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FERC Makes Unpopular Decision to Approve Sparrows Point

Conceding that its decision was "not a popular" one, FERC last Thursday approved, subject to 169 conditions, the controversial AES Sparrows Point liquefied natural gas (LNG) terminal project near Baltimore and associated Mid-Atlantic Express pipeline, which would bring 1.5 Bcf/d of natural gas to growing markets in the Northeast. The agency also upheld on rehearing two order authorizing two LNG projects -- Dominion Cove Point LNG on the eastern shore of Maryland, andNorthernStar Natural Gas Inc.'s Bradwood Landing LNG terminal project in Oregon.

With respect to Sparrows Point, "our primary concern is assuring public safety. We have done so in this order by attaching 169 conditions that will protect public safety and mitigate any adverse environmental impact," said FERC Chairman Joseph Kelliher. "I realize this is not a popular decision, but it is the correct decision, rooted in voluminous record and based on sound science."

The Sparrows Point project, which was been the target of intense opposition by state and federal politicians, would have about 1.5 Bcf/d of regasification capacity with a potential for expansion to 2.25 Bcf/d. Regasified LNG would be delivered to regional markets via Mid-Atlantic Express, an 88-mile, 30-inch diameter pipeline that would extend from the terminal to connections with interstate pipelines at Eagle, PA.

The project, including three LNG tanks to store up to 480,000 cubic meters of LNG, would be located on 80 acres within the existing Sparrows Point Industrial Complex southeast of Baltimore in Baltimore County. The site was previously owned by Bethlehem Steel and housed a steel manufacturing and shipbuilding facility.

The decision by the Federal Energy Regulatory Commission came two days after the state of Maryland, in a last-ditch effort, urged FERC to withhold approval of the terminal and pipeline project until the concerns of state and local governments are fully addressed. Maryland's concerns about the LNG terminal proposed near Baltimore are "substantial and numerous," wrote Bruce Michael of the Maryland Department of Natural Resources in a letter to the Commission last Tuesday.

Even with FERC's approval of the terminal and pipeline project, Maryland could delay the construction of the facilities indefinitely by refusing to issue water permits -- as some states have done with contentious gas projects within their boundaries.

The Interior Department's Fish and Wildlife Service recently also called on the Commission to withhold a certificate decision on the Sparrows Point terminal and pipeline facilities until issues involving endangered and threatened species have been resolved (see NGI, Jan. 12).

Responding to the concerns of Interior and others, the FERC order clarified that construction of the Sparrows Point LNG project cannot begin until the sponsors comply with the environmental conditions specified in the order. But the Commission denied pleas for additional time to submit comments on the final environmental impact statement.

Baltimore County, in its attempt to block the LNG terminal, took its case all the way to the U.S. Supreme Court last year, but it lost (see NGI, Oct. 13, 2008a). The state of Maryland also suffered a blow last June when the Department of Commerce overrode the state's objection to the LNG facility (see NGI, June 30, 2008).

Referring to the FERC rehearing orders, an Oregon energy official said the state and other stakeholders are likely to appeal FERC's action Thursday to uphold its conditioned approval of the proposed Bradwood Landing LNG facility, which is to be sited along the Oregon side of the Columbia River (see NGI, Sept. 22, 2008). FERC Thursday also upheld its October remand order that allowed Dominion Cove Point LP and Dominion Transmission Inc. to complete an expansion of its LNG import terminal and associated pipeline facilities, while at the same time barring the delivery of additional regasified LNG volumes to Washington Gas Light's (WGL) distribution system to shield it from further leaks (see NGI, Oct. 13, 2008b). With the final FERC orders issued, parties can now challenge the decisions in the courts.

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