Alabama Gov. Bob Riley told Maritime Administrator John Jamian earlier this month that he won't support development of ConocoPhillips' proposed Compass Port LNG terminal south of Dauphin Island, AL, because it could have a severe impact on the state's fisheries and very little has been done to examine that impact.
It's the same reason Louisiana Gov. Kathleen Babineaux Blanco and Mississippi Gov. Haley Barbour are opposing offshore LNG terminal construction. And because of their veto power over LNG terminals in waters off of their coasts as stipulated in the Deepwater Port Act, it has become the major stumbling block for offshore LNG terminal developers.
The offshore terminals that are being opposed plan to use the "open rack" (or open loop) vaporization (ORV) process, which takes in hundreds of millions of gallons of sea water daily to warm/vaporize the LNG.
Riley cited evidence that ORV will have a severe environmental and financial impact on the state of Alabama. "This concern is echoed by scientists, biologists, environmentalists and fishermen throughout the region," Riley said in his letter to Jamian. "The long-term cumulative impact on our fishery resources and essential fish habitat has not been adequately addressed."
Riley said ConocoPhillips has not collected adequate data to ensure that the marine resources offshore Alabama would not be "irreparably damaged" by the use of ORV. "The economic impact on these fisheries has not been addressed. Some of the most economically important fish, shrimp and crabs have not been considered in the current analysis of impact in this issue."
Riley said the state supports development of LNG import terminals but because of his concerns he "cannot support the development of terminals using the open loop system unless there is proof of negligible impacts on the marine fisheries and marine habitat."
Riley included with his letter a copy of a March filing in the Compass Port docket by Commissioner M. Barnett Lawley of the Alabama Department of Conservation and Natural Resources. In the filing, Lawley cited numerous shortcomings in the Compass Power draft environmental impact statement (DEIS), including the amount of water taken in for the vaporization process, the impact on fish species other than red drum, the total ecological impact in the area and other economic and environmental considerations.
Terminal developers have cited the higher cost of using a closed loop vaporization process, which reuses water and heats it with some of the vaporized LNG, as one of the main reasons for using ORV instead. But if the cost "is the main reason for choosing the ORV over [a closed loop process], it is hard to understand why 15 proposed, under construction, or operating onshore systems in the Gulf region can afford the use of [closed loop systems]," Lawley said. "We also wonder how one proposed offshore LNG facility in the Northwest and two proposed offshore facilities in California can operate [closed loop systems] economically."
Lawley also said the Maritime Administration and LNG terminal developers have taken an "extremely limited view" of the cumulative impact of all four of the proposed LNG import terminals in the northern Gulf. "Each one of these proposes to use between 100 [million] and 250 million gallons of sea water per day," he said. "If licensed and constructed, the total of six facilities would cause potentially severe cumulative impacts to marine fishery resources. These six facilities could destroy more than 10 billion fish eggs and 15 billion fish larvae and would result in 12% loss of the Gulf of Mexico's recreational red drum harvest based upon estimates provided in the DEIS.
"We feel that there should be no further consideration of ORV technology in the Gulf of Mexico until a cumulative impact analysis of all proposed and potentially foreseeable LNG port facilities using ORVs is completed and thoroughly reviewed."
Mark Prescott of the Coast Guard Deepwater Ports Division said this may very well send offshore LNG terminal developers back to the drawing board. "It appears from the statute that [the governors] can block these projects. We've stopped the clock for Compass Port's application [because of the ORV issue], but we're moving forward. We just put out a draft EIS for [Freeport-McMoRan's Main Pass Energy Hub terminal] and we will continue trying to address the concerns that have been raised.
"If in fact one or more governors choose to veto one of the applications, so be it. We will move on from there, and the applicant will have to move on from there and decide what that means for their project."
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