BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 376|
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THIRD READING
Bill No: SB 376
Author: Simitian (D)
Amended: 1/25/10
Vote: 21
SENATE ENERGY, U. & C. COMMITTEE : 9-2, 4/21/09
AYES: Padilla, Calderon, Corbett, Kehoe, Lowenthal,
Simitian, Strickland, Wiggins, Wright
NOES: Benoit, Cox
SENATE APPROPRIATIONS COMMITTEE : 6-3, 1/21/10
AYES: Kehoe, Corbett, Leno, Liu, Price, Yee
NOES: Cox, Denham, Walters
SUBJECT : Liquefied natural gas market: assessment
SOURCE : Author
DIGEST : This bill enacts the Liquefied Natural Gas
Market Assessment Act and requires the California Energy
Commission, on or before July 1, 2011, to create a matrix
on its Internet Web site containing information related to
the building and operation of a liquefied natural gas
terminal project, and requires quarterly updates.
ANALYSIS : Existing law requires the California Energy
Commission (CEC) to assess electricity infrastructure
trends and issues facing California and develop and
recommend energy policies for the state to address and
resolve such issues as part of its biennial Integrated
CONTINUED
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Energy Policy Report.
Existing law, the Liquefied Natural Gas Terminal Act of
1977 (since repealed in 1987), authorized the Public
Utilities Commission (PUC) to issue a permit for the
construction and operation of a liquefied natural gas (LNG)
terminal pursuant to a prescribed permit procedure. The
terminal was to be at a remote site selected by the
California Coastal Commission. [SB 1081 (Alquist), Chapter
855, Statutes of 1977, repealed in 1987]
This bill requires the CEC, by July 1, 2011, to create a
matrix on its website that describes the proposed LNG
terminals in California as well as LNG facilities from
Alaska south through Baja California. The required
information includes location, ownership, description,
capacity, cost, and environmental impacts, to the extent
that such data is publicly available.
This bill requires LNG project applicants to provide
evidence that it has consulted with the United States
Department of Defense on the impact of its project.
This bill requires that the environmental impact report for
LNG projects include a comparative analysis of feasible
alternatives, an analysis of potential disproportionately
high and adverse human health or environmental effects on
minority and low-income populations, and a full life-cycle
analysis of the impacts of the resulting greenhouse gas
emissions. This provision does not apply to LNG projects
which were found to be data adequate before January 1,
2011.
This bill states the following findings and declarations:
1. The state has a critical role in decisions regarding the
siting and design of new onshore and offshore
infrastructure for the importation of liquefied natural
gas with regard to public health, safety, and the
environment.
2. California has a rich history of innovative and strong
environmental laws and should continue to strive for the
best protections possible.
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3. Utilities in California are required to meet new demand
through energy efficiency programs before acquiring
other sources of electricity.
4. Accelerating the use of renewable energy resources
wherever feasible and ensuring a diverse and affordable
portfolio of fuel sources may minimize supply
interruptions and increase reliability.
5. Decisions regarding the importation of liquefied natural
gas should be based on a comprehensive review of current
and projected natural gas supply and demand in
California.
6. The possible importation of liquefied natural gas should
be reviewed as part of the state's integrated energy
policy report, which contains an overview of major
energy trends and issues facing the state, including
supply, demand, and price.
Background
California's Reliance on Natural Gas . The predominant fuel
for electricity generation in California is natural gas,
which provides 45 percent of California's electricity.
Reductions in natural gas use can be achieved through
continued energy efficiency programs and further developing
and integrating renewable energy resources into electricity
supplies. California imports approximately 85 percent of
its natural gas supply, primarily from gas fields in the
Southwest, Rockies and Alberta, Canada. The 15 percent of
supply derived from in-state sources is typically a lower
quality gas, which must be blended with higher BTU gas,
such as propane, to meet pipeline and end-use
specifications. Additional supplies of in-state gas are
available, but remain untapped. California natural gas
demand is expected to grow at a very modest 0.1 percent
annual rate for the foreseeable future.
LNG as Alternative Supply . LNG is natural gas that has
been cooled and therefore liquefied. Liquefaction reduces
the volume by a factor of 600, allowing it to be
transported overseas by tanker then re-gasified. LNG
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infrastructure would enable California consumers to draw
gas from major reserves around the world - e.g., Alaska,
Russia, Venezuela, Bolivia, Indonesia, Australia and the
Middle East. The CEC has suggested that importing natural
gas from other continents may help reduce Canadian and
United States natural gas prices. One LNG terminal could
supply approximately 10 percent of California's total
natural gas demand. There are eight LNG receiving and
re-gasification terminals in the United States, but none
are located on the West Coast and able to serve California.
Another seven have been approved and are under
construction, while 16 more have been approved but are not
under construction. With one exception, all these plants
are on the south and east coasts. In late 2008, an LNG
plant owned by Sempra Energy commenced operation in Baja
California. Seven LNG terminals have been proposed for
California in recent years. Plans for all but one of those
plants have been either abandoned or shelved.
Current Permitting Process . The current permitting process
for offshore projects where the terminals are outside of
California waters, as is the case with the remaining LNG
proposal, makes the U.S. Coast Guard the lead federal
agency and gives the Governor authority to reject a
project. The California Coastal Commission has the
responsibility to review the project impacts in the coastal
zone and on state lands. The State Lands Commission has
authority to issue coastal development permits and leases
for state lands.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
DLW:mw 1/25/10 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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