The U.S. Coast Guard said Wednesday that the Chesapeake Bay is not currently suitable for navigation by liquefied natural gas (LNG) tankers but could be made so for the type of traffic associated with the proposed Sparrows Point LNG terminal. Requirements would include armed tanker escorts.

During transit or at anchor “an armed, multi-vessel escort will be required to enforce the federal safety/security zones around any loaded LNG vessel navigating within specified areas of the Chesapeake Bay,” the Coast Guard said.

The Coast Guard completed its assessment of the proposed LNG facility at Sparrows Point and submitted its waterway suitability report to the Federal Energy Regulatory Commission (FERC). During its review of the waterway suitability assessment submitted by AES Sparrows Point LNG LLC, the Coast Guard consulted many port agencies and stakeholders and conducted its own independent and complementary risk assessment, it said.

The Sparrows Point project, if constructed, 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 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.

Chesapeake Bay could be made suitable for LNG traffic to and from Sparrows Point provided measures necessary to responsibly manage maritime safety and security risks are in place, the Coast Guard said. The waterway suitability report and other information is available from Coast Guard website

In a statement Sparrows Point Project Manager Kent Morton said the company believes it could meet the Coast Guard requirements.

FERC earlier in February said it could act on the application for the controversial LNG terminal project by the end of the year (see Daily GPI, Feb. 8). According to the agency’s notice of schedule, the Commission plans to issue a draft environmental impact statement by April 11, a final environmental impact statement by Aug. 15, and a final decision on the company’s application by Nov. 20. The AES application has been pending at the Commission since January 2007.

Commerce Secretary Carlos Gutierrez recently decided that he needs more information to decide AES Sparrows Point’s consistency appeal under the Coastal Zone Management Act, and consequently has stayed the closure of the decision record until April 14 (see Daily GPI, Feb. 15). AES in September 2007 appealed to the secretary to override Maryland’s objection to the federal consistency certification for the terminal. The Maryland Department of the Environment last July denied the developer’s request for a finding that the project is consistent with the state’s coastal management program (see Daily GPI, July 18, 2007).

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