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Coast Guard Now Has Applications for 2 Offshore Massachusetts LNG Terminals

Applications for two nearly identical liquefied natural gas (LNG) deepwater ports planned for offshore Gloucester, MA, have been deemed complete by the U.S. Coast Guard. Suez LNG subsidiary Neptune LNG LLC said last week it received the green light on its application from the Coast Guard, and last month the agency made a similar ruling on Excelerate's Northeast Gateway LNG project.

Neptune would deliver an average of 400 MMcf/d and a peak of 700 MMcf/d of gas to New England starting in 2009 or later. Unlike onshore LNG ports, such as the Distrigas terminal that Suez operates in Everett, MA, the offshore Neptune port would be a submerged buoy system that includes two buoys at which cargo ships would be moored. The system requires specially modified LNG vessels that can vaporize LNG as well as transport it. The vaporized LNG would be sent directly into the buoy system would be attached via a 12-mile pipeline to Algonquin's HubLine Pipeline in Boston Harbor.

An LNG ship will typically moor for four to eight days at Neptune depending on market demand. The two separate buoys would ensure that natural gas could be delivered in a continuous flow by having a brief overlap between arriving and departing LNG carriers.

Neptune LNG anticipates the project development phase, including regulatory and public consultation and evaluation, and a formal project application review, will take 15-18 months followed by a three-year construction phase.

The Neptune project is basically a carbon copy of the Northeast Gateway project planned by Excelerate Energy LLC, which already has a permit application on file at the Coast Guard for a port offshore Gloucester and has a similar LNG import terminal already operating offshore in the Gulf of Mexico (see NGI, May 16). Virtually every aspect of the Neptune project is nearly identical to Northeast Gateway, down to Neptune's location, which Excelerate President Kathleen Eisbrenner said is basically right "on top of ours."

Suez LNG spokeswoman Julie Vitek said Neptune will be "a few miles" away from Northeast Gateway, not on top of the other terminal. She admitted that the projects are similar but said there are a few small but important differences.

For example, she said Neptune's LNG cargo ships, which are being built by Norway-based Hoeg LNG, will be able to deliver 300 MMcf/d more gas than Excelerate's vessels. She also Neptune's pipeline from the delivery buoy to HubLine also would be about three miles shorter than the Northeast Gateway pipeline. "Our company has carefully planned each aspect of Neptune, from location to ship design," said Suez LNG CEO Rick Grant.

However, because the project designs are very similar, Eisbrenner said timing will be the deciding factor in which one wins the race. She wouldn't comment on the merits of a third proposed LNG import terminal near Boston that is being planned by AES Corp.

Arlington, VA-based AES released plans last month for a $500 million terminal on an uninhabited island in Boston Harbor, promoting it as an safer alternative to Suez's existing Distrigas terminal, the proposed terminal in Fall River, MA, and a better choice than the proposed offshore terminals because of their impact on fishing (see NGI, Sept. 26).

"I don't see how any of the other [projects] can be in service in the first quarter of 2007," said Eisbrenner. "That's the differentiator. Imitation is the best form of flattery so...it's great to see people going offshore and using our kind of technology. But nobody else is building regas ships, which we already have, so we're pretty excited about that.

"We started all this in the year 2000, the design, permitting, the ships and we're now in operation in the Gulf of Mexico and already completed our permit application in the Northeast, and we have four ships plus an option on a fifth ship (see NGI, July 4). We have a lot of experience behind us that we hope will be meaningful to the regulators, the customers and the suppliers."

With the Excelerate terminal entering service in the first quarter of 2007 and Neptune proposed for two or even three years later, it's possible that both LNG projects could be needed, particularly if there are new restrictions on LNG traffic or operations at Suez's Distrigas terminal in Everett. Suez said that gas demand in New England is expected to grow 1-2% per year over the next two decades, with Massachusetts alone accounting for half of the region's natural gas consumption. At this rate of growth, the region could face a supply gap approaching 500 MMcf/d in five years.

"...We believe operating both this deepwater port and our onshore LNG import terminal in Everett, MA, will go a long way toward meeting New England's increasing demand for natural gas while continuing to provide highly reliable service," Grant said.

"Our team has committed countless hours to ensure that Neptune will live up to the highest environmental, safety, and reliability standards." Neptune also said Thursday that it filed an Environmental Notification Form (ENF) for the project with the Massachusetts Environmental Policy Act (MEPA) unit. The ENF is scheduled to be published in the Environmental Monitor on Oct. 7.

After publishing a notice in the Federal Register stating that a deepwater port application is complete, the Coast Guard and Maritime Administration have 330 days to review the project and decide whether to issue a deepwater port license. However, the agencies can stop the statutory clock and demand more information from project sponsors. That has been done frequently with the many proposed offshore deepwater LNG ports in the Gulf of Mexico.

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