Seeking a Safe Landing
Getting more natural gas requires new ideas
By JOHN MCCAUGHEY
THE U.S. ECONOMY NEEDS EVER MORE NATURAL GAS, but the domestic industry cannot supply it. Gas is burned to heat homes and business, to generate electricity, to power factories, and it is also used as a raw material in chemical and fertilizer plants, food processing plants and other industries. While
demand is on a steep growth curve, supply is not keeping up. Thus, natural-gas prices have roughly doubled in the past five years.
As with oil decades ago, the obvious solution is to get the gas from somewhere else. But the days when many millions of dollars' worth of gas were flared off across North America are long gone. Canadian production continues to fall, and demand in that country continues to increase, leaving less and less gas available for export to the U.S.
Somewhere else now must be overseas, and so it must come by ship, in the form of liquefied natural gas, known as LNG. Some 30 new LNG terminals have been proposed in recent years to join four operating terminals. But, as tends to be the way with obvious solutions, the idea of 30 new LNG terminals presents obvious problems. Chief among them are safety and NIMBY-ism ("NIMBY" stands for Not In My Back Yard).
Safety has always been a leading problem in the public's perception of LNG and it's a problem exacerbated by an explosion in January this year at Skikda, a major Algerian LNG terminal. The blast killed 27 people and injured 70. Industry officials have said that the accident involved a steam boiler not directly linked to the LNG itself and of a kind not used in American LNG terminals. But they admit that similar triggers could set off a similar event in U.S. facilities.
Like nuclear generation of electricity, the LNG industry has overall racked up a close-to-excellent safety record over nearly half a century. Ships carrying LNG have made some 33,000 voyages over the years without a significant spill. But a good safety record doesn't necessarily defuse a public perception of a threat.
Safety estimates too are constrained by the fact that experts disagree about what would happen in an LNG spill. The extant scientific models are wobbly and contradictory at best. Particular scientific controversy revolves around whether something could destroy an entire 1,000-foot-long LNG tanker, setting off a fireball perhaps a mile wide (one rather excitable environmentalist described this as "55 Hiroshimas"). But there is less scientific doubt that LNG terminals have safety issues: Nearly all peer-reviewed studies suggest that a spill and a fire could cause widespread damage.
NIMBY-ism is just as powerful a drag on LNG expansion. Voters don't want LNG terminals and regasification plants anywhere near them. In March, voters in Harpswell, Maine, rejected plans to build a new $350 million LNG terminal on the 70-acre site of a former Navy fuel depot. The project has been cancelled.
A proposed $250 million liquefied natural-gas terminal in Falls River, Mass., has also run into lively opposition. City officials would prefer a hotel and conference center to be built on the former Shell Oil waterfront site.
Protestors in Mobile, Ala., fighting a proposed LNG terminal in Mobile Bay are said to have a comfortable majority over supporters of the plan. As former Energy Secretary Jim Schlesinger once memorably remarked: "There's a lot of underutilized protest capacity in this country."
Accentuating safety issues and NIMBY-ism is the shadow of terrorism. Accidents may happen and be contained, but deliberately created maximum disaster is something to be avoided in all back yards. Immediately after the Sept. 11, 2001, terrorist attacks, the federal government stopped shipments to the LNG terminal in Everett, Mass., along Boston Harbor. Shipments were soon resumed, but population density around the plant is high and it is located just upriver from downtown Boston. Critics and fire officials worry that a major tanker fire set off by a terrorist attack with rocket-propelled grenades could have terrible consequences with enormous repercussions in the local, regional and national economy.
Are government agencies taking the threat seriously enough? Rep. Edward Markey, a Democrat whose district includes the Boston LNG facility, has accused the Energy Department and the Federal Energy Regulatory Commission (FERC) of minimizing the potential danger of a fire and explosion involving an LNG tanker.
So what happens now and where does the U.S. go from here? A number of business-consultant companies are working on studies that aim for an Olympian approach that will distill and tie together the strands of NIMBY-ism, conflicting and confusing safety studies and conjectures about what terrorists might or could do. They are trying to provide a road map in this area for energy policymakers.
Bob Hirsch, a Washington-based energy technologist and energy-management analyst, outlines some of the conclusions that seem to be emerging from these studies:
• The U.S. has to have more LNG simply to keep the economy on some kind of even keel and to prevent huge increases in the price of natural gas and other fuels. Doing nothing will cause industries that depend on natural gas as a feedstock to flee abroad. In terms of home-heating and commercial use, retooling equipment for other fuels or electricity 10 or 20 years before existing natural-gas equipment reaches the end of its natural working life would be wastefully expensive. It also would require the building of more coal-fired or nuclear-power plants and transmission lines. The abrupt changeover and attendant expenses would make a large number of voters quite unhappy;
• There is no other way than by transporting LNG to get large quantities of natural gas to North American markets. Even if the government were to open now-restricted areas to drilling by independent producers, it would take years to get large quantities of gas to market. And those quantities anyway are limited, compared with projected future demand. (It may take just as many years to build LNG terminals -- not a cheery thought, either.)
• The safest way to import LNG is to locate regasification terminals miles offshore, safe from NIMBY-ism and subject to federal regulation, rather than more-politicized state oversight. The technology has already been developed for offshore oil and gas production, and the associated costs wouldn't be that large. The risk reductions would be huge. Far from populated areas, the terminals would allow much-enhanced security.
Will such views galvanize U.S. energy policymakers? Maybe, maybe not: The history of U.S. energy policymaking is a graveyard of failed national strategies put forward by overly sanguine administrations or by the perennially inept Department of Energy, then mangled to death by Congress.
LNG terminal siting is also already mired in intractable jurisdictional turf battles between FERC, other government agencies and the states. But they had better act soon. The U.S. is by no means the only market for LNG suppliers. China and India want LNG too, as do Korea, Japan and Europe.
If nothing is done, and done safely, the NIMBY-ists may find themselves holding meetings in the dark. |
