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MA Governor Gives Thumbs-Up to 2 Offshore LNG Terminals

The decision by Massachusetts Gov. Mitt Romney on Tuesday to approve the proposed Northeast Gateway and Neptune offshore liquefied natural gas (LNG) import terminals represents the last major hurdle for the two projects, which could become the first new LNG import terminals along the East Coast of the United States to successfully navigate through the challenging regulatory and political process.

Romney cited New England's growing demand, rising gas supply needs and the safety of offshore LNG projects as reasons for his decision. His authorization is required by the Deepwater Port Act before the projects can receive final permits from the Coast Guard and Maritime Administration (MARAD).

"Energy consumers have long recognized natural gas as a clean and efficient source of power, but our ability to supply this fuel has not kept pace with demand," said Romney. "These new terminals will allow us to safely expand gas supply without undue harm to the environment or to the fishing industry that is Gloucester's lifeblood."

Romney's decision is a sharp contrast to the response state officials and federal legislators had to the Weaver's Cove onshore LNG project proposed for Fall River, MA. Opponents cited safety concerns, and although Weaver's Cove received a certificate from the Federal Energy Regulatory Commission, it was blocked by federal legislation that prevented demolition of a bridge. Project sponsors still say they plan to build the onshore terminal using much smaller LNG tankers that could go under the bridge. However, little progress has been made toward its development.

In response to the approval from Romney, Rep. Ed Markey (D-MA), said the decision "demonstrates that there are safer alternatives to siting new LNG terminals in densely populated areas such as Fall River or in sensitive parklands such as the Outer Brewster Islands" where AES Corp. had planned to construct a terminal.

"New England needs more LNG, but we have a responsibility to ensure that those LNG imports are delivered securely in this post-9/11 world," said Markey. "The question of how many LNG terminals are constructed in our region is something that no governor can decide alone. We must implement a long-term plan to secure our energy security in New England, though, and in the new Congress we should have that opportunity." The New England congressional delegation met with Energy Secretary Samuel Bodman last year to urge him to implement a national and regional review process to determine where and how many LNG terminals to build.

Together the two nearly identical offshore LNG terminals, Excelerate's Northeast Gateway LNG project and Suez Energy's Neptune LNG project, could provide an average of 800 MMcf/d of gas to New England. The competing LNG projects would be sited in federal waters south-southeast of Gloucester.

MARAD and the Coast Guard released final environmental impact statements on the projects in October. Final public hearings were held in November. The statutory clock under the Deepwater Port Act was suspended on the projects in July to allow time for the Coast Guard/MARAD to collect additional environmental data and information on mitigation strategies in part to meet the requirements of the Massachusetts Environmental Policy Act and to address mitigation recommendations from the National Oceanic and Atmospheric Administration.

In July, Stephen Pritchard, secretary of the Massachusetts Executive Office of Environmental Affairs, certified the draft environmental impact statements (DEIS) on the projects but said project sponsors would need to supply more information for the final draft to be certified. Pritchard said he needed more information on alternatives, such as land-based LNG terminals, different offshore locations and other means of meeting energy demand in New England, including renewable energy and conservation. He also required more details on how a 16-mile pipeline from the terminals to Algonquin's HubLine system in Boston Harbor would be buried in order ensure minimal impact on marine life and the regional fishing industry.

A joint review undertaken by the Coast Guard and the Massachusetts Executive Office of Public Safety found that the projects properly addressed public safety concerns. Excelerate and Suez each committed $23.5 million to compensate for impacts to marine resources and human uses of Massachusetts Bay. The local fishing industry would receive about $16 million.

"This is a significant mitigation package that will advance our knowledge and management of marine resources in Massachusetts Bay," said state Secretary of Environmental Affairs Robert W. Golledge. "These kinds of projects show how to responsibly move forward with energy development while minimizing environmental impacts."

In addition to direct environmental mitigation activities, project sponsors each committed to make contributions to the state of $4 million over two years for gas efficiency and low-income fuel assistance programs.

Romney's approval letter, however, listed several timing conditions for inclusion in the licenses. If MARAD grants the licenses, Northeast Gateway could begin construction as early as the spring of 2007 with service beginning in December of that year. Neptune could begin construction in the spring of 2009 with operations following in December of that year.

Suez said Tuesday that it anticipates having a fully operational project, including construction of a pipeline connection to HubLine, specially designed ships and the LNG supply to serve customers in Massachusetts and the rest of New England, in 2009.

The $1 billion Neptune LNG project would be located about 22 miles northeast of Boston. It would be capable of sending out 400 MMcf/d of regasified LNG (750 MMcf/d on a peak day) and would be capable of mooring two 140,000-cubic-meter LNG vessels at a time by means of a submerged unloading buoy system. The project would require an 11-mile, 24-inch diameter pipeline to Algonquin.

Northeast Gateway would be located 13 miles south-southeast of Gloucester. It also would consist of two submerged buoys that would attach to specialized ships capable of regasifying LNG on board and sending it into a subsea pipeline system. Algonquin Gas Transmission has filed an application to build a 16-mile, 24-inch diameter pipeline to the Northeast Gateway project. Northeast Gateway would provide up to 800 MMcf/d of peak day sendout. Average sendout would be 400 MMcf/d.

Together, the two facilities could New England's peak gas supply by 20%. That would "help to enhance reliability and lower energy costs," Romney said. He also noted that they would allow Massachusetts to become less reliant on gas shipments to the Distrigas LNG facility in Everett, MA.

On the coldest winter days, when demand is highest, roughly one-third of the gas consumed in Massachusetts is provided by Suez's Distrigas terminal. "While deliveries there will continue, the addition of new offshore terminals will permit new deliveries without the risks associated with transporting gas through populated areas," Romney said. "Expanding the number of supply sources will also make Massachusetts less reliant on the gas it receives by more expensive transmission methods, such as interstate pipelines."

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