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Vol. 10, No. 26 Week of June 26, 2005
Providing coverage of Alaska and northern Canada's oil and gas industry

Two more governors weigh in on LNG

Mississippi, Alabama leaders join Louisiana’s Blanco opposing use of ‘open loop’ systems to warm LNG and turn it back into gas for shipment through the nation’s pipeline system

Allen Baker

Petroleum News Contributing Writer

The governors of two more Gulf Coast states have weighed in with their opposition to offshore LNG terminals that use millions of gallons of seawater to turn LNG back into natural gas for shipment on the nation’s pipeline system, killing sea creatures and eggs in the process.

Alabama Gov. Bob Riley said in a June 15 letter to federal regulators that he will not support the development of ConocoPhillips’ CompassPort liquefied natural gas terminal off the Alabama coast unless he gets proof that the terminal won’t harm the state’s marine fisheries, the Mobile Register reported. The terminal would be 11 miles south of Dauphin Island in federal waters.

And Mississippi Gov. Haley Barbour said in a June 16 letter to U.S. Department of Transportation’s Marine Administration that he wants offshore liquefied natural gas projects along the Gulf Coast to be environmentally friendly. Barbour’s letter was also related to the CompassPort project.

Conservationists want closed loop system

The two join Louisiana Gov. Kathleen Blanco, who wrote federal regulators in May outlining her opposition to any LNG terminal that requires using millions of gallons of seawater per day to warm super-cold LNG.

Opponents say this heating method, called an “open loop” system, kills all marine life in the water, including fish eggs and the tiny organisms fish eat. Instead of an open-loop system, conservationists say LNG terminals should use a “closed loop” system, a costlier method of heating LNG by using natural gas and recycled water.

The ConocoPhillips terminal would use about 150 million gallons of water daily, or more than 50 billion gallons a year, to warm the LNG. That would save an estimated $20 million to $40 million a year compared with using a closed loop system and burning gas to provide the heat, the system that’s generally used for onshore terminals.

Barbour wants scientific data

Mississippi’s Barbour, in his letter, said he is opposed to the offshore terminals unless “adequate scientific data are provided to insure our marine resources are protected.”

While it’s not clear that the governors have an absolute `veto power’ over LNG terminals in federal waters, a provision in the federal Deepwater Port Act indicates that governors of states closest to the facilities may be able to reject them even after federal approval.

Several offshore terminals are in the planning stages in the Gulf of Mexico, and one has already taken its first shipments from special tankers that have liquefaction equipment aboard.

Bill Walker, director of Mississippi’s Department of Marine Resources, said June 20 that in general Barbour supports the concept of LNG.

“The technology has come of age, but there are environmentally friendly ways to do it and we support those,” Walker said.

Walker said that for a cost of only 1 percent to 2 percent, a company can use a closed-loop system, where the same water used to warm the liquid gas can be reheated and used over and over.

That would protect the Gulf habitat and still get the job done for a small increase in cost, Walker said.

In May, the U.S. Coast Guard stopped the permitting process for the CompassPort project because the Environmental Protection Agency raised environmental concerns over the system.

Earlier, opposition by Riley to a proposed ExxonMobil terminal along Mobile Bay on a former Navy base caused that company to drop the project. That site is in state waters, and Riley refused to allow the company to go ahead with the project unless it conducted a major safety study.

—Material for this story was provided by the Associated Press



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