El Paso Corp.’s Elba Island LNG terminal, which has been dormant since 1980, officially opened its doors last week when it received the diverted tanker from Distrigas of Massachusetts LLC that had been barred from entering Boston Harbor due to security concerns.

“It means it opened today [last Tuesday] for business,” said El Paso spokeswoman Norma Dunn, who was at the 140-acre Elba Island site to witness the arrival of the tanker, Michael, that was filled with 33 million gallons of LNG, enough to heat 30,000 homes for an entire year. “It docked early today and we’re in the process of unloading it,” she noted, adding that workers at Elba Island were being “fully supported” by the Coast Guard in Georgia in this effort.

Dunn indicated that negotiations “very likely” had occurred already to sell the Distrigas LNG in regasified form, but she could not say who the buyer or buyers were. The gas “is certainly going to find a home,” she said. “There will be more shipments” to Elba Island, but she wouldn’t say when or whether anymore were expected from Distrigas.

The Coast Guard in Boston earlier had banned the tanker from Trinidad from entering Boston Harbor to off-load the LNG at Distrigas’s terminal in Everett, MA, citing safety and security concerns in the wake of the Sept. 11 terrorist strikes. This marked the second shipment destined for Distrigas that the Coast Guard had turned away, with the first one re-routed immediately after the Sept. 11 attacks.

LNG shipments to the company’s facilities will continue to be turned away until Distrigas, in cooperation with state and federal authorities, comes up with a plan to ensure the security of the tankers and the surrounding communities from possible terrorist attacks. Both the Coast Guard and Distrigas last week declined to predict when tanker traffic would resume in Boston Harbor.

Distrigas has declared force majeure — which released its from its contract obligations with its “20 or so” large LNG customers in New England — as a result of the Coast Guard’s freeze on its LNG shipments. The company reportedly is losing about $100,000 a day on the halted shipments. Distrigas declined to confirm the amount, but it did concede “certainly there are financial consequences.” Company spokeswoman Julie Vitek said its customers, mostly natural gas utilities and independent power producers, were making contingency plans to acquire gas supplies elsewhere.

A spokesman for Keyspan Energy Delivery (formerly Boston Gas) told NGI that it would not be affected in the near to mid-term, since it has been filling its LNG storage over the past seven months and it is “pretty well topped off.” The distributor said only 4% of its supply comes from LNG.

Meanwhile, supplies of LNG for the New England market were growing “very limited,” said Vitek, but she adding that fortunately heating season demand “was not ramping up quite yet.” She declined to estimate the level of current supplies. Distrigas provides about 15% to 20% of the region’s natural gas needs on an annual basis. This figure climbs to 35% in the winter, Vitek noted, as Distrigas provides local storage facilities with LNG for peak shaving.

Massachusetts Gov. Jane Swift anticipates that Boston Harbor will resume LNG tanker traffic in the near term, “possibly [in] only a matter of weeks,” said a spokeswoman for the governor said last week.

The governor is working closely with the Coast Guard and U.S. congressional delegation to re-open the harbor in a “timely and safe fashion” to LNG shipments, said Swift aide Sarah Magazine in Boston, MA. “I don’t expect it to be a long-term thing,” she said.

She noted that the issue was not critical yet in light of the still warm weather, but said it would become “more pressing” in the weeks ahead as the winter heating season approaches.

Questions are being raised about why ships carrying crude oil and petroleum products are being allowed into the harbor, while LNG has been barred. On a regular basis the LNG tankers are treated differently from other petroleum deliveries. A representative of the Massachusetts Port Authority said LNG tankers have been delivering into Boston Harbor for 30 years without incident. The standard procedure is for the harbor to be cleared for the large tankers, which carry about 3 Bcf of liquid gas, and for the tankers to be escorted into the harbor. He also noted that since the terrorist attack Sept. 11, four Coast Guard boats fitted with artillery on their decks have been patrolling the harbor.

Natural gas cannot burn in its liquid state, which is achieved by chilling it to -260° F. “You could shoot a bullet through it and it wouldn’t ignite,” one expert said. If it escapes from its refrigerated container, however, it will gasify and the natural gas could be ignited. Here again, however, the properties of natural gas keep it from burning in concentrations of less than 5% or more than 15% mixed with air. “There could be some expansion issues, however,” he added, since liquefying natural gas reduces it to 1/600th of its original volume. LNG tankers have long been required to be double-hulled. The LNG terminal in Boston is the only one in the United States near a major population center.

The only LNG fire on record happened in 1944 when an LNG storage tank in Cleveland containing 90 MMcf failed and leaked LNG onto the city streets. The LNG regasified and exploded, igniting a second tank and burning through 20 city blocks and killing 130 people. The accident was attributed to defective steel, manufactured during wartime when much of the country’s resources were directed toward fighting World War II.

©Copyright 2001 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.