Environmental Regulation and Liquefied Natural Gas

31 TCF

346

43

TCF

TCF

TCF

21

Restricted Percentage

40%

100%

100%

56%

FERC*

Gas SupplyProjected domestic production will not keep pace with projected demandPipeline imports from Canada are decliningLNG is the supply source that will fill the demand-supply gap.

FERC*

How Much Natural GasIs Out There?Source: EIA, World OilTotal World Gas Reserves as of 1/1/03: 6,127 Trillion Cubic Feet

FERC*

LNG Imports by Country

FERC*

Economic Oversight Access to LNG TerminalAOpen Access At Delivery of Liquid to TerminalLNGSuppliers LNGBuyersABBOpen Access At Delivery of Vapor into Interstate Pipeline SystemLiquid to Vapor FlowFERC*

FERC*

3732Existing Terminals with Approved ExpansionsA. Everett, MA : 1.035 Bcfd (Tractebel DOMAC)B. Cove Point, MD : 1.0 Bcfd (Dominion Cove Point LNG)C. Elba Island, GA : 1.2 Bcfd (El Paso Southern LNG)D. Lake Charles, LA : 1.2 Bcfd (Southern Union Trunkline LNG)Approved Terminals1. Hackberry, LA : 1.5 Bcfd, (Sempra Energy)2. Port Pelican: 1.6 Bcfd, (Chevron Texaco)3. Bahamas : 0.84 Bcfd, (AES Ocean Express)*4. Gulf of Mexico: 0.5 Bcfd, (El Paso Energy Bridge GOM, LLC)5. Bahamas : 0.83 Bcfd, (Calypso Tractebel)*6. Freeport, TX : 1.5 Bcfd, (Cheniere/Freeport LNG Dev.)7. Lake Charles, LA: 0.6 Bcfd (Southern Union Trunkline LNG)Proposed Terminals and Expansions FERC8. Fall River, MA : 0.8 Bcfd, (Weaver's Cove Energy/Hess LNG)9. Long Beach, CA : 0.7 Bcfd, (Mitsubishi/ConocoPhillips Sound Energy Solutions)10. Corpus Christi, TX : 2.6 Bcfd, (Cheniere LNG Partners)11. Sabine, LA : 2.6 Bcfd (Cheniere LNG)12. Corpus Christi, TX : 1.0 Bcfd (Vista Del Sol - ExxonMobil)13. Sabine, TX : 1.0 Bcfd (Golden Pass - ExxonMobil)14. Logan Township, NJ : 1.2 Bcfd (Crown Landing LNG BP)15. Bahamas : 0.5 Bcfd, (Seafarer - El Paso/FPL )16. Corpus Christi, TX: 1.0 Bcfd (Ingleside Energy Occidental Energy Ventures)17. Providence, RI : 0.5 Bcfd (Keyspan & BG LNG) 18. Port Arthur, TX: 1.5 Bcfd (Sempra)19. Cove Point, MD : 0.8 Bcfd (Dominion)Proposed Terminals Coast Guard20. California Offshore: 1.5 Bcfd (Cabrillo Port BHP Billiton)21. Louisiana Offshore : 1.0 Bcfd (Gulf Landing Shell)22. So. California Offshore : 0.5 Bcfd, (Crystal Energy)23. Louisiana Offshore : 1.0 Bcfd (Main Pass McMoRan Exp.)24. Gulf of Mexico: 1.0 Bcfd (Compass Port - ConocoPhillips)25. Gulf of Mexico : 2.8 Bcfd (Pearl Crossing - ExxonMobil)Planned Terminals and Expansions26. Coos Bay, OR: 0.13 Bcfd, (Energy Projects Development)27. Somerset, MA : 0.65 Bcfd (Somerset LNG)28. California - Offshore : 0.75 Bcfd, (Chevron Texaco)29. Pleasant Point, ME : 0.5 Bcf/d (Quoddy Bay, LLC)30. St. Helens, OR: 0.7 Bcfd (Port Westward LNG LLC)31. Offshore Boston, MA: 0.8 Bcfd (Northeast Gateway Excelerate Energy)32. Galveston, TX: 1.2 Bcfd (Pelican Island BP)33. Pascagoula, MS: 1.0 Bcfd (Gulf LNG Energy LLC)34. Port Lavaca, TX: 1.0 Bcfd (Calhoun LNG Gulf Coast LNG Partners)35. LI Sound, NY: 1.0 Bcfd (Broadwater Energy TransCanada/Shell)36. Philadelphia, PA: 0.6 Bcfd (Freedom Energy Center PGW)37. Pascagoula, MS: 1.3 Bcfd (ChevronTexaco))Canadian Approved and Planned Terminals38. St. John, NB : 1.0 Bcfd, (Canaport Irving Oil)**39. Point Tupper, NS 1.0 Bcf/d (Bear Head LNG - Anadarko)**40. Quebec City, QC : 0.5 Bcfd (Project Rabaska Enbridge/Gaz Met/Gaz de France)41. Rivire-du- Loup, QC: 0.5 Bcfd (Cacouna Energy TransCanada/PetroCanada)42. Kitimat, BC: 0.34 Bcfd (Galveston LNG)43. Prince Rupert, BC: 0.30 Bcfd (WestPac Terminals)44. Goldboro, NS 1.0 Bcfd (Keltic Petrochemicals)Mexican Approved and Planned Terminals45. Altamira, Tamulipas : 1.12 Bcfd, (Shell)**46. Baja California, MX : 1.0 Bcfd, (Sempra & Shell)** 47. Baja California - Offshore : 1.4 Bcfd, (Chevron Texaco)48. Lzaro Crdenas, MX : 0.5 Bcfd (Tractebel/Repsol)49. Puerto Libertad, MX: 1.3 Bcfd (Sonora Pacific LNG)

Existing and Proposed North AmericanLNG TerminalsNovember 2004FERCOffice of Energy ProjectsAC13524381563445102092322394029482146471225111317B28267301916412418D49US Jurisdiction FERC US Coast Guard314342* US pipeline approved; LNG terminal pending in Bahamas** These projects have been approved by the Mexican and Canadian authorities4433827353614

Office of Energy Projects*

Pleasant Point, MEEverett, MAProvidence, RIOffshore Boston, MAFall River, MASomerset, MANortheastLNG TerminalsOctober 2004Legend:Existing TerminalApproved Terminal

Proposed Terminal: Pre-FilingProposed Terminal: FiledWorking on DEISWorking on FEISPlanned TerminalLong Island Sound, NY


Mid-Atlantic LNG TerminalsCove Point, MD Logan Township, NJ Philadelphia, PALegend:Existing TerminalApproved Terminal

Proposed Terminal: Pre-FilingProposed Terminal: FiledWorking on DEISWorking on FEISPlanned TerminalOctober 2004


Southeast LNG TerminalsElba Island, GA (C)BahamasLegend:Existing TerminalApproved Terminal

Proposed Terminal: Pre-FilingProposed Terminal: FiledWorking on DEISWorking on FEISPlanned TerminalOctober 2004Pipeline only


Corpus Christi LNG, TX Vista Del Sol Ingleside LNG Lake Charles, LA Port PelicanPearl CrossingFreeport, TX Golden Pass, TXBrownsville, TX Port ArthurSabine Pass, LA Energy BridgeGulf Coast LNG TerminalsMain Pass CameronGulf LandingOctober 2004Compass Port Legend:Existing TerminalApproved Terminal

Proposed Terminal: Pre-FilingProposed Terminal: FiledWorking on DEISWorking on FEISPlanned TerminalGalveston, TXPascagoula, MSPort Lavaca, TX


Long Beach, CA California Offshore California LNGTerminalsChevron TexacoBHP BillitonCrystal EnergyLegend:Existing TerminalApproved Terminal


FERC*

Office of Energy Projects*Northwest LNG TerminalsCoos Bay, OR St. Helens, OR Legend:Existing TerminalApproved Terminal


FERC*

Maximum LNGDeliverability Growth

Chart1

11.8In-Service and ApprovedIn-Service and ApprovedIn-Service and ApprovedIn-Service and Approved

11.814.2Pending - FERCPending - FERCPending - FERC

11.814.27.8Pending - Coast GuardPending - Coast Guard

11.814.27.89.6Planned

11.814.27.89.610

In-Service and Approved

Pending - FERC

Pending - Coast Guard

Planned

Canada and Mexico

Bcf per Day

Sheet1

In-Service and Approved11.8

Pending - FERC11.814.2

Pending - Coast Guard11.814.27.8

Planned11.814.27.89.6

Canada and Mexico11.814.27.89.610

Sheet1

0

0

0

0

Bcf per Day

LNG Comparison

Sheet2

Sheet3

FERC*

US Natural Gas Balance

FERC*

LNG Siting ProcessesThere are two FERC processes for siting LNG terminals: FERC Traditional Review Process Pre-Filing Process

FERC*

LNG Review ProcessCryogenic Design & Safety ReviewScoping Meetings & Site VisitInterventions / ProtestsNotice of ApplicationAuthorization / Denial

Technical Conference DEISFEISNotice of Intent Safety and Engineering Data Requests / Analysis & Agency CoordinationFERC*

FERC*

Public InvolvementThe FERC Process:We Issue Notice of the ApplicationProject Sponsor Sends Landowner Notification PackageSCOPING = We Issue Notice of Intent to Prepare the NEPA DocumentPublic Meeting(s)Public Input:File an Intervention

Contact the project sponsor w/questions, concerns; contact FERCSend letters expressing concerns about environmental impactAttend scoping meetings

FERC*

Public InvolvementThe FERC Process:Issue Notice of Availability of the DEIS Public Meetings on DEIS

Issue a Commission OrderPublic Input:File comments on the adequacy of DEISAttend public meetings to give comments on DEISInterveners can file a request for Rehearing of a Commission Order

FERC*

LNG TerminalSiting IssuesSafetyTake Away CapacityLocal acceptanceFederal and State approvals

FERC*

SafetyProximity to residential and commercial areas raises public safety concernsExclusion zonesDOT/OPS enforces securityFERC performs pre- and post-certificate reviews of LNG terminalsBiennial reviews continue for life of terminal.Coast Guard enforces offshore ship safety

FERC*

Takeaway CapacityIs there an existing pipeline with takeaway capacity?Does the project require new pipeline construction?NEPA requires an analysis of the cumulative effects.Can not have an LNG terminal without takeaway capacity

FERC*

Federal and State ApprovalsMust get approvals:FERC NGA ApprovalDOT/OPS Exclusion ZonesCoast Guard Vessel Operating PlanCorps of Engineers Dredging, Wetland Filling, Alternative SitesNMFS, FWS Endangered Species ActCoastal Zone Consistency DeterminationState Agency Requirements

FERC*

FERCs Recent Actions FERCs Modeling StudySkikda Accident Follow-up Reorganization for Safety @ FERCFire Marshal InteractionThree Faces of LNG

FERC*

Recent EventsThe FERC ModelA number of studies gave rise to controversyFERC contracted with ABSG to identify modelsGives FERC the ability to do more site specific modeling and reviews in EISsProvides a solid theoretical foundation from which to build on as new information becomes availableAssumptions in the study are conservative

FERC*

Recent EventsSkikda AccidentPreliminary findings:Initial explosion of high-pressure steam boiler caused by hydrocarbon leakage into combustion air fan Larger secondary explosion of the hydrocarbon vapors in the immediate vicinity.Consequences: Loss of life and plant propertyMarch 13 15, 2004 FERC / DOE Team inspected accident site and interviewed Sonatrach.FERC / DOE Report addresses team review.

FERC*

Recent EventsReorganization for SafetyNew LNG Branch at FERC to focus on and enhance LNG review, inspection programsProvide for Seamless Review of LNG FacilitiesInteragency Agreement on Safety and SecurityApplication of FERC Model for LNG Tanker Release ConsequencesContract awarded for review of the LNG Program

FERC*

Recent EventsFire Marshal InteractionNational Association of State Fire Marshals (NASFM)The Partnership for Excellence in Pipeline Safety is authorized under a Cooperative Agreement between the NASFM and the OPSNASFM will mobilize Americas emergency responders and the communities they serve to help prevent, safely mitigate and investigate pipeline incidentsLNG module being developedwww.safepipelines.org

FERC*

Recent EventsThree Faces of LNGHow you get your LNG news affects your perceptionPopular Press (e.g., Newspapers)Trade PressFERC Filings and Issuances

FERC*

LNG Supply Stream -- From Production to DistributionNatural Gas ProductionNatural Gas PipelinesStorage and Vaporization FacilityLiquefaction and Storage FacilityNatural Gas ProductionDockDock

THE National Petroleum Council that was released a year ago STATES THAT UP TO 25% OF OUR GAS DEMAND WILL HAVE TO BE MET WITH NEW SUPPLIES LNG AND ARCTIC GAS.

LNG COULD PROVIDE AS MUCH AS 15% OF OUR GAS SUPPLY BY 2025.

THIS IS A LARGE INCREASE. IN 2003, LNG MADE UP ABOUT 2% OF OUR GAS SUPPLY. WHILE NOT A LARGE PROPORTION OF THE US GAS SUPPLY, THIS IS MORE THAN DOUBLE THE PERCENTAGE AND AMOUNT THAT LNG CONTRIBUTED TO THE US GAS SUPPLY IN 2002.

CURRENTLY, THE VAST MAJORITY OF OUR GAS SUPPLY COMES FROM DOMESTIC PRODUCTION AND PIPELINE IMPORTS FROM CANADA. CANADIAN IMPORTS MADE UP ABOUT 15% OF THE US GAS SUPPLY IN 2003.

HOWEVER, INCREASES IN DOMESTIC PRODUCTION WILL NOT KEEP UP WITH DEMAND.

ALSO, CANADIAN PRODUCTION IS FLATTENING AND ON THE DECLINE, RESULTING IN LESS CANADIAN IMPORTS.

MORE LNG IS NEEDED TO FILL THE EVER-INCREASING GAP.NORTH AMERICA HAS A RELATIVELY SMALL AMOUNT OF WORLDS GAS RESERVES AT 4%, 3% IN THE USUS 187 TCFCANADA 60 TCFMEXICO 15 TCF

SURPRISE, MIDDLE EAST IS NOT THE RUNAWAY REGION WITH THE VAST MAJORITY OF GAS RESERVES.RUSSIA HAS THE MOST GAS RESERVES IF ANY SINGLE COUNTRY IN THE WORLD1,700 TCF (ALMOST 28% OF THE WORLDS RESERVES)THE HACKBERRY, OR CAMERON, DECISION APPROVED THE FIFTH LNG TERMINAL IN THE LOWER 48.

THE DECISION SUBSTANTIALLY ALTERED THE REGULATORY TREATMENT THAT HAD HISTORICALLY BEEN ACCORDED LNG TERMINALS.

IN THE PAST, THE COMMISSION TREATED THE LNG TERMINAL AS AN OPEN ACCESS FACILITY SUBJECT TO SECTIONS 7 AND 4 OF THE NATURAL GAS ACT, IN ADDITION TO SECTION 3.

HACKBERRY ESSENTIALLY TREATS LNG TERMINALS AS PRODUCTION FACILITIES, MEANING THAT THE COMMISSION, OTHER THAT SITING TERMINALS UNDER SECTION 3, ONLY TAKES RATE AND SERVICE JURISDICTION AT THE OUTLET OF THE PLANT, NOT AT THE DOCK.

THIS DEVELOPMENT, IN COMBINATION WITH THE NEED FOR MORE GAS SUPPLY, HAS RESULTED IN A DRAMATIC INCREASE OF ACTIVITY IN POTENTIAL LNG TERMINALS IN NORTH AMERICA.

THIS GIVES YOU A PERSPECTIVE OF THE NUMEROUS PROPOSALS THAT ARE OUT THERE.THEIR LOCATION, STATUS AND ASSOCIATED DAILY DELIVERABILITY. NOT ONLY IN THE U.S., BUT ALSO IN CANADA AND MEXICO.

IN FACT, ID NOTE THAT THE ST. JOHN, NEW BRUNSWICK AND THE POINT TUPPER, NOVA SCOTIA (#s 34 AND 35) HAVE RECEIVED REGULATORY APPROVAL AND THAT CONSTRUCTION HAS COMMENCED AT THE POINT TUPPER FACILITY

IN MEXICO, THE ALTAMIRA TERMINAL (# 30) IS UNDER CONSTRUCTION AND THE BAJA CALIFORNIA ONSHORE TERMINAL (# 31) HAS RECEIVED ALL OF ITS REGULATORY APPROVALS. THE OFFSHORE BAJA TERMINAL (#32) RECENTLY RECEIVED ITS ENVIRONMENTAL APPROVAL.

ON A VERY INTERESTING NOTE, SHELL AND TRANSCANADA HAVE ANNOUNCED THEIR INTENTION TO CONSTRUCT AN LNG TERMINAL IN LONG ISLAND SOUND IN NEW YORK STATE WATERS. A 25-MILE SUBSEA PIPELINE WOULD BE BUILT TO CONNECT THE LNG TERMINAL WITH THE EXISTING IROQUOIS PIPELINE THAT CROSSES L.I. SOUND FROM CONNECTICUT TO LONG ISLAND.

ALSO, PHILADELPHIA GAS WORKS HAS ANNOUNCED THAT IT WANTS TO CONVERT ITS CURRENT LNG STORAGE FACILITY INTO A LNG TERMINAL.

JUST TO GIVE SOME SENSE OF PERSPECTIVE TO THESE NUMBERS.WHEN CONSUMPTION OF GAS IS ABOUT 23 TCF, AVERAGE DAILY CONSUMPTIONIN THE US IS ABOUT 63 BCF. IN A 30 TCF MARKET, AVERAGE DAILY CONSUMPTION IS ABOUT 82 BCF.

NOT ALL OF THE PROJECTS ON THE PREVIOUS SLIDE WILL BE BUILT I DONT THINK THE FINANCIAL MARKETS WILL ALLOW IT AND THERE CAN BE TOO MUCH CONCENTRATION IN A SINGLE AREA AND, REMEMBER, THE NPC STUDY SAID THAT ABOUT 15% OF OUR GAS SUPPLY WOULD COME FROM LNG (THIS AMOUNTS TO A LITTLE OVER 12 BCF/D IN A 30 TCF PER YEAR MARKET).NEVERTHELESS, IF YOU JUST COUNT THE EXISTING, APPROVED AND PENDING PROJECTS, THIS ACCOUNTS FOR ALMOST 34 BCF/D AND IN A 30 TCF MARKET, THIS IS 40% OF DAILY DEMAND.

WHEN YOU ADD IN THE TERMINALS THAT ARE PLANNED, BUT NOT YET FILED AND THE PROPOSALS IN CANADA AND MEXICO, THE DAILY DELIVERABILITY RISES TO OVER 50 BCF/D.

[MARK: THE LEGEND IS IN SEQUENCE. IT GOES LEFT TO RIGHT, THEN TO THE NEXT ROW][CANADIAN VOLUMES ARE FOR PRODUCTION ONLY. NO CANADIAN LNG IS CONSIDERED HERE. VOLUMES FROM THE ST. JOHN AND NOVA SCOTIA PROJECTS WOULD BE AVAILABLE IN LATE 2007/EARLY 2008 AT THE EARLIEST. NO MEXICAN LNG IS CONSIDERED HERE.]

LOOKING AT THE FUTURE GAS BALANCE .

THE U.S. CAN NOT MEET PROJECTED DEMAND IN THE COMING YEARS WITHOUT LNG UNLESS WE SHED MORE INDUSTRIAL LOAD. THIS IS NOT A DEMAND REDUCTION PROGRAM WE WANT TO FOLLOW.

FURTHER, ARCTIC GAS WILL NOT SOLVE THE ENTIRE PROBLEM.

IN THE SHORT-TERM, WE NEED THE CAPACITY MADE AVAILABLE FROM THE EXISTING LNG FACILITIES. BUT IN THE MID TO LONG-TERM, WE WILL REQUIRE ADDITIONAL LNG CAPACITY TO MEET OUR NEEDS AND TO PROVIDE THE STABILITY TO CALM PRICE VOLATILITY AND ASSURE INDUSTRIAL CUSTOMERS.

WHILE LNG HAS MADE A MARGINAL CONTRIBUTION TO THE U.S. GAS SUPPLY OVER THE LAST 30 YEARS, IT IS POISED TO MAKE A MAJOR CONTRIBUTION IN THE FUTURE.THE RED HORIZONTAL LINE INTERSECTS THE VERTICAL BARS AT A POINT INDICATING THAT NEW TERMINALS WILL BE NEEDED BY 2010.OUR PROCESS EXAMINES ALL ASPECTS OF SITING THE TERMINAL, INCLUDING SAFETY AND SECURITY.

WE STRONGLY ENCOURAGE PROSPECTIVE APPLICANTS TO USE THE PRE-FILING PROCESS.

Review Process:- Notice- Data Gathering/Analysis- Draft EIS - Public Meetings- Final EIS- Commission Order

Traditional NEPA (environmental) review at FERC can take 18-21 months.NEPA prefiling will not reduce the environmental review, but will allow the NEPA process to begin prior to the filing of the application with FERC.

EVENTHOUGH FERC SEEKS TO REDUCE THE PROCESSING TIME THROUGH THE PREFILING PROCESS, THERE ARE MANY OPPORTUNITIES FOR PUBLIC INVOLVEMENT.

IN THIS WAY STAKEHOLDER CONCERNS ARE NOT COMPROMISED.

NOTE THAT OUR PROCESS INCLUDES AT LEAST SEVEN OPPORTUNITIES FOR PUBLIC INPUT.

SAFETYthe FERC looks st the marine and land-based safety issues duing its review. we coordinate with dot and the coast guard during the review.[note: we are currently working on an interagency agreement with both to make each agencys role clear.]Proximity to residential and commercial areas raises public safety concerns.the calculations of thermal and flammable exclusion zones for the on-shore lng facilities are based on the dimensions of the proposed impoundment system and the design spill volumes.DOT/OPS enforces security.FERC performs pre- and post-certificate reviews of LNG terminals.Biennial reviews continue for life of terminal.Coast Guard enforces offshore ship safety.TAKEAWAYIs there an existing pipeline with takeaway capacity?Does the project require new pipeline construction? NEPA requires an analysis of the cumulative effects. Can not have an lng terminal without takeaway capacity.LOCAL ACCEPTANCEHas the project sponsor interacted with the local population?Entertain concerns. Make adjustments or accommodations to the project.FEDERAL/STATE APPROVALSMust get approvals: FERC NGA Approval; DOT/OPS Exclusion Zones; Coast Guard Vessel Operating Plan; Corps of Engineers Dredging, Wetland Filling, Alternative Sites; NMFS, FWS Endangered Species Act; Coastal Zone Consistency Determination; State Agency Requirements

HERE ARE SEVERAL ITEMS OR EVENTS THAT HAVE OCCURRED IN THE LAST YEAR THAT ID LIKE TO ELABORATE UPON.-The study also reviews the protections built into tankers and their operations-As models advance, and new technical information becomes available, we will incorporate improvements

ORIFICE MODEL used for estimating the LNG release rate for a given hole size in the inner and outer hulls of an LNG tanker

POOL SPREAD estimated using the Webber methodology, which accounts for resistance to spreading as a result of frictional forces

VAPOR GENERATION rates calculated using film boiling heat transfer theory THERMAL RADIATION distances determined with the solid flame model, with the use of a burning rate of 0.058 lb/s-ft2 and an emissive power of 84,000 BTU/hr-ft2

FLAMMABLE VAPOR CLOUD DISPERSION determined using the computer program DEGADIS

Accident resulted in:27 deaths, 57 injured - all plant employees on the plant siteDestroyed three trains, damaged another

Major differences with U.S. facilities, but potential failure modes warrant further evaluation:Proximity of combustion/ventilation air intake equipment to any possible hydrocarbon releaseHazard detection devices to isolate or shutdown any combustion equipment Review of all jurisdictional LNG facilities in progress

The FERC/DOE Report is now public and available to parties that ask for it.

Purpose of Study: to recommend modeling methods for FERC staff to use in calculating site-specific hazards of LNG import terminal applications

-spill rates from various size tank holes-pool spread for unconfined LNG on water-thermal radiation from pool fire-dispersion of flammable vapors

BIDS under review now for review of LNG ProgramThe popular press may give the most sensational, least balanced view of LNG developments.

The trade press will report the facts but will also give you the rumor and innuendo which can alter an otherwise rational perspective.

If you want unbiased, factual information on any particular LNG proceeding that is on file at the Commission, use FERCs e-Library and look at the filings. See what the company is proposing, see what the Commission has done in the case, see who is actually protesting the case. This will give you the real story.

Documents

Environmental Regulation and Liquefied Natural Gas