GAS, GAS, GAS...

Mr. Watts predicted that natural gas consumption could more than double over the next 20 years, and could eventually overtake oil to become the next domi-nant fuel. . .

-Phil Watts speech, May 2002 Int’l Chamber of Commerce meeting

LNG & The Golden Gate In June 2001, Shell and its partner, Bechtel, set their LNG sites on California, and specifically Mare Island, just across the inland waterway from San Francisco. Located within the town of Vallejo, Mare Island was once a US naval shipyard, since closed down. Shell and Bechtel want to build a major LNG terminal there. They have also proposed a 1,500 megawatt power plant that would be the fifth largest in the state (recently scaled back to 900 megawatts). The com-bined project would instantly make both companies major players in the California energy market. What the two companies envision are double-hulled tankers, full of LNG, arriving from the Asia Pacific re-gion at a rate of about three per week by 2007 or 2008, each passing beneath the Golden Gate Bridge, proceeding across San Francisco Bay to San Pablo Bay, where they would unload at the southern end of Mare Island. The tankers would dock at the new LNG terminal equipped with a regasification facility, storage complex, and the power plant. At the terminal, a new technology called "thermal integration" would capture some efficiencies: the liquid gas would cool the power plant while the plant’s heat would regasify the LNG, reducing energy and water consumption. According to Shell and Bechtel, the $1.5 billion project would also pump up the local economy and produce jobs — 1,000 construction jobs and 100 permanent jobs.9 Much of this was first laid out by Shell and Bechtel in private meetings with Vallejo mayor Tony Intintoli, city manager David Martinez, and a few other consultants. Shell proposed to pay Vallejo $100,000 and some legal costs for exclusive negotiating rights for the site while a six-month business study was undertaken. The mayor soon called a press conference and said the public’s initial response was positive, which surprised a few alert citizens, since the public hadn’t yet heard exactly what was being proposed. At the first public meet-ing with the town council in May 2002 when the feasibility study was approved, about 150 union members turned out as a show of support, and Shell and Bechtel assumed they had a done deal. But by August 2002, more residents in the area learned about the project and began raising questions. "It’s not feasible, it’s not safe, and its not right for Vallejo," said one resident. Others wanted the council to reject it, period.

An LNG facility on Mare Island would be the first on the US west coast, and possibly all of North America, depending on whether it was built before others proposed for Mexico and elsewhere. Opponents to the Mare Island location point to its drawbacks. It is not an isolated ,deep-water coastal location. Rather, the island sits at the edge of San Pablo Bay, astride the entrance to a major inland shipping route, the Carquinez Strait. And it is also on the doorstep of a major population center of 116,000 people. Incoming shipments would have to pass beneath the Golden Gate Bridge, and keep a wide safety bubble around each vessel as required by US Coast Guard regulations. Opponents worry about LNG’s highly volatile nature, and they are concerned about public safety. Unloading and regasification, which would occur at Mare Island, are when the LNG is most un-stable. The concern of public officials is about potential spills, vapor clouds, and fires. Three schools, the Vallejo City Hall, and nearly all of cen-tral and southern Vallejo would lie within two miles of the complex. The environmentally sensi-tive San Pablo Wetlands Wildlife Refuge is also nearby. Shell and Bechtel, however, see a major market to be served and what they believe is an ideal location. This one project alone could sup-ply 17 percent of the state’s gas demand and three percent of the electricity by 2010. And given some of the existing infrastructure, the project could also plug into a major existing gas pipeline. But others in the community had hopes that Vallejo and Mare Island were moving away from its heavy industrial past, with the former Navy island of more than 4,000 acres slated to become a major regional park for open space and recreational uses. Equally important are the local plans for a first-class, mixed-use community with 1,400 residential units and seven million square feet of commercial space — projects that proponents say will generate 8,000-to-10,000 jobs and good local revenue. The Mare Island battle is a turf fight over more than energy and the environment; it’s a fight over a community’s right to determine its future.

Shell and Bechtel angered some Vallejo-area citizens by the way they handled their proposal, keeping it under wraps for nearly a year before making it public. The companies say that was necessary to keep competitors at bay, what they call proprietary information. Citizens, however, call it secrecy, something less than democracy. Some public opinion polling conducted by www.vallejonews.com, a small on-line newspaper covering the controversy, found residents oppos-ing the project by a 2-to-1 margin. By August 20th , 2002, the Vallejo city council meeting was overflowing with a crowd of 600 people.

The town council had also began to learn more about LNG on its own. Vallejo fire Chief Donald Parker visited an LNG terminal in Everett, Massachusetts, which had also been the subject of a 25-year-old 60 Minutes show. When city manager David Martinez reported to the council in August 2002, he recommended that the city conduct its own study of the safety and health effects of the proposed Shell/Bechtel facility. Martinez, in fact, cited "substantial doubt as to whether or not to proceed with the project at all." He suggested a two-to-three month study that would look at LNG and its properties, earthquake and terrorism risks, and national and international rules for LNG facilities. Shell and Bechtel then said they would pay up to $250,000 to cover the cost of a 90-day health and safety study.11 But Shell and Bechtel were not planning to roll over because of a little citizen opposition. In fact, several of the Shell-Bechtel advance team have already been found saying precisely that in so many words to their citizen adversaries. Comments like: "We’re going to roll over you," and, "This project will be built," have already been made in off-the-record, tête-à-têtes. Offices have been opened and staffed on both sides of the controversy. But Shell and Bechtel are clearly leading on that score, with as much as $300,000 already set loose for local ads and lining up allies.

Shell and Bechtel are also running a web site devoted to the Mare Island proposal. Here’s a sample: "LNG has been safely delivered to densely populated cities in the United States, Europe, and Japan for over 40 years. In that time there have been 33,000 LNG carrier voyages, covering more than 60 million miles, without a significant acci-dent or safety problem, either in port or on the high seas." Shell and Bechtel, however, haven’t told the entire safety story. A group of Canadian consultants preparing a 1998 analysis for an LNG facility in that country included a number of LNG incidents in their report, accidents which they concluded were not necessarily damning of building such facilities, but which at least were disclosed for public review (see sidebar). Safety figures to be a prominent part of the Mare Island debate, and probably for other locations where LNG facilities will be proposed in the future. "If it comes down to safety and dollars," says Vallejo city manager David Martinez, I will come down on the side of safety. If the questions cannot be answered satisfactorily, then I don’t think we want the project, even though I might be excited about the [project’s] potential [as a] revenue generator."

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