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Facing Stiff Local Opposition, AES Files Sparrows Point LNG Project

About 100 feet of paper was loaded onto a truck and carried to regulators Monday as AES Corp. formally filed its application for the Sparrows Point liquefied natural gas (LNG) project, which would be built at the site of a former steel mill on a peninsula that juts out into Chesapeake Bay in Baltimore, MD. But with virtually no local political support for the 1.5 Bcf/d project, the hardest work may still be yet to come for AES.

LNG import projects planned near large population centers have not fared well in recent years, and Sparrows Point would be less than two miles from the nearest residential housing. That already has prompted Baltimore County to pass an ordinance that bars construction of LNG terminals within five miles of homes. AES has filed a lawsuit in federal court challenging the ordinance.

Meanwhile, a report is due for release this week from a state-appointed LNG task force that is widely expected to all but condemn the project. The 14-member task force included seven members of the LNG Opposition Team, a Dundalk, MD-based organization spearheading an effort to derail the Sparrows Point project. The report will be distributed to the governor and state lawmakers and will be posted on Maryland's Department of the Environment website.

While the Federal Energy Regulatory Commission has the final say on whether LNG projects should be built, states have used their authority under the Coastal Zone Management Act to block projects.

"I think that Maryland can regulate water quality and its coastal zone management plan and to that extent can influence the process," Joel Baker, co-chairman of the state LNG task force, told the Baltimore Sun Monday.

Despite stiff opposition to its plan, AES project manager Kent Morton said the company believes its application addresses all of the concerns of local officials. "Having attended all the [task force] meetings, I am very confident that our 100 feet of paper has addressed all the issues that the report raised," said Morton.

"Pretty much every LNG project that's out there is facing opposition in one form or another. It kind of goes with any large infrastructure project. We've seen this with power plants, with transmission lines, with pipelines, with roadways. There's always going to be opposition.

"One of the things we did for a number of reasons was introduce the project concept last January, which was at the very beginning of an election year, and there was a lot of activity during the campaigns that focused on our project. It became a sound-bite subject. It's much easier to be opposed to an LNG project than it is to be for one," he noted.

"That year that we spent out in the prefiling process...was tough. We didn't have all the answers. Now we are confident that we do..."

Sparrows Point 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 the Mid-Atlantic Express pipeline, an 87-mile, 30-inch diameter pipeline that would extend from the terminal to connections with interstate pipelines at Eagle, PA. The pipeline also would include connections with local distribution company Baltimore Gas & Electric. AES also is considering building a 300 MW gas-fired combined-cycle power plant at the terminal site.

The project, including three LNG storage tanks, would be located on 80 acres within the existing Sparrows Point Industrial Complex in Baltimore County. The site was previously owned by Bethlehem Steel and housed a steel manufacturing and shipbuilding facility.

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