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Broadwater Energy to Appeal New York LNG Ruling

Just two weeks after receiving bad news from the state of New York on the siting of its proposed liquefied natural gas (LNG) terminal and associated pipeline in the middle of Long Island Sound, Broadwater Energy early last week fired back in announcing that it has taken the first step in preparation for an appeal to the U.S. Department of Commerce.

On April 10 the New York State Department of State (NYSDOS) announced a negative consistency determination in Broadwater's Coastal Zone Management Act application, finding that the project is not consistent with the state's coastal zone policies. On the same day New York Gov. David Paterson said he opposed construction of the floating LNG project, saying "privatizing open water would be fundamentally wrong" and issuing an executive order for a planning board to find alternatives (see NGI, April 14).

As part of the appeal, Broadwater, a joint venture between TransCanada and Shell US Gas and Power, has filed a request with the Federal Energy Regulatory Commission (FERC), as the lead agency for the Broadwater project, to consolidate the record for the project. The "consolidated record" includes all relevant information from FERC and other permitting agencies and will be submitted in conjunction with Broadwater's appeal to the Department of Commerce.

The company stated that the terminal has been designed and sited to be consistent with New York's coastal zone policies. "Despite the recent determination by the NYSDOS, we firmly believe that Broadwater is the best way to deliver a new supply of clean, affordable and reliable natural gas to the region without the onshore and near-shore environmental and safety impacts associated with other alternatives," said John Hritcko, senior vice president and regional project director for Broadwater Energy. "We made significant additional commitments to the Department of State, which we believe would be welcomed by local residents."

Hritcko added that the region would surely benefit from a new supply stream of natural gas. "It is important to recognize that the Long Island, New York City and Connecticut gas markets are at the end of very long gas pipelines. As a result, this market region pays very high prices for natural gas relative to other parts of the US. The Broadwater project brings significant new gas supply into the region, and will serve to moderate regional gas prices," Hritcko noted.

Despite the negative finding by the NYSDOS, Hritcko said Broadwater continues to stand behind the project, noting that the company remains committed to an open, transparent regulatory review and Broadwater's appeal is part of this review process.

"While third-party studies have validated the significant energy cost savings to consumers, a project like Broadwater brings additional significant benefits -- including local and county revenues as well as proposed improvements to water quality in the Long Island Sound and programs to improve and restore the marine and fishing heritage of the area," Hritcko added.

The bad news from New York on April 10 came one week after Connecticut's Gov. M. Jodi Rell and Attorney General Richard Blumenthal said they had asked FERC to rehear and reconsider its decision approving the Broadwater project (see NGI, April 7). Blumenthal said he expects FERC to deny the state's request to fix what he says are "fatal flaws" in the agency's decision, and once it does, the state will file an appeal in the U.S. Court of Appeals.

When Broadwater Energy filed its application with FERC in January 2006 to build the LNG terminal project approximately nine miles off the shore of Long Island, NY, and 11 miles from Connecticut, it immediately drew widespread calls for federal regulators to reject the project (see NGI, Feb. 6, 2006). The proposed Broadwater offshore terminal, which received an environmental nod in January, would have an average sendout capacity of 1 Bcf/d and peak sendout of 1.25 Bcf/d (see NGI, Jan. 14). Broadwater would operate the facility, while Shell would own the capacity and supply the LNG. The project, which is targeted for service in December 2010, would cost approximately $700 million to build.

The LNG would be delivered by tankers, temporarily stored on the floating LNG facility, vaporized and then transported in a new 21.7-mile subsea pipeline that would have an offshore connection with Iroquois Gas Transmission that extends across Long Island Sound. Broadwater estimates that an average of 118 tankers annually (two to three per week) would be needed to meet the project's planned sendout volume. The tankers would enter Long Island Sound from the Atlantic at the eastern end of the sound and travel down the middle to the terminal, away from Long Island and Connecticut harbors and not approaching the New York City harbor.

Broadwater estimates that approximately half of the natural gas sendout from the offshore LNG terminal would be delivered to New York City, about 25-30% to Long Island and the remaining 20-25% to Connecticut.

Bowing in part to pressure from Rell, Blumenthal and other state officials, FERC in March imposed more than 80 environmental, security and safety conditions in its order approving the Broadwater LNG project (see NGI, March 24). The Commission's approval came a week after a state task force issued a report that Rell said was a "scathing indictment of FERC's single-minded focus on approving the Broadwater platform no matter what the evidence shows" (see NGI, March 17).

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