations and called them politically motivated. Agran, who has served his allotted term as mayor but won election to the City Council this month, said his victory was vindication.

Friday, November 12, 2004

Hetch hetchy Restoration Considered

State officials are studying the emptying of the Hetch Hetchy reservoir, which provided water storage to the San Francisco area. That the proposal would reduce electric generation seems to be an afterthought. How short our memories can be!

Wednesday, November 10, 2004

Crystal Energy LNG terminal lags behind other applicants

The Woodside/Crystal Energy/Veneco proposal to re-use the offshore oil Platform Grace near Santa Barbara is coming under scrutiny, even as other proposals appear more likely to succeed, according to the Santa Barbara News-Press:

Platform Grace, an oil platform 15 miles south of Carpinteria, is central to a recently signed agreement that could bring enough natural gas to meet more than a quarter of California's surging residential demand.

Crystal Energy of Oxnard and Woodside (USA) Energy Inc., a subsidiary of Australia's largest publicly traded independent oil and gas company, have inked a strategic alliance to develop Crystal's proposed Clearwater Port project.

Under the agreement, Woodside will provide technical and operational expertise plus funding for the $300 million facility, which would bring natural gas to Santa Barbara County and the rest of California...

Platform Grace was installed in 1979 and stands in 319 feet of water. In 1999, Chevron sold the platform, which no longer produces oil, to Carpinteria-based Venoco Inc. Crystal Energy now has a long-term lease with the option to purchase.

The project involves converting the platform to a liquefied natural gas, or LNG, import facility. Natural gas, primarily from Australia, cooled to minus 259 degrees and thus greatly reduced in volume, would be shipped in liquid form to the platform.

There, the liquid would be turned back into vapor and sent through a 12-mile sea-floor pipeline to an existing industrial facility in Oxnard before being fed into the Southern California Gas Co. network...

Cy Oggins, staff environmental scientist with the California State Lands Commission in Sacramento, said the most advanced application is that of BHP Billiton, which hopes to be pumping gas by 2008.

Mr. Oggins said the Australian resources company wants to moor a floating LNG storage and re-gasification facility 14 miles off the coast, about level with the border of Ventura and Los Angeles counties.

The application was lodged in September 2003, and an environmental review was conducted in February. Mr. Oggins said the environmental impact report was released a week ago and is open for comment until Dec. 20, after which hearings will be held.

Billiton is followed by Sound Energy Solutions, a subsidiary of Mitsubishi, which wants to build an onshore facility at the Port of Long Beach.

Tuesday, November 09, 2004

Japan Junket has high hopes for hybrids

Governor Arnold Schwarzenegger is on his way to Japan to discuss a number of issues...among them, building hybrid cars in California:

In addition to high-profile dinners and receptions promoting Golden State tourism, agriculture and the idea of California as an attractive business investment, much of Schwarzenegger's trip will be taken up with a series of private meetings with Japanese business leaders that his staff has refused to divulge until the mission begins on Wednesday.

Some of the agenda has leaked out in the Japanese media, however, where there have been reports of a private meeting with Toyota officials, whom Schwarz enegger presumably wants to lobby about manufacturing the automaker's Prius in California.

Monday, November 08, 2004

Energy Fix point of Contention between Schwarzenegger, Nunez

California is looking at an epic battle as two of the most powerful men in the State Capitol try to muscle their way through the Legislative and Regulatory process to get their "fix" for the State's energy mess:

As California flirted with another power crisis, the Legislature was fashioning what its leaders described as a comprehensive energy policy, essentially returning to the old centralized, highly regulated system that existed before the 1996 deregulation.

Southern California Edison was the chief promoter of the unring-the-bell approach, but it also had strong support from consumer groups and was carried by Assembly Speaker Fabian Núñez.

But business groups didn't like it because it would have made it more difficult for commercial and industrial power users to seek competitive bidding for supplies, nor did independent power producers, who complained that it would restore the utilities' monopoly on generation.

Schwarzenegger, as expected, vetoed the bill. He had already floated his own approach, which would modify, but not eliminate, the market approach to power supply and pricing that was at the heart of the 1996 bill, and he wanted the Public Utilities Commission to implement his plan without new legislation.

Since that veto in late September, the PUC has begun to implement portions of his plan. It voted 3-2 late last month, for instance, to order utilities to speed up their acquisition of additional power supplies to meet peak summer demands - an action that favors new contracts with independent suppliers. The dissenters were Loretta Lynch and Carl Wood, who stand with the consumer groups on the issue of who should control power supplies, but both are scheduled to leave the commission at the end of the year. And that's where the Legislature may play a role in fashioning policy.

Two of the remaining three commissioners, former utility executive Mike Peevey and Susan Kennedy, are strong proponents of Schwarzenegger's approach. But the third, Jeff Brown, has been the swing vote on a number of specific utility issues. To completely bypass the Legislature and push his revised deregulation scheme through the PUC, Schwarzenegger needs a solid majority, but his replacements for Lynch and Wood must also gain confirmation in the state Senate, which by its vote on the Núñez bill is out of sync with the governor.

Heating Bills Rise with Natural Gas Costs

Californians will face a budgetary pinch to keep warm this winter, as heating bills are on the rise:

Some industrial customers and electricity generators are switiching to less expensive natural gas as a fuel, increasing demand and therefore prices.

And this year's hurricane season damaged natural-gas producing wells in the Gulf of Mexico. The United States is heavily dependent on the Gulf for oil and natural gas. Some 25 percent of the nation's natural gas supply initially was lost because of drilling disruptions, and while that is down to 2 percent, the effect on spot and futures market pricing continues.

For instance, prices for natural gas deliveries in January were about $3 higher than the spot market price, which is for deliveries usually within a month. February's future price is about $1.60 higher than the spot price.

Natural gas prices already were going higher because demand was outstripping supply.

Monthly natural gas bills for the 21st Century Health Club in Cotati now top $8,000, a 60 percent increase over $5,000 several years ago, said Kenny, the club's general manager.

Friday, November 05, 2004

Coast Guard: Cabrillo Port Dangers Overblown

Answering questions raised by the often-histrionic Tim Riley about the dangers of BHP Billiton's proposed Cabrillo Port Liquefied Natrual Gas facility off the Ventura County shore, the US Coast Guard determined that the dangers of LNG are overstated:

The chances of a major accident at a proposed liquefied natural gas port off Oxnard's coast are very low, according to an environmental report released this week by three state and federal agencies.

Australian energy company BHP Billiton wants to build a deep-water port and processing facility called the Cabrillo Port that would deliver natural gas to California through an undersea pipeline. The facility would be about 14 miles from shore at its closest point and 21 miles from Oxnard. The pipeline would come ashore at Ormond Beach, wind its way underground through southern and eastern Oxnard and continue to a valve station north of Camarillo.

The California State Lands Commission, U.S. Coast Guard and Maritime Administration prepared the draft environmental impact report...

"What is important to remember is we will use proven technologies to cleanly and safely help California meet its energy needs," BHP spokeswoman Kathi Hann said in a statement. "Our facility is more than 14 miles from the closest point to shore. We planned it this way to provide the people of California with what they want, minimal impact on the coastline, sea and air, and what they need, a safe source of natural gas to meet the growing demand for energy."

Election could push Energy Bill

Last May, the Federal Energy Bill fell two votes short of cloture. Ironically, the two absent United States Senators just lost an election on Tuesday. With a perceived mandate and four more Republican Senators, the Los Angeles Times speculates an energy bill may finally come to be in 2005:

"The new Senate makeup will likely help movement on energy legislation in the 109th Congress," said Lee Fuller, vice president of government relations for the Independent Petroleum Assn. of America, a Washington trade group representing independent oil and natural gas producers.

An energy bill that includes measures to promote energy conservation and production passed the House last year. Its supporters in the Senate fell two votes short of overcoming a filibuster, though, so it never came to a vote in that chamber.

The bill would mandate greater use of ethanol, an alternative fuel made from corn — a measure that Republican John Thune pledged to try to deliver to ethanol-producing South Dakota during his successful campaign to replace Senate Democratic leader Tom Daschle. The legislation, a priority for the administration, also includes measures designed to strengthen the nation's electric grid and prevent fuel supply shortages and price spikes, such as those that occurred during California's energy crisis in 2000 and 2001.

Monday, November 01, 2004

Natural Gas Prices on the Rise

PG&E Customers will pay more for natural gas this winter...alot more:

Staying warm this winter and cool next summer likely will be more expensive, as the Modesto and Turlock irrigation districts consider joining Pacific Gas & Electric Co. in raising rates.

Natural gas rates will go up 11.9 percent in November, compared to November of last year, PG&E spokesman Mark Hendrickson said.

An average November residential gas bill for 41 therms of use will rise from $41.70 to $46.66, Hendrickson said.

Hendrickson said PG&E does not profit from the sale of natural gas, only from transportation of it. The transportation costs are roughly a third of the gas rate.

Natural gas prices are up 15.7 percent over a year ago, while the transportation price rose about 5 percent, according to figures supplied by Hendrickson.

Sempra Affiliate power label labeled 'misleading'

Sempra Affiliate SDG&E is facing charges that the power content label it sends consumers is not accurate:

Careful utility bill readers – particularly those who favor renewable energy sources – are being misled by a small insert included in San Diego Gas & Electric bills.

The most recent copy of the insert – called a "power content label" – declares that 8 percent of the electricity supplied by SDG&E is derived from renewable resources.

But SDG&E acknowledged that the inserts are inaccurate.

"It is not the percentage we have under contract," said Ed Van Herik, a spokesman for SDG&E. "The plan is to update the label next year."

SDG&E derives about 4 percent of its electricity from renewables. But rather than provide this percentage to customers, SDG&E has been copying the percentage from a second column on the insert that indicates the percentage of renewable power statewide.

Sempra LNG Project Greenlighted in Mexico

Sempra will build an LNG terminal in Mexico to serve both California and Baja, leaving four other companies scrambling to get approval what will likely be just one more LNG terminal along the U.S. West Coast:

Sempra Energy said Friday that it had won a high-stakes race for approval to construct North America's first West Coast liquefied natural gas terminal.

San Diego-based Sempra, parent of Southern California Gas Co. and San Diego Gas & Electric Co., said it would begin building the project early next year at a seaside location north of Ensenada.

Half a dozen companies — including ChevronTexaco Corp., Mitsubishi Corp., BHP Billiton and Marathon Oil Corp. — are pushing proposals to bring LNG to energy-starved California and other Western states aboard special container ships docking at Pacific coast terminals. The goal is to tap into California's soaring demand for natural gas — and gain hefty profits from prices that have more than tripled since 2000.

CLA Ron Deaton tapped for LADWP Job

Los Angeles' Chief Legislative Analyst, Ron Deaton, whom some call the most powerful man in City Hall, will be generating a new buzz as head of the beleagured Los Angeles Department of Water and Power:

After a year of leaving the DWP's leadership in limbo, Mayor James Hahn suddenly announced Thursday that he was naming Chief Legislative Analyst Ron Deaton to run the beleaguered utility. The Hahn-appointed DWP commission plans to formally appoint Deaton on Tuesday.

The agency has been hit by criminal investigations, critical financial audits, threats of lawsuits over its massive rate increase for water and controversy over how it spends millions of dollars in public funds.

Hahn's decision to nominate Deaton, who amassed enormous power as the top adviser to the City Council for more than a decade, developed over the past several months in a bid to stabilize the agency amid increasing criticism and the long-term illness of General Manager David Wiggs.

Hahn and DWP officials were concerned about the continued pummeling of the agency and what that was doing to its reputation, credibility and morale. Hahn was urged at least three months ago to consider appointing Deaton, officials said in interviews.

The move could be voted on as soon as Tuesday.