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Comprehensive FERC Hearing Sought for All Northeastern LNG Terminals

Massachusetts Attorney General Thomas Reilly and the City of Fall River, MA, filed a motion with FERC in the Weaver's Cove LNG docket last Thursday requesting that the Commission initiate a new comprehensive evidentiary hearing to review all of the proposed and planned northeastern liquefied natural gas (LNG) import terminals in order to identify those that best serve the public interest.

Reilly and the city told the Federal Energy Regulatory Commission (FERC) that its current "fragmented" approach to handling project applications is irresponsible and violates its public interest standard.

"If the Commission, and the consumers to whom it owes the ultimate responsibility for sound decision making, is to be assured that New England's need for incremental supplies of natural gas is satisfied in the most sensible, safe fashion, it is imperative that the decision making crucible have the benefit of, and be able to evaluate and select from among, the full panoply of available alternatives," they said.

They noted that there are at least seven proposed LNG terminals in the region, including the Weaver's Cove LNG terminal in Fall River. Weaver's Cove LNG is being proposed by Poten & Partners and Hess LNG. It would delivery a peak load of 800 MMcf/d to the region and would have a capability to store 200,000 cubic meter of LNG on site. The project would be located on 73 acres on the Taunton River feeding into Mount Hope Bay and Narragansett Bay about 50 miles south of Boston. FERC issued a draft environmental impact statement on the project in August 2004, but significant local and state opposition has hindered the regulatory process. The project would need to pass a Coastal Zone Consistency Review in Massachusetts and Rhode Island.

The other regional LNG projects include the following: KeySpan and BG Group's Providence LNG terminal in Providence, RI; TransCanada and Shell's Broadwater Energy in Long Island Sound; Quoddy Bay LLC's terminal in Pleasant Point, ME; Somerset LNG's proposed terminal at Somerset, MA; and two offshore terminals near Gloucester, MA, one proposed by Suez (formerly Tractebel) and the other by Excelerate Energy.

In addition, there are between four and six more LNG terminals proposed in Canada, and Maritimes & Northeast Pipeline said recently that it is planning to triple its pipeline capacity (to 1.5 Bcf/d) to bring some of that LNG to the northeastern U.S.

"There is only one way to ensure decision making that in fact would be consistent with the public interest: by the initiation of a single proceeding, consolidating within it the Weaver's Cove, KeySpan and Broadwater import and related applications, and by publicly inviting the submission by others, by a date certain, of alternative proposals, including proposals for deepwater ports," Reilly and the city told FERC.

They said FERC would not be crossing jurisdictional boundaries with the Department of Transportation (Maritime Administration and the Coast Guard) by including deepwater ports in the proceeding. The Commission simply "cannot fulfill its responsibilities under the Natural Gas Act to determine whether the Weaver's Cove proposal is 'inconsistent with the public interest' without fully considering the alternatives to that proposal, including deepwater ports," they argued.

In fact, consolidating all of the proceedings into one hearing is "necessary to fulfill Congress's declaration of policy in the Deepwater Port Act," they added.

They also told FERC a combined proceeding would be the fastest way to bring incremental supply to New England, which they agreed is desperately needed.

"Indeed, there is nothing at all unique about the procedure that we suggest...," they said. "It was the procedure of choice mandated by the Commission itself decades ago as it struggled with the need to select from the available proposed pipeline projects... If, as it would appear, LNG facilities are now to become a dominant intermediary between sources of production and consumption, the authorization process must be no less rigorous and no less comprehensive."

The attorney general and attorneys for the city said they are not "content simply to say 'no' or to stand as an obstacle" to Weaver's Cove LNG or the other gas supply projects. They expressed a willingness to support the projects that are "demonstrated to serve best the citizens" and "best promote the public interest in this new post 9/11 environment."

"It would be ludicrous to turn a blind eye to the risks, burdens and benefits associated with each potential location for an LNG terminal and to the exacerbation of the burdens on our already overstretched federal, state and local public safety personnel that each proposal would bring," they said. "Yet that is precisely what the Commission would be sanctioning if it proceeds to consider the Weaver's Cove proposal in isolation..."

They said that the issue of greatest importance when it comes to urban LNG terminals is safety, and FERC's current procedure of examining multiple terminals separately fails to allow for a proper review of potential alternatives that could lessen or eliminate the risk of a cataclysmic disaster while providing the same gas supply benefits to the region.

"Where safety issues are credible, it simply is not possible for the Commission to declare the risks associated with one project acceptable or, in the words of Section 3 as not 'inconsistent with the public interest,' without simultaneous considering the risks to public health and safety that would be associated with alternatives."

Setting safety issues aside, they told FERC that Weaver's Cove LNG and KeySpan's Providence LNG terminal both would not provide needed gas supply in a timely fashion. Given the need for bridge demolition in Weaver's Cove's case and substantial infrastructure refurbishment in KeySpan's case, neither would be available in five years, they argued.

In contrast, they noted a nearby alternative LNG project with far fewer safety concerns -- Excelerate's Northeast Gateway project offshore Gloucester -- could be in service in 2007, judging from the company's Gulf Gateways Energy Bridge which took only about nine months to construct. Furthermore, there are multiple other projects that pose fewer safety concerns yet would provide the needed gas supply.

As a result, the attorney general and city requested that Commission consolidate the Weaver's Cove, KeySpan and Broadwater Section 3 and 7 applications, and announce an open season inviting other proposals for gas supply to the region. All the proposals would be the subject of the evidentiary hearing.

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