Liquefied Natural Gas Foes Go to The Mat in Maryland
LUSBY, Md., March 2 (Reuters) – Maps of Indian and Japanese ports paper the walls of a Dominion Resources Inc conference room in a small Maryland town, population 1,835, known more for crabbing and bird watching than global trade and the U.S. natural gas revolution.
Dominion, an American energy company long focused on U.S. markets, hopes to begin an expansion worth billions of dollars at its Cove Point complex on Chesapeake Bay later this year. As part of the plan, compressors fired by a new power plant would cool gas to -260 degrees F (-162 C) until it becomes the hot global commodity known as liquefied natural gas, or LNG.
But if environmentalists, including a group that has led the charge against TransCanada Corp’s long-delayed Keystone XL oil pipeline, get their way, Dominion won’t soon be shipping anything anywhere.
The Cove Point site, a little more than an hour’s drive southeast of Washington, DC, boasts four large storage tanks and a pier built in the 1970s to import LNG from Algeria.
That was long before the United States rode the wave of hydraulic fracturing, or fracking, to become the world’s top gas producer.
The gas boom has set off a race among U.S. companies to export LNG to China and India, which are both trying to cut their use of coal in power plants, and to Japan, which moth-balled nuclear plants following the 2011 Fukushima disaster. European economies also covet LNG.
Cove Point is among more than 20 U.S. projects that want to export LNG. Of those only one, Cheniere Energy’s Sabine Pass in Louisiana, has full federal permitting.
Competition from other exporters, including Russia, Australia, Mozambique and Canada, makes it unlikely that all the proposed U.S. export projects will get off the ground, analysts say.
“Timing is the most crucial element, when you look at the global gas market right now,” said Leslie Palti-Guzman, a gas analyst at Eurasia Group, a risk consultancy. “You have such a flurry of projects coming on line, they will all compete for the same markets and around the same time.”
Cove Point has two major selling points. Proximity to the Marcellus Shale region, a huge gas resource in Pennsylvania and surrounding states, is one. Not having to build from scratch is another.
The U.S. Department of Energy has only approved six export licenses for LNG projects, including Cove Point, since 2011. Pressure is building for more, as President Barack Obama wants the country to help build a global gas market as part of his climate action plan.
Opponents, including nearby homeowners concerned about safety and environmental groups agitated about the amount of carbon emissions from the fuel’s journey from wells to power plants, want to slow down the permitting process and dull Cove Point’s competitive edge.
‘ARE THE RISKS TOLERABLE FOR PEOPLE?’
Unlike other LNG projects on the West and Gulf Coasts, Cove Point lies within 1 mile (1.6 km) of hundreds of homes, and opponents hope related concerns will delay the project.
Dominion has already signed contracts with India’s gas utility, Gail, and Japan’s Sumitomo trading company to start shipping more than 700 million cubic feet of LNG by late 2017 – roughly, a shipload as long as New York’s Chrysler Building is tall, every four days.
Before Dominion starts work on the expansion it needs the green light from the Federal Energy Regulatory Commission (FERC). The agency has already been working on an environmental assessment of the project for 20 months. But opponents are urging the agency to conduct a wider review, known as an environmental impact statement (EIS).
Dale Allison, a retired Navy aerospace engineer who can see Cove Point’s tanks from his house, cites a 2009 report by the independent Congressional Research Service that said spills from tanks, while unlikely, could form a vapor cloud that may drift, catch fire and cause “considerable damage.”
He wants FERC to do a full EIS. “The right way to assess the project would be to establish what are the risks, are the risks tolerable for people who live near it, and if not, get them out,” Allison told Reuters.
Dominion says anxiety about the existing storage tanks is unfounded because they already have been approved, and the company will soon get permits to install roughly $3.6 billion of new equipment at Cove Point.
“Nobody is more interested in protecting that investment than us,” said Dominion vice president Mike Frederick, who is in charge of operations at the site. In the unlikely event of a leak or attack at the plant, dams built around tanks would contain any leaks, keeping workers and nearby residents safe, he said.
Dominion officials say Cove Point’s less polluting LNG will displace coal at power plants in India, which is struggling to control emissions linked to climate change.
But environmental groups are pushing local and federal agencies to consider whether LNG, once it has been super-cooled, sent via potentially leaky pipelines at home and abroad, and shipped thousands of miles, is really the low-carbon alternative to coal that boosters have claimed.
Adam Brandt, a professor at Stanford University who has studied the climate benefits of natural gas, said when companies say LNG is replacing coal they present only a partial picture of the fuel’s emissions.
“You need to look at the entire value chain, from the well in the United States, all the way to the liquefaction and shipping,” Brandt said, adding that more study needs to be done on LNG’s overall climate benefits.
SECRET SAFETY INFO
Dominion has submitted 21,000 pages of information about Cove Point to FERC for the agency’s assessment, even including calculations on vehicle emissions that an additional 75 workers would add to the existing 100-member crew.
Frederick said that the process has been public, with opponents free to add comments into the docket, and that FERC has added an additional public comment period. Still, much of the information on safety at Cove Point is not public.
“It’s absurd to build what Dominion has in mind close to so many human beings without at least doing an EIS to really look at this,” said Mike Tidwell, the director of the Chesapeake Climate Action Network, a nonprofit group promoting renewable energy solutions.
Tidwell’s group has partnered with 350.org, an international environment group that has fought against Keystone and development of Canada’s oil sands, to push the relevant agencies to examine the risks of Dominion’s plant as well as the likely emissions.
Cove Point has support from powerful Maryland politicians including Steny Hoyer, the second-ranking Democrat in the U.S. House of Representatives.
Maryland’s Attorney General Doug Gansler, however, who is running for governor in November, wants FERC to conduct a full EIS, as does the editorial board of the Baltimore Sun, the state’s largest daily newspaper.
Christi Tezak, an analyst with ClearView Energy Markets, said an EIS probably will not be needed because the export project is within the site’s existing footprint, and even if it were needed it might add only about three months to the approval process.
A longer delay could cause problems. “If the project is delayed too much, maybe the (Indian and Japanese) contracts could be canceled and the buyers could look for another project,” said Eurasia’s Palti-Guzman.
Dominion would not comment on its contracts.
It is unclear whether opponents can force FERC to undertake the full study. A spokeswoman said the agency would conduct a full EIS only if the initial assessment were to find a significant impact on the human environment.
© 2014 Thomson Reuters. All rights reserved.|
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