Imported Liquified Natural Gas and its Role in Energy Independence Samuel Brown

What is Liquified Natural Gas? Liquefied natural gas (LNG) is natural gas that has been turned into a liquid by cooling it to a temperature of -256°F at atmospheric pressure It consists of primarily methane (typically, at least 90 percent) LNG is odorless, colorless, non-corrosive and non-toxic Liquefying natural gas reduces its volume by a factor of approximately 610 (1/600th) LNG’s flammability range limits are 5 to 15 percent in air

Why LNG? The Cost of Natural Gas has been rising since 2001 Henry Hub prices (Jan Jan. 2006)

US Natural Gas Production is Decreasing 3 percent decrease in production (Sep-04 to Nov-05)

Where is the Natural Gas?

World Importers of LNG: World Importers of LNG: Imports as Percent of Total Natural Gas Consumption of Total Natural Gas Consumption

The Deepwater Port Act Originally passed in 1974 to facilitate licensing of offshore oil ports. To date The Louisiana Offshore Oil Platform(‘LOOP’) was the first facility licensed. Historically, LNG facilities have been located onshore. In the United States, the Federal Energy Regulatory Commission has sited onshore LNG facilities under the Natural Gas Act.

Current U.S. LNG Ports

The Deepwater Port Act - Federal Role In 2002, the Act was amended to permit the siting of LNG ports. Pursuant to a delegation order from the Secretary of Transportation, licenses are issued by the Maritime Administrator, representing the Maritime Administration or MARAD. The Act requires that MARAD work in coordination with the U.S. Coast Guard, but MARAD has the ultimate responsibility for issuing the license. Additionally, MARAD has the authority over the approval fees charged by adjacent coast state(s) and over suspension or termination of licenses. The Coast Guard has responsibility for approving the operations of the deepwater port and leading the inter-agency NEPA process.

The Deepwater Port Act - Federal Role The Deepwater Port Act requires coordination of federal authorizations. The Act only requires a single application to MARAD. Agencies that are required to review application have 45 days after the final public hearing to issue their approval or disapproval. However, the agencies are not required to grant or deny project authorizations before MARAD makes a licensing decision. To expedite the federal deepwater port review process, several federal agencies have entered into a Memorandum of Understanding.

The Deepwater Port Act - Federal Role Several federal agencies have extremely important roles: The Environmental Protection Agency has the role of assessing the air and water impacts. Importantly, the EPA has decided to incorporate the air and water quality standards of the adjacent coastal state. The NEPA process may trigger the necessity to consult U.S. Fish and Wildlife Service or the National Marine Fisheries Service.

The Deepwater Port Act - States’ Role Unlike, onshore LNG siting, a license under the Deepwater Port Act requires the approval of the Governor of each adjacent coastal State. The Governor has to inform MARAD of his approval or disapproval not later than 45 days after the last public hearing. Otherwise, approval is conclusively presumed. Currently, legislation has been drafted to provide states with final approval of onshore LNG facilities

Proposed and Approved LNG facilities

What is a deepwater port? What is a deepwater port? According to the the Deepwater Port Act, a “deepwater port” is [A]ny fixed or floating manmade structure other than a vessel, or any group of such structures, that are located beyond State seaward boundaries and that are uses or intended for use as a port or terminal for the transportation, storage, or further handling of oil or natural gas for transportation to any State... For natural gas ports, the term includes: [A]ll components and equipment, including pipelines, pumping or compressor stations, service platforms, buoys, mooring lines, and similar facilities that are proposed or approved for construction and operation as part of a deepwater port, to the extent they are located seaward of the high water mark and do not include interconnecting facilities.

Deepwater Ports - Onboard Vessel Regasification

Deepwater Ports - Gravity Based Structure

Deepwater Ports -Floating Storage and Regasification Vessel

Deepwater Port Act - In Action ? Sixteen applications were filed for licenses to import liquefied natural gas (LNG) Since the Deepwater Port Act was amended seven projects have been approved. Only one deepwater port for LNG has been constructed,Gulf Gateway Energy Bridge. However, the port has been inactive since August 2005 due to Hurricane Katrina.

Deepwater Port Act - Case Study - Cabrillo Port BHP Billiton proposed to site a floating storage and regasification unit off the coast of Southern California The site would be supplied by stranded gas from Australia. The State of California is a perfect testing ground for LNG, because the state wants to stabilize its fuel supply and LNG provides a clean source of fuel. However, California has a vocal set of opponents to any LNG facility.

Deepwater Ports -Floating Storage and Regasification Vessel

Cabrillo Port Location

Deepwater Port Act - Case Study - Cabrillo Port Environmental Issues of the FSRU Air Issues Attainment or Nonattainment How many emission offsets? Tug Boats and School Buses Tanker Issues Who controls the tanker’

Cabrillo Port Location

Deepwater Port Act - Case Study - Cabrillo Port Water Issues How will the FSRU affect California Fisheries Open Loop regasification vs. Closed Loop regasification

Deepwater Port Act - Case Study - Cabrillo Port Policy Issues Should the port be controlled access as allowed by the DPA or should the port be required to open access? REMEMBER THE ROLLING BLACKOUTS!!! El Paso Energy fiasco

Deepwater Port Act - Case Study - Cabrillo Port As of April, 29, 2007, the California Coastal Commission voted to deny approval of the siting of the Cabrillo Port LNG site. The Governor of California has not weighed in?

LNG and Energy Independence E ?