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White House officials, Republicans from gas states, and fossil fuel lobbyists are teaming up in a push to open the Pacific Coast as a new frontier for U.S. exports of liquefied natural gas (LNG). The effort aims to reduce the cost of exporting gas to Asia and lock in the long-term viability of the industry.
At the heart of the campaign is Sempra Energy, the parent company of major utilities in Southern California and Texas. Sempra Infrastructure, a business 70 percent owned by Sempra and led by former Trump energy secretary Dan Brouillette, is developing gas export terminals on the Gulf Coast and in Northern Mexico.
New documents reviewed by the Prospect show that Sempra is crusading to expand a network of pipelines for delivering gas to its export hub in Mexico, and floating an interstate bond authority to finance the infrastructure.
Joined by the electric utility Dominion Energy and a handful of drilling companies, Sempra is promoting gas export infrastructure through a group called Western States and Tribal Nations (WSTN), that says it aims to promote “tribal sovereignty through the development of domestic and global markets for natural gas produced in the Western United States.”
But as the L.A. Times has reported, WSTN’s primary backers are fossil fuel companies like Sempra, and county governments in gas-producing states. WSTN is run by HBW Resources, a Houston-based energy lobbying firm. It was founded by Andrew Browning, a partner at HBW Resources who was President Bill Clinton’s special assistant at the Energy Department’s Office of Fossil Energy.
HBW Resources strongly disagrees with the Times’ claim that energy companies are the main funders of WSTN, pointing to the organization’s memorandum of understanding. “The main funders of the organization are the states and tribal nations which govern and lead WSTN, companies aligned with our mission, and other entities, all of which are publicly listed on our website,” said Bryson Hull, a spokesperson for HBW on behalf of WSTN. “Without states and tribal nations, there is no Western States and Tribal Nations Natural Gas Initiative.”
The pipeline expansions Sempra Infrastructure is promoting would siphon more gas away from the U.S. at a time when home heating costs have been volatile. Gas prices for Californians spiked repeatedly over the past year during an unusually rainy and cold winter.
One big winner of higher-cost American LNG would be Sempra, whose customers in Southern California could face higher gas bills, further boosting Sempra’s recent record profits. To make the case for more exports, Sempra is using social justice language, arguing that exported gas benefits tribes and could be marketed as an “ESG” product.
WESTERN DRILLERS AND GAS-STATE POLITICIANS have long sought a direct route to ship gas to Asia. Japan and South Korea, the world’s second- and third-biggest importers of LNG, are eager to buy more of the fuel, and are vying to serve as export hubs for distribution to neighbors.
Drillers in the oil patches of the Rocky Mountains and Great Plains produce both oil and natural gas from their wells, but often need pipeline capacity to ship the gas to market. The oil and gas industry has lacked the political foothold in liberal states along the West Coast to bulldoze pipelines from the Rockies to the coastline. The developer of a major natural gas project in Jordan Cove, Oregon, quit in 2021 after sustained opposition.
Beyond concerns about climate change, opposition stems from the potential health hazards. Areas around export hubs in Texas’s Corpus Christi and Galveston have shown elevated rates of asthma and cancer. One gas terminal near Houston recently suffered a fiery explosion of compressed methane. Given opposition to building LNG export infrastructure in California, Oregon, Washington, and British Columbia, which could theoretically receive piped gas from Alberta, Sempra has looked south of its San Diego headquarters to Baja California.
WSTN counts three tribes among its members. Tribal governments have been divided over the question of whether to pursue fossil fuel development. While many climate campaigns have been led by Indigenous activists, a long history of lucrative fossil fuel extraction on tribal lands makes some tribal leaders argue for sustained production.
In December, WSTN held a forum to encourage new gas export infrastructure on the West Coast. Emails and conference materials reviewed by the Prospect shed light on Sempra’s strategy to overcome permitting and financing hurdles to pipeline build-out.
The documents were obtained by the Energy and Policy Institute, a San Francisco watchdog that monitors fossil fuel companies and utilities. They include detailed planning for the second day of the WSTN forum, which was invitation-only and closed to the press.
Emails show that Jim Diemer, then Sempra Infrastructure’s director of midstream (i.e., pipeline) development, joined other LNG boosters on a panel focused on moving more gas from the Rockies to overseas markets. In the slide deck prepared by Diemer and others, bullet points and a map of gas pipeline routes reveal long-range ambitions for new export infrastructure. (Diemer left Sempra in February, after the forum.)
In an email, a panel member stressed the importance of access to multiple gas basins, including “Green River, Piceance, Uinta, San Juan, Permian, more remotely Powder, DJ Basins and Marcellus.” Those options are crucial, the slideshow explains, “to provide for supply diversity and ESG optionality.”
Boosters of natural gas argue that it is cleaner than coal and will become more environmentally friendly as it is blended with renewable fuels. While LNG produces lower carbon dioxide emissions than coal, it often has a larger greenhouse gas footprint when methane emissions are taken into account. In emails, Browning emphasized the priority of getting methane data from LNG companies and suggested engaging Project Canary, a climate emissions tracking company.
The slide presentation also floats a new “Western Interstate Gas Authority,” potentially to be modeled after an existing bond authority for municipal gas utilities in Georgia, which would issue bonds to finance for pipeline infrastructure.
Diemer strategized ahead of the panel on how to persuade Asian partners to back the plans. In one email, he wrote, “The only thing I might highlight further is offtaker participation in midstream/upstream to vertically integrate participating more broadly in the value chain … I would consider putting it out there more directly to stimulate discussion with the Japanese.”
Project developers can often raise more capital for big infrastructure projects, like LNG export terminals and pipelines, by striking long-term offtake supply agreements, which help show that they will have the cash flow to pay back loans or equity partners.
Diemer did not return a request for comment.
SEMPRA’S PLANS TO SCALE UP GAS EXPORTS come as the company faces backlash on the home front for soaring gas bills at its utilities, including accusations of price-gouging.
Gas bills have gone up across the board for Californians. Customers of Pacific Gas & Electric, which is not owned by Sempra, saw gas bills rise by about 30 percent between January 2022 and January 2023. At Sempra’s San Diego Gas & Electric, prices more than doubled, and at SoCalGas they nearly tripled, according to the California Public Utilities Commission. The price hikes led consumer watchdogs to call for an investigation into Sempra Energy.
It’s not the first time Sempra has been accused of price-gouging. It paid $377 million in 2006 to settle claims that it had manipulated gas prices during an energy crisis, and paid another $410 million to settle similar claims in 2010.
The push to sell more gas to U.S. allies in the Pacific comes less than five years after Sempra sold off two major utility assets in South America to companies based in China. It described the sales at the time as part of an “increasing focus on North American markets.” But Sempra is pushing hard to capture Asian consumers with new exports.
LNG boosters have enlisted Rahm Emanuel, U.S. ambassador to Japan and former chief of staff to President Obama, to champion export capacity. The support of officials in the administration is crucial for gas lobbyists to show sustained demand for LNG.
“AMERICAN LNG EXPORTS ARE NOW A FORMAL U.S. POLICY AND DIPLOMATIC TOOL: The Biden Administration in both Japan and the U.K. has formally made LNG exports part of its short- to medium-term policy for solving energy shortages. Ambassador Emanuel gave the reason succinctly in his keynote address,” Browning wrote in a memo summarizing the conference.
Emanuel delivered the keynote at WSTN’s December event after the governors of Utah and Wyoming sent him a letter of invitation written by HBW Resources. Browning wrote to the staff of Utah Gov. Spencer Cox and Wyoming Gov. Mark Gordon, asking them to invite Emanuel to the WSTN event, according to the documents obtained by the Energy and Policy Institute.
“The request to invite Ambassador Rahm Emanuel to speak at our event came from a decision of the board, whose members are appointed by their respective governments and who provide all leadership and direction to WSTN’s activities,” a spokesperson for HBW Resources said in a statement to the Prospect.
“We have sent the original invite (which I have attached for you) to the Ambassador’s staff in Japan … they have advised us that we should send notes of invitation/encouragement from our state governors and tribal chairs,” Browning wrote to Gordon’s staff.
Randall Luthi, chief energy adviser to Gordon, wrote to a colleague saying it would be easy to get the governor’s sign-off. “I can usually do it relatively quickly,” Luthi explained. “I waddle up the stairs with the document in hand and get approval or signature. Once Andrew [Browning] knows it is ok, it appears that he has the ability to add the signature electronically.”
Spokesperson Michael Pearlman told the Prospect that while Gordon signed on to WSTN’s group letter, the individual letter Luthi was referencing was never sent.
This article has been corrected to reflect that Jim Diemer is Sempra Infrastructure’s former director of midstream development. The article has also been corrected to clarify that Western States and Tribal Nations is a coalition of state, county and tribal governments, which contests the Los Angeles Times’ reporting that its backers are fossil fuel companies. Finally, the update clarifies that Mr. Browning received permission from two governors to invite Mr. Emanuel to a future WSTN event.
