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Two LNG Projects Pass Environmental Review; KeySpan Flunks Safety Test

FERC on Friday issued favorable final environmental reviews for the two most hotly disputed liquefied natural gas (LNG) projects that have come before the agency in the last couple of years -- the proposed 4.4 Bcf Weaver's Cove LNG import terminal near Fall River, MA, and KeySpan LNG's proposed conversion of its existing 600,000 barrel LNG storage terminal in Providence, RI, to an import terminal. But the KeySpan LNG project fell short of the current federal safety standards, the agency said.

The decisions were somewhat surprising, given the high level of opposition to Northeast LNG projects by federal, state and local lawmakers, as well as the public. The Weaver's Cove LNG project is only one step away from being approved by the Federal Energy Regulatory Commission, while the proposed KeySpan LNG facility may have some trouble ahead.

In a final environmental impact statement (FEIS), FERC staff concluded that the Weaver's Cove LNG project would meet current federal safety standards, could be operated safely and would have limited environmental impacts if constructed and operated in accordance with 76 environmental mitigation measures recommended by the agency [CP04-36].

Separately, the Commission staff concluded that the KeySpan LNG conversion project would not meet current federal safety standards, but it said that with appropriate mitigation, construction and operation it would have limited adverse environmental impact. The FEIS identified 75 specific environmental mitigation measures that must be met by KeySpan LNG and its accompanying pipeline project [CP04-223, CP04-193].

"KeySpan LNG indicated that to bring the terminal into compliance with current [safety] standards would not be feasible due to the high financial costs, the need to acquire several adjacent properties, and the fact that making the modifications would require taking the existing [storage] facility out of service for two to three heating seasons," the FEIS said.

Both FERC Chairman Pat Wood and Commissioner Suedeen Kelly indicated during a meeting in mid-March with the Rhode Island congressional delegation, as well as the state's Attorney General Patrick Lynch and Providence Mayor David Cicilline, that the KeySpan LNG project would not go forward unless it met federal safety standards, said Commission spokesman Bryan Lee. The Commission "will take this up, look at the record and decide what to do" with the proposed KeySpan project.

The Weaver's Cove LNG and KeySpan LNG projects have come under considerable attack, with lawmakers and the public decrying the proposed facilities as security and safety risks. They contend that the siting of the LNG projects so close to densely populated metropolitan areas make them the targets of terrorist attacks.

Within one mile of the proposed Weaver's Cove facility, there are 12,000 people living in 5,100 housing units, the FEIS said. Of these, 1,200 units are located within a half mile of the project. FERC concluded that the "likelihood of a cargo containment failure and subsequent LNG spill from a vessel casualty -- collision, grounding or allision -- is highly unlikely," but it conceded that "historical experience provides little guidance in estimating the probability of a terrorist attack on an LNG vessel or onshore storage facility."

Earlier this month, former White House antiterrorism adviser Richard Clarke issued a report finding that not only are LNG tankers and urban import terminals vulnerable to "catastrophic" terrorist attacks, they also are "extremely attractive" terrorist targets and there is little that can be done to protect against such attacks (see related story).

Rhode Island's Lynch, an ardent foe of both LNG projects, hired Clarke's Virginia-based consulting firm in January to conduct the study of LNG import terminal proposals in Providence and Fall River. The report was filed with the U.S. Coast Guard and Federal Energy Regulatory Commission this week.

The report repeats some of the Department of Energy's Sandia National Laboratories' findings on LNG, including analysis of the massive fire that could follow an attack (see NGI, Dec. 27, 2004). However, unlike the Sandia analysis, Clarke's report indicates that security measures would be inadequate to significantly reduce the risk of attack. In addition to commissioning the report, Lynch has mounted a heated legal battle to block the KeySpan LNG project in court.

Rhode Island Gov. Donald Carcieri also has expressed his opposition to the KeySpan LNG project. While noting that "LNG facilities appear to be the only viable short- or mid-term solution" for the gas supply imbalance in the region, he said that siting marine terminals in populated areas like the city of Providence "is not part of the solution."

The $250 million Weaver's Cove project would have 4.4 Bcf of storage capacity, a vaporization capacity of 400 MMcf/d on average and up to 800 MMcf/d on a peak day, and the ability to deliver up to 100 MMcf/d by truck to local and regional markets. The project includes the construction of two 24-inch diameter pipelines, totaling 6.1 miles. Weaver's Cove is a subsidiary of Poten & Partners in Houston.

The Weaver's Cove facility would occupy 68 acres of a 73-acre site on the Tauton River feeding into Mount Hope Bay and Narragansett Bay, about 50 miles south of Boston.

The KeySpan LNG upgrade, if built, would supply up to 375 MMcf/d of imported LNG to the New England region via the interstate pipeline facility of Algonguin Gas Transmission's existing G system, according to the agency's FEIS. The facility also would continue to deliver up to 150 MMcf/d of vaporized LNG to the New England Gas Co. distribution system. KeySpan LNG signed an agreement in October 2003 with BG LNG Services to undertake the $50 million conversion project.

Most of the proposed KeySpan LNG facility upgrade would be located on about 17.5 acres of industrially-zoned land the company currently leases. The new ship berth and off-loading facility would be constructed within about 3.5 acres along the Providence River.

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