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Crown Landing LNG Again Seeks Permit Extension

Continuing schedule delays -- exacerbated by a ruling by the Department of Transportation Pipeline Hazardous Materials Safety Administration (PHSMA) that ended the use of a key vapor gas dispersion model -- have prompted Crown Landing LLC to ask FERC for a one-year extension to revise a permit application for a liquefied natural gas (LNG) terminal on the Delaware River in Gloucester County, NJ.

"Without an approved vapor dispersion model, Crown Landing cannot determine how much land and what land use restrictions and facility configurations are required to site any land-based LNG facility," CEO Gordon Shearer wrote in a letter sent May 4 to the Federal Energy Regulatory Commission (FERC). "We also cannot evaluate the viability and attractiveness of the alternative berth locations we are pursuing."

Crown Landing requested that FERC extend the pre-filing deadline until June 30, 2012 [No. CP04-411-000]. Last year the company asked FERC to push the deadline back until June 30, 2011 (see Daily GPI, May 19, 2010). The original deadline, June 20, 2009, was extended 12 months by FERC two years ago.

Crown Landing has been evaluating "a number of berth alternatives, including several that require detailed discussions with third parties to assess the legal, technical and commercial viability of each berth option" and has made "steady progress" with that work since the last extension was granted, said Shearer. But PHSMA's ruling, which was issued last July, placed a significant hurdle in the company's path by ending the use of one risk analysis model and identifying no alternative model.

"Until such time as PHSMA has approved an alternative vapor dispersion model, siting an LNG berth for the Crown Landing project and concluding discussions with third parties (land owners, local, state and federal regulators) will continue but at a much slower pace than originally anticipated when Crown Landing received its last extension," Shearer wrote to the Commission.

An affiliate of Hess LNG acquired Crown Landing from BP plc in late 2009 (see Daily GPI, Nov. 4, 2009). At the time Hess LNG officials said the New Jersey site was a "strategic" location for an LNG facility and said it could be completed in about seven years.

Crown Landing has had a controversial run since its inception. In October 2008 BP suspended the LNG terminal plans after the U.S. Supreme Court ruled that the state of Delaware could block the construction of an off-loading pier in New Jersey (see Daily GPI, Oct. 9, 2008; April 1, 2008). Justices said Delaware had veto power over river bottom construction within state boundaries, even if the construction extended into the river from New Jersey's shoreline.

In its request last year for a permit extension, Crown Landing said it had identified project design modifications that it believed would allow the project to comply with various regulatory objections, including those of Delaware officials. The company also said it planned to reduce the size of the project, decreasing sendout capacity to about 600 MMcf/d, about half of the original level, and installing one storage tank rather than the three previously planned.

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