The Good Guys

March 2005

REED's Report: Vol V Issue #2

New LNG Terminals?

A huge boom in the import of liquified natural gas, a volatile fuel requiring extremely special handling, is poised the change the coastal seascape of the U. S. over the next few years – potentially displacing busy fishing grounds, redirecting shipping lanes, and restricting yacht traffic in ports from Nova Scotia to Texas to Oregon.

Liquified natural gas, or LNG, currently enters the U.S. from four terminals in Massachusetts , Maryland , Georgia and Louisiana . But more than 40 new terminals are currently in the planning stages along the North American coastlines, including the Bahamas and Mexico . Many of the proposed terminals are facing opposition from a diverse coalition of environmentalists, boaters, fishermen, shipping interests, and local residents.

LNG is created by supercooling natural gas to -260° F. In its liquid state, it shrinks to 1/400 of its original size, making it economically feasible to transport by ship. When it reaches its destination, the gas must be warmed to return to its gaseous state, in which it is delivered into pipelines carrying it across the the U.S. LNG’s explosive volatility is at the heart of much of the controversy surrounding the new terminals, particularly those to be built in busy residential areas. Many fear that a LNG tanker explosion in a harbor like Boston could level the downtown skyline.

Because of this, since Sept. 11, 2001 , authorities have treated LNG tankers and terminals as potential terrorist targets. Tankers entering Boston harbor are escorted by armed Coast Guard vessels and the harbor channels are closed to other traffic when a tanker is transiting. Proposals for two LNG terminals at the northern end of Narragansett Bay and one in the middle of Long Island Sound have boaters and coastal tug operators wondering if they’d be forced out of those busy waterways whenever a tanker arrived.

The approach to the proposed Narrragansett Bay terminals in Fall River , MA and Providence , RI would bring the 950-foot tankers right past Newport , RI , one of the country’s busiest yacht centers. The Long Island Sound terminal, would actually be a huge, anchored barge in the middle of the Sound, where tankers would directly connect to an underwater pipeline.

Seven proposed offshore transfer terminals similar to Long Island Sound’s are currently in the planning stages, including proposals off the coast of Gloucester , MA; Corpus Christi , TX ; Ventura , CA and Louisiana . At these sites, fishermen are worried that the terminals could eliminate access to fishing grounds or even destroy the fisheries themselves. The tankers use treated seawater as part of the warming process that returns LNG to a gaseous state. The water is then pumped back overboard.

But opponents say that, particularly in the Gulf of Mexico , the water being returned is significantly cooler – a change in temperature that could adversely impact local sealife. No research has been done to determine how significant the impact could be, but the Louisiana Charter Boat Association, a trade group of sportfishermen, is trying to organize a boycott of Shell Oil to protest that company’s plans to develop a LNG terminal 36 miles off the coast.

In Gloucester , commercial fishermen are complaining that the terminal site 10 miles offshore is in the middle of a highly regulated groundfish and lobster habitat that supports a fleet of smaller inshore fishing boats. Since tankers are expected to be using the terminal all the time, the local fishing fleet would be driven from the area.

Despite fears over the proliferation of gas terminals, even gas industry officials say some of the terminals may never be built. The capacity for gas imports that all the terminal proposals represent grossly exceeds the nation’s demands. Gas companies pursue more site proposals than they need because the process of finding a suitable terminal site and obtaining permission to build can takes years and is often unsuccessful.

WHERE THEY ARE

Below is the most recent list of offshore LNG terminal proposals being reviewed by the U.S. Coast Guard. Shoreside facilities are reviewed and approved by the Federal Energy Regulatory Commission with input from the Coast Guard. For more information, visit www.ferc.gov.

Company:Tractebel

Facility Name : Neptune

Location:22 miles off Massachusetts in the Atlantic Ocean

Application Received: 02/15/2004

Status:Application undergoing review for completeness

Company:ConocoPhillips

Facility Name: Beacon Port

Location: Gulf of Mexico , 56 miles off Johnson's Bayou, La.

Application Received: 01/18/2005

Status :Application deemed incomplete

Company:ExxonMobil

Facility Name : Pearl Crossing

Location: Gulf of Mexico , 41 NM off Cameron Parish, La.

Application Received: 05/25/2004

Application Deemed Complete: 07/21/2004

Public Meetings: Louisiana and Texas , 08/2004

Status:Application review temporarily suspended on 09/16/2004 , until additional information, essential to the environmental review, was provided by applicant. Application review resumed on 02/02/2005 .

Public Docket Number :18474

Company:ConocoPhillips

Facility Name: Compass Port

Location: Gulf of Mexico , 11 NM off Dauphin Island , Ala.

Application Received: 03/29/2004

Application Deemed Complete: 05/24/2004

Public Meetings: Mobile , Ala. , 07/13/2004 ; Pascagoula , Miss. , 07/14/2004

Status :Draft Environmental Impact Statement published on 02/11/2005 . Public meetings will be held on Feb. 28, March 2 & 3 in Texas , Alabama and Mississippi , respectively

Public Docket Number:17659

Company: Freeport MacMoran

Project Name: Main Pass Energy Hub

Location: Gulf of Mexico , 16 NM off coast of Louisiana

Application Received: 02/27/2004

Application Deemed Complete: 06/22/2004

Public Meetings:Held in Alabama , Mississippi , Louisiana , Aug. 10-12, 2004

Status:Application review temporarily suspended on 09/03/2004 until additional information, essential to the environmental review, was provided by applicant. The applicant is continuing to respond to additional data requests.

Public Docket Number:17696

Company:Crystal Energy

Project Name: Clearwater Port

Location: Pacific Ocean , 14 NM off the coast of southern California

Application Received: 01/28/2004

Status:Application deemed incomplete 03/12/2004 ; Latest information submitted by applicant on 01/28/2005 ; undergoing review for completeness

Public Docket Number:N/A

Company:Shell USA Oil & Gas

Project Name:Gulf Landing

Location: Gulf of Mexico , 38 NM off coast of Louisiana

Application Received: 11/03/2003

Application Deemed Complete: 01/22/2004

Public Meetings: Lafayette , La. , 03/16/2004

Draft Environmental Impact Statement published: 07/01/2004

Public Hearing: Lafayette , La. , 07/15/2004 ; New Orleans , 11/18/2004

Final Environmental Impact Statement Published: 12/03/2004

Status:Approved on 02/16/2005 . Record of decision from the Maritime Administration available in the docket.

Public Docket Number:16860

Company:BHP Billiton

Project Name: Cabrillo Port

Location: Pacific Ocean , 14 NM off coast of Ventura County , Calif.

Application Received: 09/03/2003

Application Deemed Complete: 01/27/2004

Public Meetings: Oxnard , Calif. , 03/15/2004 ; & Malibu , Calif. , 03/16/2004

Draft Environmental Impact Statement Published: 11/10/2004

Public hearings: 11/29/2004 , 11/30/2004 , 12/01/2004 , in Santa Clarita, Oxnard and Malibu , Calif. , respectively

Status:Application review temporarily suspended on 01/05/2005 until additional information, essential to the environmental review, was provided by applicant.

Public Docket Number:16877

Company :El-Paso Energy (now Excelerate)

Project Name: Energy Bridge

Location: Gulf of Mexico , 100 NM off coast of Louisiana

Application Received: 12/20/2002

Application Deemed Complete: 01/23/2003

Public Meetings: Lafayette , La. , 06/10/2003

Draft Environmental Impact Statement published: 09/09/2003

Final Environmental Impact Statement published: 11/26/2003

Public License Hearing: New Orleans , 10/03/2003

Status:Approved 12/31/2003 . Progressing with post licensing requirements (i.e., federal agency certifications, engineering and operations review and approval) in preparation of commencing operations in 1st. Qtr., CY2005.

Public Docket Number:14294

Company:Chevron-Texaco

Project Name:Port Pelican

Location: Gulf of Mexico , 36 NM off coast of Louisiana

Application Received : 11/25/2002

Application Deemed Complete : 12/27/2002

Public Meetings: Lafayette , La. , 04/29/2003 , 07/01/2003

Draft Environmental Impact Statement published: 05/30/2003

Final Environmental Impact Statement published: 08/29/2003

Public License Hearing: New Orleans , 08/13/2003

Status:Approved 11/14/2003 . Applicant preparing data for environmental review of proposed fabrication sites.

Public Docket Number :14134