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Developer of Gas Terminal Wants Extension

Times Staff Writer

The developer of a proposed $700-million liquefied natural gas terminal at the Port of Long Beach is pushing to extend its contract to retain exclusive rights to build the processing plant at the harbor.

An agreement granting Sound Energy Solutions, a partnership of Mitsubishi and ConocoPhillips, the rights to build the terminal on a 25-acre harbor site is set to expire Thursday. But officials of the energy company and the port are downplaying the deadline, saying a final decision on the terminal will come after an environmental review of the project is completed this summer.

“We still have the right to say no” to the project, said Art Wong, spokesman for the port.

The board of harbor commissioners is scheduled to meet in closed session today to consider a request from the energy company to extend its contract. Under the agreement, the firm must continue to pay the harbor an annual fee of $17,425 per acre to retain sole claim to the designated project site.

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Jeffrey Adler, spokesman for Sound Energy Solutions, said the company would continue to pursue permits to build the natural gas terminal. The energy firm has threatened to sue the port and the city of Long Beach if they attempt to halt the project.

“We’re planning to continue,” Adler said. “We’ve been acting in good faith to process the project, and we’ve been assured all along by the port and city officials that they want to see the conclusion of the process.”

A divided Long Beach City Council voted last summer to wait until the environmental review process was completed before taking a stance on the proposed terminal, which would be the first of its kind built on the West Coast. But the council’s power to cancel plans for the terminal is unclear because a new law gives the federal government great latitude in approving such projects.

The proposed terminal is a source of controversy because it would be built less than two miles from downtown Long Beach, which opponents fear would be vulnerable to a catastrophic fire in the event of an accident, earthquake or terrorist attack.

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Officials with the California Public Utilities Commission have opposed putting a terminal in such a densely populated area.

“When human error alone makes this risk too large in light of how many people would be in harm’s way, the added risks of earthquakes or terrorist attacks make this site one of the worst possible sites imaginable,” the commission wrote in December in a report to the Federal Energy Regulatory Commission, which has the authority to approve the project.

Dwindling North American supplies, rising energy demand and clean-air benefits make imported natural gas an attractive fossil fuel.

The Long Beach terminal would process chilled, compressed natural gas and distribute it for use in businesses, factories and vehicles.

But critics worry about the danger involved in ships delivering fuel to the harbor and the twin 160,000-cubic-meter receiving tanks that would have to be built.

The liquefied natural gas industry has a generally good safety record -- such terminals are in operation throughout Europe and on the East Coast -- but risk assessments differ on the hazards that such a facility would pose to Long Beach.

The draft environmental impact report released last year indicates that fire resulting from an accident could be largely contained within the Long Beach port boundaries, but studies by the state Public Utilities Commission and Sandia National Laboratories indicate that a terrorist attack could produce an explosion extending at least one mile into the community.

Although those issues have been hotly debated over the years, so far the LNG terminal controversy has mostly taken a back seat in Long Beach elections to other more pressing issues, such as libraries and police protection.

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Both mayoral candidates -- veteran City Councilman Frank Colonna and former Southern California Edison Co. president Bob Foster -- have denounced plans for the LNG plant.

Colonna said the energy company had failed to prove its case within the three-year time limit set forth in its contract with the harbor.

“Their due diligence is expired,” Colonna said. “It’s time to move on. The project should never be [built] onshore.”

Other companies are promoting natural gas terminals off the coast of Ventura County and Malibu. State officials say California needs more natural gas to accommodate growth and meet clean-air requirements.

Harvey Morris, assistant legal counsel for the state Public Utilities Commission, said the port would be in a better position after its contract with Sound Energy expired.

“The port has more options by not extending this agreement,” Morris said.


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