Monday, April 24, 2006

Supplies, not Gouging drive gas prices higher

Although politicians are seeking to score political points off of rising gas prices, it is supply and demand which are driving up the cost of oil.

It took the worst hurricane season in official memory to drive oil prices last year to new heights.

Last week, without a storm in sight, price records tipped over like an oil rig in Category 5 winds.

This time, petroleum markets are being buffeted by the fear that world oil production might be disrupted. And the rally is being fed by investment funds seeking hefty gains.

In Iran, the world's fourth-largest oil exporter, a nuclear development program is drawing the West's ire. In Nigeria, rebels have forced a 25% reduction in crude output and are threatening more. On the Gulf Coast, oil pumping and fuel refining still haven't recovered from hurricane damage.

At the same time, worldwide demand for all things petroleum shows little sign of weakening after the last few years of torrid growth. Neither does the interest of investors such as hedge funds and mutual funds, which have been funneling billions of dollars into oil and other commodities.

Taken separately, these and other market undercurrents lack the dramatic punch of nature's force. But together, said John Kilduff, senior vice president of energy risk management at New York commodities trader Fimat USA Inc., "It's a parade of horribles … both real and imagined."

Oil may Bankrupt Hermosa Beach

While most of us feel like going to the gas station could bankrupt us, the City of Hermosa Beach may bankrupt itself for not wanting to increase oil supplies.

Because of some decisions by city officials, Hermosa may wind up bankrupt. Many voters may conclude that the fiscal future of the city is probably the most important issue they will consider in a special election this June to fill a vacant City Council seat. Here's why.

In 1984, Hermosa Beach voters passed an initiative lifting a decades-old ban on oil drilling throughout the city, allowing oil and gas drilling at two sites: the maintenance yard near City Hall and the former South School playground. Two years later, a company called Macpherson Oil acquired drilling rights from Hermosa Beach for a 30-year project to slant-drill for oil at these two government-owned sites.

In 1986, Macpherson made a $100,000 payment to Hermosa Beach, and the company claims it invested millions of additional dollars fulfilling the project. The city also mandated extensive studies of the site relating to public health and the environment.

In 1995, before Macpherson could actually break ground, however, Hermosa Beach voters approved Proposition E, reinstating a ban on oil and gas drilling within city limits.

While this initiative was being challenged in the courts, in 1998, the Hermosa Beach City Council completed the shutout, voting to cancel the project. The council claimed that a consultant it hired deemed it unsafe. So where was this consultant years earlier, when the city entered into its deal with Macpherson? Proposition E was advanced by a local environmentalist group called Stop Oil, so it's no mystery what its objective was throughout the process. After all, many environmental activists oppose development and expansion of infrastructure we all need and use, details be damned.
A plan to place a liquefied natural gas terminal in the heart of Long Beach may face troubles on account of alternative project sites.

One plan by Mitsubishi-ConocoPhillips to put an LNG terminal onshore smack in the middle of the Port of Long Beach has residents and activist organizations up in arms. They don’t want the terminal in such a densely populated urban area. Currently, the Federal Energy Regulatory Commission and the Port are reviewing the Mitsubishi-ConocoPhillips environmental impact report and deciding whether or not to grant permits for construction of the LNG facility. However, two other plans by competing LNG transport companies to build facilities offshore may help opponents fight the Long Beach proposal. “In the environmental impact report, they must address alternatives,” explains Jesse Marquez, executive director of Coalition for a Safe Environment. “These alternative plans provide us a legal challenge if they do approve the LNG terminal in Long Beach.”

Long Beach LNG faces competition

A plan to place a liquefied natural gas terminal in the heart of Long Beach may face troubles on account of alternative project sites.

One plan by Mitsubishi-ConocoPhillips to put an LNG terminal onshore smack in the middle of the Port of Long Beach has residents and activist organizations up in arms. They don’t want the terminal in such a densely populated urban area. Currently, the Federal Energy Regulatory Commission and the Port are reviewing the Mitsubishi-ConocoPhillips environmental impact report and deciding whether or not to grant permits for construction of the LNG facility. However, two other plans by competing LNG transport companies to build facilities offshore may help opponents fight the Long Beach proposal. “In the environmental impact report, they must address alternatives,” explains Jesse Marquez, executive director of Coalition for a Safe Environment. “These alternative plans provide us a legal challenge if they do approve the LNG terminal in Long Beach.”

Thursday, April 20, 2006

Row erupts at LNG hearings

I am beginning to think that building an LNG receiving terminal off the coast of Oxnard may be safer than attending a hearing over whether it should be built.

Critics of a floating liquefied natural gas terminal off the Ventura County coast outnumbered supporters Wednesday as state and federal officials concluded three days of public hearings in Oxnard.

At issue is BHP Billiton's Cabrillo Port terminal. Critics say the Australian mining firm's proposal would hurt air and water quality and marine wildlife, lower property values and threaten security by offering terrorists a ripe target.

Supporters, including business and labor leaders, and taxpayer advocates, counter the terminal would be safe, environmentally sound and a sorely needed remedy for state energy shortages.

The California State Lands Commission and Coast Guard conducted the hearings, taking public testimony on a draft environmental impact report released last month. Earlier this week, officials extended the public comment period on the report an extra two weeks to May 12.

The 971-foot long Cabrillo Port would sit 13.8 miles off the coast, accepting LNG from tankers — natural gas chilled to a liquid state — and then converting it back to a gaseous form.

A pair of underground pipelines would carry the gas to the Reliant Energy generating plant near Ormond Beach. Another pipe would then take it to a Southern California Gas Co. facility on Center Road in Somis.

More than 600 people jammed the Oxnard facility Wednesday night after another hearing that afternoon. Similar hearings were held in Santa Clarita on Monday and Malibu on Tuesday.

As part of the proposal, BHP Billiton would pay for an expanded pipeline in Santa Clarita to handle extra gas capacity. The Monday hearing drew 16 speakers, all but two supporting the proposal but offering "very little" comment on the EIR, said Dwight Sanders, chief of the State Lands Commission's environmental and planning division.

At a Malibu meeting Tuesday night, more than 300 people showed up and critics dominated the event, shouting down proponents and often interrupting them with boos, hisses and jeers. Some 60 people spoke, with critics outnumbering supporters by more than two to one.

At one point, Surlene Grant, the hearing's facilitator, warned the audience she would ask Los Angeles County sheriff's deputies to remove anyone who didn't cooperate.

Tuesday, April 18, 2006

OPEC: Oil Prices Too High

In an adept understanding of economics and the diminishing returns of higher prices, OPEC is speaking out about $70-a-barrell oil.

OPEC believes oil prices are too steep, after setting a fresh record high above $70 a barrel, and the rise is not justified by market fundamentals, a senior OPEC delegate said on Tuesday.

The delegate said there was no shortage of crude oil supply and that OPEC giant Saudi Arabia and other producers had pledged in the past to keep markets well supplied.

"OPEC believes strongly that prices are too high and nobody wants to see these prices," the delegate told Reuters. "(But) it has nothing to do with fundamentals."

U.S. crude set a fresh record high on Tuesday on concern that Iran's nuclear row with the West could affect oil exports from the world's fourth-largest producer and as a major Nigerian supply outage dragged into a third month.

Cabrillo Port's Worst Case Leaves Land Unaffected

The worst case scenario for an LNG terminal planned off the Ventura County Coastline by BHP Billiton would not be as bad as previously feared.

A catastrophic release of liquefied natural gas from a terminal proposed off the Ventura County coast could spread a powerful and spectacular fireball over several miles, but pose no threat on land because the facility would be at least 14 miles offshore, a new study shows.

The gas-processing plant, one of four proposed for Southern California, would convert fuel shipped from across the Pacific Ocean for use in Los Angeles-area factories and power plants.

Of course, if you build the terminal on shore, as proposed in Long Beach, you're guaranteed that a catastrophic fireball will affect land lovers.

Monday, April 17, 2006

Alt Fuels Reach Tipping Point

Rising oil prices are making Californians think more and more about alternative fuels. Some expers now think we may be at a tipping point.

Cars, trucks, trains, planes and other vehicles account for 7 of every 10 barrels of oil consumed in the U.S.

With such a deep reliance on oil, the transportation world has been nearly impervious to change. Electric-hybrid vehicles are barely a blip, alternative fuels have made only tiny inroads, and a push for more fuel-efficient cars has stalled under the Bush administration.

"In the transportation sector, we've essentially made no progress in the last 25 years," said Daniel Sperling, director of the Institute of Transportation Studies at UC Davis.

Bush's Advanced Energy Initiative, which he promoted in a February tour of research sites, would inject badly needed money into alternative-fuel programs.

Critics say the commitment is paltry. Bush's fiscal 2007 budget seeks about $150 million for biofuels and $290 million for hydrogen-related research. By comparison, the government spends an estimated $150 million a day in Iraq.

But proponents believe the decades of inertia could be broken by a rare convergence of technology, money, political will and motivated motorists.

Monday, April 10, 2006

LNG Update: Engineers back Cabrillo Port; Regulator joins Esperanza Team

In one of the latest developments in California's liquefied natural gas terminal race, BHP Billiton's offshore project in Ventura County has a strong new ally.

Calling the venture "an essential energy development that requires the most highly skilled and trained personnel," the Marine Engineers' Beneficial Association (MEBA) has announced its endorsement of a proposal by BHP Billiton (BHP) to construct a liquefied natural gas (LNG) facility approximately 20 miles off the coast of Oxnard, California.

Meanwhile a former State Regulator has signed on in support of an offshore project near Long Beach:

David Maul, former manager of the California Energy Commission's Natural Gas Office; ENTRIX, Inc., a professional environmental consulting company specializing in environmental permitting and compliance for major offshore oil and gas projects in California and the United States; Project Consulting Services, Inc., a leader in engineering, construction, management and inspection of onshore and offshore pipelines; and Pillsbury Winthrop Shaw Pittman, LLP, an interdisciplinary law firm with leading practices in environmental, land use and energy legal advice and in project development and finance.

"As the former head of the California Energy Commission's Natural Gas Office, I'm intimately familiar with every LNG project on the West Coast," stated Maul, president of Maul Energy Advisors. "I chose to work with Esperanza Energy because of the company's strong commitment to design and build a LNG project that is responsive to California's unique environmental and regulatory sensitivities."

Hybrids Clog Carpool Lanes

With 50,000 new hybrid vehicles eligible to drive in caprool lanes in California, those people who actually drive in carpools are getting bothered for having to share.

When California allowed solo occupants of hybrid cars to use carpool lanes last year, many thought they were merging onto a narrow strip of car culture heaven.

But increasingly, hybrid owners say they feel like the victims of road rage.

Carpoolers accuse them of driving too slowly in order to maximize their fuel efficiency, and of clogging diamond lanes that were once clear.

Hybrid motorists even have a term for the ill will: "Prius backlash."

"There's a mentality out there that we're a bunch of liberal hippies or we're trying to make some statement on the environment," said Travis Ruff, a real estate agent from Newbury Park who drives a Toyota Prius. "People are a lot less friendly than when I drove a Mercedes."

Friday, April 07, 2006

LNG inevitable for California

Longtime opponent of liquefied natural gas Tom Elias has come to the conclusion that it's coming to California, after all.

The question, apparently, may no longer be whether liquefied natural gas will be arriving soon in California, but where.

This is true even though there has never been a definitive study of whether the state needs this expensive new energy source, natural gas frozen into a liquid form in a variety of far-off foreign locations, then brought here by tanker, warmed back to a gaseous state and piped to homes and businesses.

As I see it, no study is needed. The fact that new proposals are coming out to bring LNG to California on a monthly basis these days proves that companies see the need and are willing to invest big bucks to fill it.

Burbank launches 5-year Renewables Plan

The City of Burbank has unveiled a five-year plan to meet the City's renewable energy goals.

The Burbank Water and Power Board on Thursday gave initial approval of a five-year road map for meeting rising energy demands and still reaching its goal of using 20 percent renewable energy resources by 2017.

Board members voted 4-0, with three members absent, to approve a draft of the city's 2006 Integrated Resource Plan. Their approval paves the way for the City Council to give final approval this summer.

"The purpose of the IRP is to present a plan on how to meet Burbank's future electric needs," said Bruno Jeider, the author of the report, at BWP's headquarters near downtown. "Essentially what the plan has us doing is meeting 100 percent of increased requirements through efficiency, conservation and renewable resources."

The municipal utility, which operates on an annual budget of $300 million a year, serves 45,000 households and 6,000 businesses in the city.

Thursday, April 06, 2006

New LNG proposal for Long Beach

Heeding calls from Long Beach officials that any liquefied natural gas facility should not be in the heart of the City, a new proposal solves the problem by going offshore.

Tidelands Oil & Gas Corp. said it was weighing a liquefied natural gas project off the coast of Long Beach, making it the fifth company to propose such a facility in Southern California.

The small San Antonio-based company, which is pursuing a smattering of natural gas projects, announced its intentions Tuesday but declined to offer details except to say that the sites under consideration for building a terminal are as many as 12 miles away from the shores of Long Beach.

"We're very far along," said Michael Ward, president of Tidelands and Esperanza Energy, a California subsidiary created for the enterprise. "We're in the 'fatal flaw' analysis of our project."

...California is more dependent on natural gas than many states because nearly half of its electricity comes from gas-fired plants. The state consumes an average of 6 billion cubic feet of natural gas each day — and imports 87% of it from elsewhere in the United States, according to the California Energy Commission.

As the state's energy needs grow, so will demand for natural gas imports. State energy officials believe that will require liquefied natural gas, which is liquefied by chilling it to minus 260 degrees Fahrenheit, compressing it so it can be carried long distances by tanker ships. At the unloading point, a "regasification" facility converts the liquid back into a gas, which is carried by pipeline to power plants and other users.

Last month, Woodside Energy of Australia unveiled plans to build a receiving terminal in the ocean about 22 miles south of Malibu. That design calls for regasification to take place onboard specially designed ships. The gas would then be piped to shore, eliminating the need for a regasification structure.

BHP Billiton of Australia, Crystal Energy and a partnership between ConocoPhillips and Mitsubishi Corp. also have announced proposals for liquefied natural gas projects in Southern California. Excelerate Energy, based in the Woodlands, Texas, is considering building a gas project off California but hasn't said where.

Shell Oil Co., Chevron Corp. and Sempra Energy are involved in liquefied gas projects along the Western coast of Baja California.

Wednesday, April 05, 2006

Alternative Energy Roundup

While it doesn't have everything to do with California Energy, Winds of Change has a great roundup on the latest news in Alternative Energy solutions. Check it out.

Hat tip: Instapundit.

PG&E launches push for new generation

Pacific Gas and Electric is making a move to build new electric generation in California...filling a gap left open since the energy crisis in 2000-01.

A post-energy crisis lull in the construction of new power plants in Northern California neared an end Tuesday, as PG&E Corp. announced $1.5 billion in development deals that could provide it with 1,780 megawatts -- enough new electricity to serve 1.4 million households.

The deals mark "a momentous step to secure new, clean and reliable electricity suppliers to power California's growing economy and replace an aging fleet of power plants," Tom King, chief executive of PG&E's utility unit, said in a release.

PG&E also has in the works a $380 million deal to acquire and complete a 40 percent constructed, 530-megawatt power plant in Antioch from Mirant Corp., a bankrupt power seller based in Atlanta.

The deals would leave PG&E owning two new power plants and holding long-term contracts for the output of three other plants owned by third parties. All of the deals require approval by state regulators.

Monday, April 03, 2006

Candidates uneasy about LNG in Long Beach

Candidates for the 5th Council District in Long Beach aren't so sure about Sound Energy Solutions / Mitsubishi's proposal to put a liquefied natural gas facility in the heart of the City.

Q: How do you feel about the [proposed] LNG [facility] in our harbor?

Monica Blumenfield: I'm opposed to the LNG...[It] could wipe out parts of the downtown area...

Dave Radford: All the information on LNG is not in yet...I'm still lookin' and readin' and thinkin' about it...

Vice Mayor/Councilwoman Jackie Kell: I do think the LNG plant will be built but offshore. We're going to have 5,000 new residents downtown [new condos, residential units] and we have the new Pike @ Rainbow Harbor and so I don't think we should have the LNG plant in the middle of two harbors which make up the third largest port complex in the world, but I do think we could have it built offshore and there are companies that specialize in doing that.

Dennis Porter: I would have to agree that it's not in yet as to how safe LNG is...I would say that offshore would be better...

Ed Barwick: Having lived adjacent to a nuclear power plant for a long time when I was in the Navy in the north Atlantic, I look at more of the probabilities of an incident and I look at what's there. And there's almost no incident that's been dictated for that facility [in the Port of LB] that would go beyond the perimeter of the facility, so I think it's a reasonable thing to do. We still have additional information to look at, but I'm leaning toward the fact that it would be probably be safe enough to put in the harbor and it would bring clean burning natural gas that everybody is clamoring for in the city and the environment and I think it's important we look at alternatives to clean the environment.

Gerrie Schipske: I think we need to combine a couple of things. One, our own police and fire department went to the city of Boston [which has an LNG facility in a suburb adjoining their harbor]...and they came back and they were very, very disturbed and very concerned about the safety, the unsafe aspects of locating an LNG facility in the Port of Long Beach. And consider this: in 1992, the coastal zone commission took a look at a proposal to put an LNG plant in the port of Los Angeles and said no, it would be unsafe because of the earthquake fault that runs through the ports. This is just a hundred yards away. Long Beach does not need to be a target. I think we need though to ask how we got ourselves into this situation that we're backing into an LNG plant...We need to talk about how decisions are made in Long Beach and how the citizens get into the fact after the decision was made behind the rail.

Silicon Valley man bankrolls Energy Initiative

Since the Legislature is slow to adopy clean energy measures, a Silicon Valley man is taking the matter into his own hands.

Vinod Khosla is bankrolling a ballot initiative that would tax oil producers and subsidize alternative energy -- technologies he invests in as one of the valley's most prominent venture capitalists.

If California voters embrace the November initiative, the tax on oil companies could generate $4 billion for projects intended to reduce the state's dependence on oil by 25 percent within a decade.

Such political moves are still new territory for the well-heeled venture capital community more accustomed to funding start-up companies than ballot campaigns. That changed in 2004, when the industry put its money behind another technology-building initiative: stem-cell research.