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Louisiana Governor Raises Red Flag Over Offshore LNG Terminals

Louisiana Gov. Kathleen Babineaux Blanco, who has been a strong proponent of liquefied natural gas (LNG) import terminal construction in her state, has sent a letter to Acting Maritime Administrator John Jamian warning that she will oppose construction of LNG terminals off the Louisiana coast that use the "open rack" vaporization (ORV) process.

All of the offshore LNG terminals on file at the Maritime Administration would use the ORV process, which consumes millions of gallons per day of sea water to vaporize the LNG and in the process kills marine life. The Maritime Administrator has ruled that the impact on marine life from the process is not significant enough to reject permit applications but should continue to be monitored.

However, the governor and the state's Department of Wildlife and Fisheries believe there is no federally approved monitoring system in place despite the start of operations this spring at Excelerate's Gulf Gateways Energy Bridge LNG port offshore Louisiana.

"I have enclosed a letter from Secretary Dwight Landreneau of the Louisiana Department of Wildlife and Fisheries, expressing serious concern that pre- and post-construction monitoring and adaptive management plans for the federally licensed Energy Bridge and [Chevron] Port Pelican LNG terminals have not yet been developed and asking that the Louisiana Department of Wildlife and Fisheries be given an official and substantial role in developing these monitoring and adaptive management plans," Blanco said in her letter, which included a copy of the letter from Landreneau.

"I share Secretary Landreneau's concerns and hope that your agency will move quickly to develop monitoring and adaptive management plans for all licensed LNG terminals in the Gulf. The current absence of finalized monitoring and adaptive management plans for licensed, and in one instance, operating LNG facilities highlights the shortcomings of the deep water port licensing process."

Blanco told the Maritime Administrator that the permitting process has been too hasty and has not allowed sufficient time to assess the serious impact of the ORV process among other things.

"As a state supportive of LNG development, we have tried to work within the current licensing system to allow offshore LNG development, but also protect our fishery resources," she said. "...Based on the inadequacy of current data, we are unable to reach an acceptable comfort level with the potential risks presented by the cumulative impacts of multiple offshore LNG facilities that use the open rack vaporizer system.

"Considering these ongoing concerns, I will oppose the licensing of offshore LNG terminals that will use the open rack vaporizer system. Until studies demonstrate that the operation of the open rack vaporizer will not have an unacceptable impact on the surrounding ecosystem, I will only support offshore LNG terminals using a closed loop system having negligible impacts to marine life."

Mark Prescott of the Coast Guard Deepwater Ports Standards Division was surprised by the governor's comments. "Her natural resources person says there's no monitoring plan in place and that all of this is completely irresponsible. That really pisses me off because there is a monitoring plan. We've worked very hard with the applicants and with [the National Oceanic and Atmospheric Administration's Fisheries department] to get something in principle that is actually being carried out."

Prescott said Excelerate is carrying out an interim monitoring plan and will implement a final monitoring plan "before the next LNG shipment in all likelihood." He said the ORV monitoring plan is "very detailed" and includes taking water and fish samples at various depths and locations.

Attempts have been made to describe the ORV process and its impact in various environmental assessments. "I think in general there is some agreement over what the projected numbers might be as far as impact on fish, at least the species that were examined -- the difference being in the interpretation of the level of significance," said Prescott.

NOAA Fisheries estimated that about 0.1%-3.8% of the annual Red Drum catch in the Gulf could be lost if one LNG terminal with an open sea water vaporization process is built.

Meanwhile, the clock on the Maritime Administration's 356-day permit review process is currently stopped on ConocoPhillips' application for the Compass Port LNG port offshore Alabama because of the ORV process and other concerns.

"Everything has been so focused on ORV but there are lots of other issues," said Prescott. "I think there is an effort to get grassroots opposition to LNG and that's sort of driving all this" press about ORV.

He noted that the Maritime Administrator so far has determined that the impact from the ORV process was not significant enough to warrant rejecting a permit application. "In the environmental impact statement for Shell Gulf Landing, the impact [from ORV] was described as a minor adverse long-term impact. The Maritime Administrator has to look at nine things, including national interest, security, energy efficiency, environmental quality and other important items," Prescott noted.

However, the Deepwater Port Act also grants state governors the ability to block offshore LNG terminals. Blanco essentially could force the Maritime Administrator to reject the permit applications for all ports offshore Louisiana. It's not clear, however, that she could halt ports that are already in operation or already have been approved. Three ports have been approved and one is in operation.

LNG developers could be forced to use a closed loop system, which is more expensive because it uses some of the LNG for heating and revaporization. Offshore LNG terminal developers estimate reusing water in a closed loop process would cost an additional $20-40 million/year in vaporization costs because it would require 1.5% of the LNG cargo to be used for heating. In the remaining permit applications on file, the potential impact of both open rack and closed loop systems are being analyzed.

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