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Rhode Island Governor Asks FERC to Reject KeySpan LNG Project in Providence

Citing the potential destruction that could occur to the city of Providence, RI, from terrorist attacks on liquefied natural gas (LNG) tankers or facilities, Rhode Island Gov. Donald L. Carcieri last Thursday called on FERC to reject KeySpan LNG's plan to convert its existing 600,000 barrel LNG storage terminal in the city to an import terminal.

Based on a "thorough evaluation" of the project, the governor said he concluded that the "safety and security risks posed by the proposed upgrade to the Providence terminal outweigh the potential benefits for the New England region." However, if the Federal Energy Regulatory Commission should decide to approve the project anyway, Carcieri asked that it be conditioned on KeySpan LNG implementing "all reasonable safety and security measures for the existing facility as well as for the marine upgrade."

He said his decision to oppose the project did not come easy. He acknowledged that New England has "significant needs" for more natural gas in the coming years. Natural gas accounts for 18% of the region's primary energy needs, 33% of its home heating requirements and 31% of the power generation fuel mix. New Englanders have paid "extraordinarily high prices and have been subject to threats of supply disruptions" due to inadequate gas supplies and constrained pipeline infrastructure, Carcieri noted.

The governor said he also was aware that "LNG import facilities appear to be the only viable short- or mid-term solution for the region, whether located onshore in New England, offshore and/or in southeastern Canada."

But siting marine terminals in populated areas like the city of Providence "is not part of the solution," given overriding safety and security concerns, Carcieri said. "Although the probabilities of a successful [terrorist] attack are low, the consequences would be devastating to life and property within a substantial area surrounding the target vessel or terminal. There simply is no justification for accepting the known risks associated with LNG import activities in densely populated locations like the city of Providence."

The proposed KeySpan LNG upgrade would boost the facility's vaporization capacity to 525 MMcf/d from 150 MMcf/d, and would provide 375 MMcf/d of additional firm baseload supply of natural gas to Rhode Island and the greater New England region. KeySpan LNG signed an agreement in October 2003 with BG LNG Services to undertake the $50 million conversion project. The project won a favorable draft environmental impact statement from FERC staff in December 2004. It still is awaiting final environmental clearance and a certificate.

The governor said his view of LNG safety and security concerns was "heavily influenced" by the findings of the study conducted by Sandia National Laboratories of New Mexico and released in December 2004. It found that terrorist assaults on tankers transporting LNG into U.S. ports would likely burn people as far as a mile away from the site, as well as would produce other extensive injuries and structural damage.

Carcieri noted that the area around the LNG terminal project proposed for Providence includes industrial facilities (oil, gas and chemical facilities, and freight lines), twelve schools, two hospitals, all of Providence Harbor, homes and a liquefied petroleum gas tank. In short, "the risks posed to the persons and property in these areas...are grave and unacceptable," he said.

The governor believes FERC should adopt a regional approach to reviewing LNG proposals, rather than approach projects on a case-by-case basis. In fact, he has advocated that the New England Governors' Conference adopt and implement a regional approach to LNG, including tanker traffic in the region and the siting of new gasification terminals.

"The regional approach is not intended to usurp jurisdiction from the Commission...[It] is intended to develop guidelines for New England for vessel transport and new terminal sites; encourage coordination with the LNG industry to develop proposals that are more acceptable to local governments; forge effective and uniform emergency response plans; and develop a uniform approach to proposal like the Providence terminal upgrade that pose intolerable safety and security risks."

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ISSN © 2577-9877 | ISSN © 1532-1266
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