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Favorable Draft Environmental Reviews Issued for 2 Pascagoula, MS, LNG Projects

FERC staff released favorable draft environmental impact statements (DEIS) Friday on two liquefied natural gas (LNG) import terminal projects proposed in Pascagoula, MS. Commission staff concluded that both projects, including one proposed on a 33-acre site in the Port of Pascagoula by Gulf LNG Energy and another proposed by Chevron Corp. subsidiary Bayou Casotte Energy LLC on a 264-acre site located adjacent to Chevron's Pascagoula refinery, would have limited adverse environmental impact given the use of proposed mitigation measures.

Gulf LNG Energy LLC's $450 million LNG Clean Energy Project would include two 160,000 cubic meter LNG storage tanks and a vaporization plant capable of sending out 1.5 Bcf/d of regasified LNG, associated facilities and five miles of 36-inch diameter pipeline. Gulf LNG Energy executed an agreement with the Port of Pascagoula for the right to build the LNG terminal on lands in Bayou Casotte that are owned or controlled by the Jackson County Port Authority.

Gulf LNG Energy is owned by several Houston-based individual investors and Angola's state owned oil and gas company, Sonangol, which recently purchased a significant equity stake in the company. Sonangol has substantial natural gas resources and is performing front-end engineering and design work for a liquefaction facility in Angola to be built by 2009 with partners Chevron, British Petroleum, TOTAL, and ExxonMobil under the name of ALNG.

FERC's environmental staff concluded the Gulf LNG project would have limited adverse environmental impact with the proposed mitigation. Although 15 endangered or threatened species were identified as potentially occurring in the project area, staff said measures have been proposed, such as special pile driving and piloting procedures, by Gulf LNG that would minimize impacts on these species. The project also would make use of a site previously used for dredged material placement. It would be located on lands designated for water-dependent industrial development with access to a deep water federal navigation channel. And its proposed pipeline route would be co-located with existing facilities to the maximum extent possible.

The terminal would be located only about 1.7 miles southeast of the closest residences, but Commission staff concluded that there would not be a significant safety risk. Operational controls would be imposed by the local pilots and Coast Guard to direct the movement of LNG ships, and security provisions would be imposed to deter attacks by potential terrorists, staff said.

"Based on the extensive operational experience of LNG shipping, the structural design of an LNG vessel and the operational controls imposed by the Coast Guard on local pilots, the likelihood of a cargo containment failure and subsequent LNG spill from a vessel casualty -- collision, grounding or allision -- is highly unlikely," FERC staff said. "For similar reasons, an accident involving the onshore LNG import terminal is unlikely to affect the public. As a result, the risk to the public from accidental causes should be considered negligible."

FERC staff said the siting of Chevron's LNG project, Casotte Landing LNG, next to the Chevron Pascagoula refinery would provide "numerous synergies and environmental benefits, including use of existing services for security and safety, minimization of landowner impacts, and use of waste heat from the Refinery to accomplish LNG vaporization."

Only a short pipeline would be required from Casotte Landing to the existing pipeline grid, including five pipeline interconnects. The project would include three 160,000 cubic meter LNG storage tanks and 1.3 Bcf/d of average vaporization capacity using a closed-loop vaporization process that includes water from the refinery as a heat source.

Staff said construction of the terminal will require significant dredging that would have direct and indirect impacts on aquatic resources, potentially impairing water quality, destruction of benthic habitat and impacts on fish. However, staff doesn't expect significant adverse impacts.

Construction of the Chevron project would permanently affect 123.5 acres of low- to medium-quality wetlands. Chevron has proposed to provide compensatory mitigation for unavoidable, permanent wetland impacts through mitigation banking. Staff also concludes that impacts to onshore wildlife would be minimal. About 15 endangered or threatened fish species have been identified as potentially being impacted in the project area, but staff said that with proposed mitigation, the project also probably would not impact those species.

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