***Please note the size of this facility and how
many workers Northern Star expects for both the terminal and for the
construction................interesting that the Jordan Cove Energy
Project has stated they will have 50-60 terminal workers and up to
1,000 construction workers for a smaller production facility ???
|
Q&A on LNG venture
By Tony Lystra
Feb 03, 2007 - 11:56:01 pm PST
|
Depending on who you talk to, NorthernStar Natural
Gas's plans for the Lower Columbia either amount to the intervention of a
perfect corporate citizen serving the energy needs of the U.S., or a
get-rich-quick scheme that puts the public at too much risk.
Here's a story to help you make up your own mind: A list of questions and
answers about the company, its proposal to build a liquid natural gas
terminal and pipeline here, the potential risks and the potential
benefits.
The information has been compiled from government documents,
NorthernStar's applications to regulatory agencies, the company's
financial statements and interviews with federal officials.
Whether the company will be allowed to follow through with its plans is
far from decided. Keep this cheat sheet handy as the process unravels.
What does the project include?
NorthernStar Natural Gas proposes to build a $600 million liquid natural
gas import terminal in Bradwood,
Ore., on the Columbia River. The terminal, on 62 acres in Clatsop
County, would be roughly 30 miles inland from the Pacific Ocean.
It would include two storage tanks, each 168-feet-high and capable of
holding 160,000 cubic meters of LNG. The company said it may eventually
build a third tank. The facility would also include a berth for LNG
tankers, a control room, maintenance shop, warehouse, office and
electrical room.
The site was once the Columbia Hudson Lumber Mill, which closed in 1962.
The Houston company also wants to build a 36-mile natural gas pipeline
that would pump the gas from the terminal, under the Columbia River,
across Cowlitz County, under the Cowlitz River and connect with an
existing pipeline north of Kelso.
The pipeline would be 36 inches in diameter on the Oregon
side of the river and 30-inches in diameter where it passes under the
Columbia River and crosses Cowlitz County.
How does it work?
Tankers, each able to hold between 100,000 and 200,000 cubic meters of
LNG, would travel up the Columbia and dock at the terminal. Off-loading
arms would suck the superchilled liquefied gas into the storage tanks. The
product would be warmed back into a gaseous state, then channeled into the
pipeline for delivery. The terminal would be able to send out 1.3 billion
cubic feet of natural gas per day.
Between 10 and 11 LNG tankers would dock at Bradwood Landing each month. A
tanker could be unloaded in 14 hours, but could spend as long as 24 hours
at Bradwood Landing.
Tankers would arrive every three days for an average of 125 each year.
When would construction begin?
If regulators approve NorthernStar's plans, the company expects to begin
construction during the third quarter of this year and begin operations at
the end of 2010. However, federal regulators have no timetable for
deciding on the project.
The facility would have a lifespan of 25 years to 50 years, NorthernStar
said.
What does NorthernStar need to build Bradwood Landing?
NorthernStar must gain the approval of the Federal Energy Regulatory
Commission, a five member, presidentially appointed board that regulates
the industry.
The company must also meet the regulations of local jurisdictions.
NorthernStar has said it expects FERC to consider its projects this year.
If FERC agrees that NorthernStar can install its terminal and pipeline,
the company will have eminent domain over private land holdings, allowing
it to pay property owners to run the pipeline through their property.
Landowners will not have any legal say in locating the pipeline, but
disputes over price can be taken to courts at the state level, FERC said.
How would the terminal change the Columbia River?
The company would have to dredge its berth and a turning basin for the
tankers. Roughly 700,000 cubic yards of dredge spoils would be put on the
terminal site.
NorthernStar estimates this part of the project would involve dredging the
river for one month, 24 hours a day.
The dredging operations would take place between November of this year and
February 2008, assuming FERC approval, the company said.
How many jobs would the operation create?
NorthernStar estimates the terminal would employ between 35 and 40
workers. Personnel would be on duty at the terminal 24 hours a day, seven
days a week, with three operators working each shift.
Construction at Bradwood Landing would include an average daily workforce
of 331 workers and could peak at 526 workers, the company said.
From where will the natural gas be shipped?
NorthernStar says its LNG will come from the "entire Pacific Basin
and possibly from the Middle
East." Other exporters of LNG, according to the company,
include Indonesia,
Malaysia,
Australia,
Oman
and Abu
Dhabi.
Export plants, it said, have been proposed for Peru,
Bolivia,
Qatar, Iran,
Russia,
Yemen,
and Alaska.
Is there demand here for Natural Gas?
NorthernStar cites government figures saying a potential increase in
demand, coupled with flat domestic production of natural gas, could create
a shortfall of as much as 13 billion cubic feet per day by 2015.
How many Cowlitz County landowners would be affected by the pipeline?
Documents filed with Cowlitz County show the 36-mile pipeline would affect
roughly 544 parcels. In some cases, multiple parcels are controlled by the
same owner.
Where does Northern Star's money come from?
A substantial amount of the company's seed money came from MatlinPatterson,
a private investment firm with offices in New
York, London,
Hong
Kong and Sao
Paulo that agreed to provide up to $14 million.
NorthernStar is also awaiting approval from the Securities Exchange
Commission for a $125 million stock issue that would fund other
development costs. Construction would be funded by loans.
How many LNG terminals already are operating in the U.S.?
Five. They're in Everett,
Mass., Cove
Point, Md., Elba Island, Ga., Lake
Charles, La. Another is offshore in the Gulf of Mexico.
Seventeen have been approved by FERC. Another three have been approved by
the Coast Guard, which oversees offshore facilities in federal waters. The
Canadian Government has approved three. Mexico has approved an additional
three.
In addition, eleven have been proposed to FERC and another eight have been
proposed to the Coast Guard.
No LNG terminals are now operating on the West
Coast.
How many employees does NorthernStar have?
As of Nov. 15, 2006, the company said it employed 23 people, not including
contractors.
Who are these guys?
According to NorthernStar's financial documents, the company's top
officials include:
• Chairman Gerald Lindner, who also serves as the chairman and CEO of
KGen Power LLC, a power company established in 2004 by MatlinPatterson,
one of NorthernStar's chief investors. He was also the founder and
chairman of Opus Power LLC, an advisor and partner to private equity firms
regarding the acquisition of power assets. He earned an MBA from the
University of California, Los Angeles and a bachelors in math and
economics from St. Mary's College.
• Chief Executive Officer William Garrett, who was a founder and
principal with ESI Holdings, LP, a consulting firm that assists companies
in developing energy projects. He was also a founding member of Organic
Fuels, LLC, which builds and operates bio-diesel facilities. Garrett has a
chemical engineering degree from the University
of Virginia and completed a U.S. Naval Nuclear Power School program
in nuclear engineering.
NorthernStar pays him a base annual salary of $600,000.
• President Paul Soanes, also a founder and principal of ESI Holdings
and Organic Fuels. Soanes worked for ARCO from 1991 to 2000, including a
stint as the company's vice president for commercial development in Asia.
He has a bachelor's degree in commerce from Murdoch University, Western
Australia.
NorthernStar also pays him a base annual salary of $600,000.
How long has the company been around?
NorthernStar was formed in 2005.
Does NorthernStar have any experience operating LNG terminals?
The company says its executive team has been involved in the development
of more than 50 "energy infrastructure projects" costing more
than $15 billion, but it did not specify what, exactly, the projects are.
What other projects is NorthernStar trying to build?
Besides Bradwood Landing, the company also wants to operate two offshore
terminals in Southern California.
In what is known as the Clearwater
project, the company would import LNG to an existing platform 13 miles off
the coast of Oxnard,
Calif. Should FERC approve the project, construction would begin in
the third quarter of 2008, and the platform would begin operating in the
second quarter of 2010.
For its Orion project, the company would operate an import terminal off Carlsbad,
Calif. The company said it would apply to FERC for approval of this
project in conjunction with its Clearwater
application. It did not specify when the terminal might begin operating.
Does it have any currently operating natural gas terminals?
No.
What would the environmental impacts of the terminal and pipeline be?
Critics say the potential impacts are myriad, from damage to salmon
habitat to fundamental changes to the Columbia River's ecosystem. FERC's
environmental impact statement has not been completed yet.
Critics say the Bradwood Landing site contains an old mill pond that has
become salmon habitat. They are also concerned that LNG tankers will pull
between 11 and 14 million gallons of water from the Columbia for ballast.
NorthernStar said no ballast water will be unloaded, but some worry that
the tankers will off-load water, carrying non-indigenous organisms from
far-off ecosystems. Hundreds of ships travel the Columbia annually after
visiting foreign ports, presenting the same issue.
NorthernStar has said it will spend roughly $50 million over multiple
decades to help restore salmon habitat in the region, including buying and
preserving Svensen Island.
Have there been accidents at LNG terminals in the past?
According to FERC, four major LNG-related accidents have occurred in the
past 60 years.
In 2004, an LNG export terminal in Skikda,
Algeria exploded in North
Africa, killing 27 people and wounding 56.
A natural gas leak caused an explosion in 1979 in Cove
Point, Md, killing one plant employee and injuring another. The
explosion caused $3 million in damage.
In 1973, in Staten
Island, N.Y., a fire increased pressure inside a tank, causing its
concrete dome to collapse, killing 37 construction workers.
And, in 1944, an LNG tank failed in Cleveland,
Ohio, its contents spilling into the street and storm sewer system.
An explosion and fire killed 128 people.
What are the risks to the public associated with natural gas pipelines?
Nationally between 1970 and June 1984, there were 2.4 deaths per year
among pipeline company employees and 2.6 deaths per year among the general
public as a result of pipeline-related accidents, according to FERC.
Between 1984 and 2005, there were 2.8 deaths per year resulting from
pipeline accidents.
"The transportation of natural gas by pipeline involves some risk to
the public in the event of an accident and subsequent release of
gas," FERC officials wrote in a recent report.
The agency noted that methane, the main component of natural gas, is
odorless, colorless and tasteless. If it is breathed in high enough
quantities, it can result in asphyxiation.
"Unconfined mixtures of methane in air are not explosive," the
report said. But methane can explode if confined near an ignition source.
What safety measures will the NorthernStar project include?
The terminal's two storage tanks will be double-walled, the company said,
to prevent spills. A "containment berm" would be constructed on
the site "as an added safety measure." The documentation did not
elaborate.
FERC said it can review projects in conjunction with as many as 20
government agencies at a time, including the Department of Homeland
Security and the Department of Transportation.
FERC staff typically monitor construction to make sure safety standards
are met.
Is there a risk of terrorist attacks on the tankers?
Federal officials think so. The Coast Guard routinely escorts LNG tankers
as they enter U.S. waterways. The escorts are also intended to ensure that
tankers don't run aground or become powerless in the shipping channel.
How will the tankers affect river traffic?
The Coast Guard requires safety zones around LNG tankers and other vessels
including Naval ships and, sometimes, cruise ships, said Lt. Shadrack
Scheirman, the project officer overseeing the NorthernStar proposal for
Coast Guard Sector Portland.
But the Coast Guard has not yet commented on whether LNG ships bound for
Bradwood Landing would block other shipping and recreational vessels on
the Columbia. NorthernStar has provided a report on the issue to the Coast
Guard, but it has not been made available to the public.
The Coast Guard's report should be completed in the coming weeks,
Scheirman said.
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