Proposed natural gas dock cheered
State welcomes what many fear is a target
nola.com
Saturday, August 14, 2004
By Michael A. Mohammed
Staff writer
Though similar proposals around the country have touched off angry debates, a hearing on a liquefied natural gas terminal proposed for a site 16 miles off the Louisiana shore generated nothing but optimism and support Thursday.
The public meeting was the second of three in the yearlong permitting process for McMoRan Exploration's planned $500 million conversion of its dormant Main Pass sulfur mine into a facility to dock and unload massive LNG tankers and to regassify and store the fuel.
The project would require extensive overhauls to the facility, including two new semisubmerged platforms for mooring a tanker, the creation of massive caverns for gas storage in the salt dome below the platform, and regassification equipment. Still, given the intense U.S. demand for gas, McMoRan hopes to have the work completed within two years of receiving the construction permit.
Main Pass is a particularly attractive location because of the platform and salt dome it sits on, McMoRan Chairman James "Jim Bob" Moffett said.
The cheap, plentiful storage allowed by the dome will make the facility even more lucrative, he said, because it "lets you get a long-term buyer who can pay you for the storage and use it when he needs it."
Elsewhere in the country, however, local leaders have railed against LNG importation because of the fear of possible terrorist attacks on the massive fuel-filled ships. In Boston, for example, ever since the Sept. 11 attacks, a public battle has raged between Mayor Thomas Menino and LNG importers seeking to use the terminal in Everett, Mass. Critics fear that if a ship was attacked it would wipe out much of downtown Boston.
But Mayor Ray Nagin, who was at Thursday's meeting, shrugged off the fears, saying that local industry expertise makes him confident of the tankers' safety.
"Louisiana industries have a history of dealing with petrochemicals without incident," he said.
Scott Kirkpatrick, energy adviser to Louisiana Gov. Kathleen Blanco, said Louisianians are accustomed to living and working around petrochemicals.
"We are used to working around oil and natural gas, around large facilities and large ships," he said.
The project has gained urgency from the many people and industries with a large stake in lowering the price of natural gas.
The chemical industry is at the front of that crowd, because it suffers from high prices on two counts: it often uses the gas as a major raw material for some chemicals, like ammonia and methanol, and it needs the gas to power furnaces and provide electricity.
Jas Gill, president of the chemical company Cytec, was at the hearing to discuss his company's need for cheaper gas. Since 1999, Cytec has been forced to close its methanol and ammonia units and has hit its workers with hefty pay cuts and layoffs.
"Given an equal playing field, we can complete with anyone in the world," Gill said. "But when a major component of our cost is natural gas it becomes very difficult."
He winced when asked whether he would have to close more units and how his company would weather the four years before LNG development is expected to affect gas prices.
"I don't see another unit coming down, but we're going to have to . . . do what we have to survive," Gill said. "We'll deal with the next four years the same way we've dealt with the last two, but it's a tough road ahead."
Gill lamented the lack of a national energy strategy or central planning organization and said that in 2001 he testified to Congress about gas prices.
"The issues are not new, they are not just surfacing today," he said.
Moffett said overseas LNG producers are pushing for access to the lucrative U.S. market.
"Trinidad, Algeria, Venezuela -- they're anxious to get their gas into the United States. There's only four places to get it in right now," he said.
But several economists have worried that with the runaway LNG development soon to begin, there will be too many terminals and not enough demand. Some industry leaders have responded by saying that not all of the current prospects will receive permits.
But when asked whether the Coast Guard would take market congestion into account in giving permits for offshore terminals, Mark Prescott, who as chief of the Coast Guard's deepwater ports standards division is in charge of the permitting process, said he does not make decisions about a facility's profit potential.
"It's impossible for us to say, 'Why don't you hold off on this because the person down the street is about to get his approval?' " he said.
He said, however, that he thinks regardless of the $10 million or more that companies may invest to design LNG plans and apply for permits, some ultimately may decide to back out.
"If you're going to spend $10 million to research a project that costs $1 billion, it's a good investment," Prescott said.
Nagin said the LNG industry may revitalize the state's petrochemical industry and give it an advantage over Houston.
"This is the future, and it gives the state an opportunity to reinvent itself," he said. "We used to be the oil and gas hub for the country, and now we can become the liquefied natural gas hub."
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Michael A. Mohammed can be reached at mmohammed@timespicayune.com or (504) 826-3306. |
