Congress prepared to move on LNG

Congress prepared to move on LNG Legislation would give federal government ultimate authority on development of onshore terminals Wednesday, July 27, 2005 By SEAN REILLY Washington Bureau WASHINGTON -- Taking the position that national energy needs come before state and local safety concerns, Congress is poised to cement the federal government's control over the siting of onshore liquefied natural gas terminals.

Although the Federal Energy Regulatory Commission would have to consult with state governments, it would get "exclusive authority to approve or deny an application for the siting, construction, expansion or operation" of an LNG terminal onshore or in state waters, according to a draft of almost-complete energy legislation posted on a congressional Web site.

As they put the finishing touches Tuesday on the bill to overhaul national energy policy, negotiators on a House/Senate conference committee also appear to have ignored a recent request from U.S. Rep. Jeff Sessions and U.S. Rep. Jo Bonner, both Mobile Republicans, to require offshore liquefied natural gas terminals to use "closed-loop" gas recovery systems that aren't destructive to sea life.

Sessions could not be reached for comment Tuesday afternoon. Bonner said he wants to get Alabama Gov. Bob Riley's opinion about the LNG language. Bonner added that he would vote against the entire energy bill if there is no provision for closed-loop systems and Riley feels the legislation fails to adequately assure a voice for states and local communities in deciding where LNG facilities will go.

Both the House and Senate are expected to vote on the final bill by the end of the week.

Amid a predicted boom in natural gas imports, the issue of LNG oversight has flared up in coastal areas around the country. Among them is Mobile County, where a public backlash last year forced ExxonMobil Corp. to drop plans for a terminal on Mobile Bay. FERC is not currently reviewing any permit applications for onshore facilities in coastal Alabama.

But one motive behind Congress' intervention is to help the federal commission prevail in a court fight with the California Public Utilities Commission over where terminals should go.

Marnie Funk, a spokeswoman for Senate Energy Committee Chairman Pete Domenici, R-N.M., said the new legislation simply aims to clarify lawmakers' aim in passing the Natural Gas Act almost 70 years ago.

"One hopes that courts will recognize that Congress intended for FERC to have siting authority," she said Tuesday.

To Domenici and other backers of the federal commission's position, natural gas is too valuable to the nation's energy supply to let state and local objections hold up projects indefinitely. Critics of FERC respond that the commission -- which sees its top job as providing "dependable, affordable energy," according to its mission statement -- is neither willing nor able to scrutinize the hazards associated with super-chilled, explosive liquefied natural gas.

In an apparent bid to allay those doubts, the final legislation includes a section requiring FERC to consult with a designated state agency regarding various issues, including the emergency response capabilities of the surrounding communities. The state agency can then file an advisory report with the federal commission on those issues within a month after the permit application is filed.

Casi Callaway, executive director of Mobile Bay Watch Inc., an advocacy group, welcomed that nod to federal-state cooperation, but still warned that the new legislation would be "devastating" to south Alabama.

"I think there couldn't be a more dangerous removal of states' and individual rights," said Callaway, who is also a member of the Gulf Fisheries Alliance, an organization that favors LNG technology -- such as closed-loop systems -- believed to be not harmful to fish populations. By contrast, open-loop systems use sea water to thaw the gas, destroying large amounts of sea life in the process.

While the legislation would not affect states' ability to regulate development under several federal pollution and coastal management laws, Callaway saw LNG oversite as primarily a public safety issue.

It was not clear how the legislation would have affected the strategy that Riley used last year against the ExxonMobil project, when he refused to allow the sale of the former Navy home port site to proceed until a full-blown safety study was completed.

The legislation does say, however, that most disputes will go to the U.S. Circuit Court of Appeals for the District of Columbia, rather than be heard by state or federal courts closer to the affected community.

U.S. Rep. Ed Markey, D-Mass., was critical of the provision, saying it represents another tilt in the federal government's favor. "The argument is to take each one of these siting decisions as far away (as possible) from the state which will be affected," he said.

http://www.iags.org/n0121041.htm

Study: LNG - Not in my backyard

In recent years America's gas market has been primed for volatility largely because of declining domestic supplies. To keep prices in check and limit the global influence of the oil cartel, many have advocated increasing imports of liquefied natural gas (LNG), natural gas cooled at extremely low temperature and high pressure until it contracts into a liquid which then can be transported worldwide by tankers. The liquid is unloaded at regasification terminals which turn it back into gas fed into pipelines for distribution. The U.S. Department of Energy expects LNG to account for 15% of U.S. gas consumption by 2025, compared to 1% today. Consequently, LNG imports into the U.S. are expected to grow by about 8.2% a year over the coming decade. U.S. Federal Reserve Bank chairman Alan Greenspan testified repeatedly before Congress that LNG was the only solution on the horizon for the projected chronic natural gas shortage.

However, LNG is highly volatile and in the era of terrorism may offer more opportunities for terrorist strikes on vulnerable energy infrastructure targets located near residential neighborhoods. One such disaster scenario was developed by James Fay, a professor emeritus of mechanical engineering at Massachusetts Institute of Technology, a former chairman of the Massachusetts Port Authority and a member of the Union of Concerned Scientists. Fay is indeed concerned. He predicts parts of Rhode Island and Massachusetts could be devastated by an attack on LNG tankers regularly passing through navigation canals close to residential areas in Boston and the Rhode Island shoreline on their way to the terminal in Everett, Mass.

In an interview with Energy Security Fay said a terrorist attack by a boat bomb - such as the one used against the USS Cole in 2000 or the French tanker Limburg off the coast of Yemen in 2002 - could cause at least half a cargo hold's worth of LNG to seep out of the ship and ignite. "In just over three minutes, the fire could spread two-thirds of a mile from the ship," Fay said. "There is nothing safety officials can do in such a case. They would have no time to evacuate people or to put out the fire." Fay also predicts damaging thermal radiation within a mile radius of the tanker which could set fire to thousands of homes and cause significant losses of blood and treasure. "Like the attack on the World Trade Center in New York City, there exists no relevant industrial experience with fires of this scale from which to project measures for securing public safety," he says. Fay insists the methodology of his modeling is sound.

Fay's analysis, as well as that of other experts, has sparked a debate in New England as well as in other states where LNG terminals operate or are under consideration. In addition to the Everett facility there are operational plants at Cove Point in the Chesapeake Bay, Maryland, in Savannah, Georgia, and in Lake Charles, Louisiana. LNG tankers are very conspicuous. Their distinctive storage tanks jut like humps on the decks; their identity cannot be mistaken. Terrorists attempting to target such a ship will have no problem identifying it. Furthermore LNG installations can be attacked onshore by truck bombs with similarly damaging consequences.

Alabama Governor Bob Riley sent letters to the Federal Energy Regulatory Commission and the Alabama Port Authority saying he will block sale of state-owned land to ExxonMobile for use as an LNG terminal "until an independent safety study has been completed and evaluated," specifying it should be "a study that considers the most credible worst-case scenario." Gov. Riley's letter states that “Only in this way can [..] all parties concerned by apprised of the actual possible outcomes of an accident or terrorist attack.”

Boston Mayor Thomas Menino recently decided to rid Boston Harbor of its long-standing LNG facility over safety concerns. "Everyone should be concerned about it because the Coast Guard, Boston fire department and other agencies do not have the equipment if something did happen with an LNG tanker. Everyone says there is no problems, but what happens when something does happen?" Menino said this past December when the national threat level was elevated to orange. Menino and other representatives of Boston-area communities had mounted an unsuccessful lawsuit to halt the LNG operations after Sept. 11, 2001. Professor Fay agrees. "Federal officials are at a state of denial right now. They ignore the scenario of tanker spill as a problem they have to deal with." Menino has no jurisdiction in the harbor so the tankers are still coming.

The Coast Guard however is not ignoring the threat. It has taken some precautions to minimize the risk of attack against LNG tankers. Fast escort boats shepherd each gas tanker as it travels to the terminal. A security zone extending 500 yards on each side, two miles ahead and a mile behind the tanker is imposed and other vessels are instructed to give the tanker a wide berth during its passage and 12-hour unloading process. Violators face arrest, fines of up to $25,000 and prison terms of up to 10 years. But these penalties are unlikely to deter suicide terrorists such as those who flew planes into the World Trade Center and the Pentagon. It is not clear what procedures the Coast Guard would be willing to use once a terrorist boat penetrates into the security zone. Nor it is clear how rapidly security officials could respond to the threat. After all, well armed and vigilant military targets like the USS Cole could not prevent such an attack.

LNG tanker

The safety concerns surrounding LNG installations pose difficulties for energy companies attempting to build new terminals. No such terminals have been built in the U.S. for two decades, but applications to construct 30 more have been made in recent years. Only half a dozen are likely to materialize in the next decade. ExxonMobil has announced plans to build a $600 million plant on the Texas coast and wants to build three more in other states. ChevronTexaco announced plans to construct an off the coast of Baja California, Mexico and Royal Dutch/Shell and BP are among other companies driving to build new terminals in California, Texas, Alabama, Florida, Mexico, Nova Scotia and other locations. In most of these places opposition by local communities is mounting and it is not yet clear which consideration will prevail: public safety or economic need.

One of those LNG terminals was going to be "in my backyard"

They wanted to put an LNG terminal on Hollinger's Island. Located within the blast radius was an elementary school not to mention some very expensive waterfront property. If Hollinger's Island goes down, then so will my area because the only reason this area has managed to stay afloat is because people from Hollingers Island have to shop up here.

Jeff Sessions has opposed Congress all the way on this, and I applaud him for it. I'm glad I voted for him 3 years ago.

The reason LNG was stopped here is because the opposition was bi-partisan and cut across all dividing lines. A story printed in the Republican Register even managed to bring up the point that under a bill passed in the late 1970s, there is not a location in this county suitable for these kind of plants

In fact, the reason LNG was stopped here is because the effort was spearheaded by our Republican paper.

Locals should have a right to make decisions in these matters because it affects their community, their property values, even their lives.

If you want to build an LNG plant in a populated area, build it in a slum (I even wrote Exxon telling them where a good location would be), don't locate it in a nice area where there is something to be lost

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