Setbacks On East, West Coasts

 

Natural Gas Week, January 29, 2007

 

The LNG industry suffered major setbacks last week,

with one project in California effectively stalled and dead in

the water and a second project in Long Island Sound under

heavy attack by politicians and environmentalists.

Early last week, the Long Beach Port Commission voted

to end an environmental review of the project. Unless overturned

in court, the vote could end the $700 million plans by

Sound Energy Solutions (SES) — a joint ventured by ConocoPhillips

and Mitsubishi — to locate a 700 million cubic feet

per day receiving terminal on 25 acres inside the port.

“The bottom line, the Harbor Commission is the sole authority for leasing property here at the port,” said Art Wong,

assistant director of communications for the harbor commission.

“If they aren’t going to lease the property, this

should effectively end it.”

Opponents of the project cited the danger it posed to hundreds

of thousands of people living and working within

three miles of the proposed terminal, particularly if there

were a terrorist attack or an earthquake. They pointed out

that the site lies within several miles of three identified

fault lines.

SES has yet to decide what action it will take, according

to company officials. One option is to take the harbor to federal

court, as the Federal Energy Regulatory Commission

has final say over licensing onshore terminals. Wong said

the commission is not in agreement with that position,

telling Natural Gas Week: “They can have all the permits

they want, but if the commission doesn’t lease the property

to them, that kind of ends it.”

The action caps a rough 45-day period for SES. While

FERC and the US Coast Guard gave the project favorable

reports in 2005, very little has happened since. Last summer,

the harbor commission refused to extend a 3-year letter

of intent with SES that would have granted the company

exclusive development rights on the site.

In December, the commission said that it is considering

ending the review process, adding that the City of Long Beach had failed to reach a transportation-and-supply

agreement with the company and had not clearly given its

endorsement.

“There was some support for the project,” Wong said.

“But the critics were by far the loudest.”

Rory Cox with the environmentalist group Pacific Environment

told Natural Gas Week that stopping the Long Beach project has broader and deeper political implications

in California , especially for Gov. Arnold Schwarzenegger,

who has signaled support for the BHP Billiton LNG project

that would be located about 13 miles off the coast of Oxnard .

“This sends a clear message to Gov. Schwarzenegger,”

Cox said. “The people of California don’t want more fossil fuels,

anywhere, under any circumstances. They do want the

governor to hold to his promise of a clean and green future,

and not invest billions into more foreign fossil-fuel dependence,

and more greenhouse gases.”

Cox said his group, along with Long Beach Citizens for

Utility Reform and the coalition Ratepayers for Affordable

Clean Energy, which represents 20 community and

environmental groups from the Long Beach area, have

publicly maintained the position that LNG is not needed

on the West Coast. The money that would be spent on

LNG developments could better be spent on renewables

and efficiency.

Even while supply constraints into the New York- -area

grid blasted Transco zone 6 New York prices as high as $30

last week, a major political assault by air, sea and land was

being waged on a proposal to build a floating terminal to receive

LNG ships in waters between New York ’s Long Island

and Connecticut . The project, designed to improve deliverability

into the region, is being developed by TransCanada

and the North American LNG unit of Anglo-Dutch super

major Shell.

The partners seeking a license to build

the project, expected to cost between $700

million and $1 billion, have argued it is

safe, will cut consumer bills and will help

the environment by supplying relatively

clean-burning natural gas to the region.

The terminal’s planned capacity of 1 Bcf/d

would provide enough gas for 4 million residences

in New York and Connecticut , the

partners have repeatedly said in filings

and public hearings on the proposal.

“There are between 4,000 and 7,000

commercial vessel transits in the Sound

every year. We’d add about 100,” said

Shell spokeswoman Teresa Covington in

several published reports. She was responding

to published complaints that the

terminal would add too many new ships

into the marine traffic flow pattern.

The LNG terminal project is in New York state waters and must be approved by a number of

state agencies, with FERC having the overall siting authority.

Analysts say a lawsuit is likely and courts may have the

final say.

But in a new twist last week, Connecticut Attorney General

Richard Blumenthal called on the Federal Aviation Administration

and the Department of Homeland Security to

establish a no-fly zone around the site. Currently, no such

rules exist for any of the five LNG receiving terminals now

in operation in the US , including the one in Everett , Massachusetts ,

which is located just miles from downtown

Boston.

“Neither the Coast Guard nor FERC has addressed the

issue of potential dangers to this project from the air,” Blumenthal

wrote in a letter to the FAA. “The airways above

the Sound are heavily used by private and commercial aircraft,

and traffic is increasing.” He added that traffic from

Kennedy, LaGuardia, Westchester, Tweed and MacArthur

airports are routinely directed over the Sound to avoid flying

over populated areas.

Of course, he wrote, diverting these aircraft from over the

Sound would put them over populated areas.

He added that the FAA has applied no-fly restrictions

over military sites, shuttle launches, sporting events such

as the World Series and the Super Bowl,

and national landmarks such as the

White House, the St. Louis Arch, Disney

World and Mount Rushmore . In his letter,

he formally asked the FAA to become

involved in the decision-making process

for the Long Island Sound project and

submit comments.

Blumenthal continued his attack from

the sea and land, saying the federal Draft

Environmental Impact Statement “fails to

meet even the minimum standards of the

National Environmental Policy Act.” He

added that the project also violates New

York’s Long Island Sound Coastal Zone

Management Plan, which is designed to

protect commercial and recreational boating

interests, open space and visual qualities

as well as the environment in Long Island

Sound.

“This document is a manifesto, it draws a line in the

Sound,” Blumenthal said. “Our message to New York authorities

is that if you care about your coast and your

Sound, you must reject this project. The Broadwater project

is an unacceptable security danger, an environmental

atrocity and an aesthetic monstrosity. The deficiencies in

[FERC’s] Draft Environmental Impact Statement are

stark and stunning.”

The time for public comment to federal authorities was

Jan. 23, and FAA officials have not said if they will attempt

to file any statement regarding the Long Island

Sound project.

—John A. Sullivan