NGI The Weekly Gas Market Report / NGI All News Access

Appeals Court Upholds Approval of Shell's Gulf Landing LNG

A three-judge panel of the U.S. Fifth Circuit Court of Appeals has turned down petitioners who asked for a review of a Transportation Department order licensing Shell Gas and Power's Gulf Landing LLC LNG import terminal offshore Louisiana.

The court said the department did not act "arbitrarily and capriciously" in failing to require a more costly, but environmentally superior closed loop vaporization system, nor in failing to include in its evaluation the three other potential LNG projects in the area. The Transportation Dept. order, based on research by its Maritime Administration, refused to include the three other projects in its evaluation because they were speculative and might not be constructed (one has since been canceled).

In their decision the judges reminded petitioners that "NEPA [the National Environmental Policy Act] guarantees a process, not a result," and said a reviewing court has a "narrowly defined duty of holding agencies to certain minimal standards of rationality... We must look at the decision not as a chemist, biologist or statistician that we are qualified neither by training nor experience to be..."

The petitioners, the Gulf Restoration Network, the Sierra Club and the Louisiana Charter Boat Association, focused on one provision of NEPA that requires use of "the best available technology" to mitigate environmental impact. The transportation secretary, however, said that must be balanced with the act's overall intent, and that provision is best read as "requiring construction that reasonably minimizes adverse impact to a reasonable degree given all relevant circumstances" (see NGI, Feb. 21, 2005).

There are considerations other than the impact on the marine environment. For instance, there's the impact of the project on other parts of the environment and on the national interest. The judges noted NEPA's overall requirement that the federal government "achieve a balance between population and resource use which will permit high standards of living and a wide sharing of life's amenities." And the transportation secretary's cost analysis of the technology "also complies with Congress' intent to 'promote the construction and operation of deepwater ports as a safe and effective means of importing oil or natural gas...'

"As the secretary points out," the court wrote, "this goal would be compromised if the 'best available technology' requirement demanded the use of the technology that is best for the marine environment, even if the costs were so prohibitive that no applicant could ever construct a port using that technology."

Regarding the three possible projects that were not considered in the evaluation of cumulative impact, the justices said Transportation's reasoning seemed appropriate in excluding them because they were in the early stages and no environmental statement at that point had been prepared on them. Also, the decision concluded that two were too far away to have a "cumulative impact." The department did consider two projects for which draft environmental impact statements were available.

Shell's 1 Bcf/d terminal will be located in 55 feet of water 38 miles offshore Louisiana in West Cameron Block 213. The project would include two gravity-based structures, LNG containment facilities, open-rack vaporizers, living quarters, a ship berthing system and pipeline facilities. It will be able to receive 135 LNG ships annually, each with cargoes of between 125,000 and 160,000 cubic meters. Service is expected in late 2008 or early 2009.

(ConocoPhillips recently canceled its proposed Compass Port offshore LNG terminal, after the governor of Alabama threatened to veto the application for the facility if it did not use the closed loop vaporization system, which, the governor said, would harm fewer fish. ConocoPhillips said it would be too costly and pulled the plug on the project (see NGI, June 12).)

The judges who heard the Gulf Landing case were Patrick E. Higginbotham, W. Eugene Davis, and Carl E. Stewart. Davis wrote the decision.

©Copyright 2006 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

Comments powered by Disqus