LNG making headway despite obstacles as projects advance on land and offshore

Despite regulatory hurdles and sometimes fierce local opposition, six new liquefied natural gas (LNG) terminals have opened or are about to come on line in the United States.

“The six new LNG terminals that just came on line or are coming on line in the U.S. are a mix of offshore and onshore, and we see that mix going forward,” said Bill Cooper, president of the Center for Liquefied Natural Gas in Washington, D.C.

Canaport LNG expects to bring on line a new LNG terminal in St. John, New Brunswick, by the end of 2008. It will supply markets in Canada and the United States. Eight LNG projects are under development in Canada and Mexico.  (Photo courtesy Canaport LNG)

Four of the new facilities are onshore terminals: Cheniere/Freeport LNG in Freeport, Texas, and Cheniere/Sabine Pass LNG in Cameron Parish, La., which are both in operation, and Cameron LNG in Hackberry, La., and Golden Pass LNG near Port Arthur, Texas, which are due to be operational in 2009.

The two new offshore terminals are on the East Coast. Excelerate Energy’s Northeast Gateway is in operation 13 miles off Gloucester, Mass. The Neptune LNG Deepwater Port project, 10 miles off Gloucester, received its license in March 2007. When pipeline work is completed in 2009, it will provide up to 750 million cubic feet of natural gas per day.

Other existing LNG terminals are in Everett, Mass.; Cove Point, Md.; Elba Island, Ga., and Lake Charles, La., along with Excelerate Energy’s Gulf Gateway Deepwater Port in the Gulf of Mexico. Gulf Gateway went into service in March 2005 at a site 116 miles off the coast of Louisiana and made deliveries throughout Hurricane Katrina, according to Excelerate Energy.

In March 2008, a Federal Energy and Regulatory Commission (FERC) tally of LNG projects in the United States listed six in operation, 22 approved and seven proposed. These include three approved and six proposed projects that come under U.S. Coast Guard and U.S. Maritime Administration (MarAd) jurisdiction.

The U.S. regulatory process from conception of an LNG terminal to operation is “arduous,” Cooper said. Terminals on land or within three miles of a state shoreline are regulated by FERC under the Natural Gas Act, and the governor of that state “has the right to exercise its review of the project under the Coastal Zone Management Act,” he said.

If the governor approves, the terminal plan can proceed; if not, the applicant can appeal to the U.S. Secretary of Commerce. Outside of the three-mile limit, LNG terminal permitting is done under the Deepwater Port Act through MarAd and the Coast Guard.

“Under the Deepwater Port Act, the governor of any adjacent state, which can be more than one, has the right to disapprove the project, and the act does not specifically provide for an appeal of a governor’s decision,” Cooper said. “A governor actually has more power over an offshore project than one onshore in the state.”

One example of the legal complexities involves BP PLC’s Crown Landing LNG terminal project in Logan Township, N.J. That project has stalled because of objections by the state of Delaware to a proposed 2,000-foot-long pier in the Delaware River that would extend from New Jersey into Delaware’s waters. The U.S. Supreme Court’s special master ruled in April 2007 that Colonial-era legal precedents give Delaware authority not only to the middle of the river but all the way to the New Jersey shoreline. Appeals by BP and New Jersey to the full court could still be pursued.

“For better or worse, it can be far easier to build facilities in Canada and Mexico and import the gas via pipeline to the U.S.,” said Morton Edwards, vice president of legislative affairs for the Interstate Natural Gas Association of America in Washington, D.C.

 As of April 2008, Canada and Mexico had each approved four new LNG terminals, some of which could supply natural gas to U.S. markets. Canaport, the Irving Oil/Repsol LNG terminal in Saint John, New Brunswick, will come on line late in 2008. The gas will serve markets in both Canada and New England.

While opposition to new LNG terminals is often fierce, the demand for natural gas continues to grow. During the next two decades, New England’s demand for natural gas is forecast to grow by 1 percent to 2 percent per year, according to the Neptune LNG Deepwater Port project.

“At this rate of growth, New England could face a shortfall in 2010 without new supplies of natural gas,” the report said.

Cooper noted recent estimates by economists that the United States would need 15 LNG regasification terminals to meet demand.

By Professional Mariner Staff