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ConocoPhillips offers incentives for LNG Company makes 'economic guarantee' to Alabama, including guaranteed supply of up to 200 million cubic feet per day to state The Associated Press
ConocoPhillips has offered the state of Alabama incentives to build support for its proposed liquefied natural gas terminal off the Alabama coast.
The LNG terminal project is still under review by state and federal regulators. But ConocoPhillips unveiled details earlier in February of its “economic guarantee” to Alabama, including a guaranteed supply of natural gas that would be made available to the state.
The nation’s third-largest energy company behind ExxonMobil and Chevron said it’s willing to sign contracts dedicating as much as a fifth of the terminal’s capacity for use in Alabama.
The Mobile Register reported Feb. 17 that under terms of the agreement, the state would get at no cost the option to buy up to 200 million cubic feet of gas per day at “market” rates. That’s the average spot market price. Company incentives package sent to governor ConocoPhillips spokesman Steve Lawless said the Houston-based firm has to charge that rate, and not offer the state a discount, because of its obligation to shareholders.
“It’s going to put Alabama in a great position as far as supply is concerned, particularly as the state’s demand grows over the coming years,” Lawless told the Register. “It’s really an unprecedented offer. We’re not aware of any company doing anything like this anywhere else in the country.”
The company’s incentives package has been sent to Gov. Bob Riley, who has raised environmental concerns about the LNG industry.
The ConocoPhillips terminal as proposed would use an “open loop” seawater system for regasifying the LNG. Somewhere between 100 million and 200 million gallons of seawater a day would go through the system each day. Scientists say most any small creature near the intakes would be drawn in and killed immediately by the temperature change. Eggs and drifting juveniles would be most vulnerable.
ConocoPhillips has said it doesn’t want to burn gas for heating the LNG, as onshore terminals generally do, because that would make the terminal uneconomic. Company executives say ConocoPhillips is willing to guarantee the facility will have zero impact on “marine species of concern,” and they’re willing to shut down the terminal if it’s shown it does have an impact.
But ConocoPhillips executives have been very careful to define what they mean by zero impact, saying that refers to “species of special concern” and it would be the “net effect” after offsetting any destruction at the facility by habitat improvements and conservation funding elsewhere in the Gulf. Facility would be in federal waters ConocoPhillips plans its Compass Port terminal for federal waters about 12 miles south of Dauphin Island. It would create a minimum of 690 jobs during its three-year construction process, according to ConocoPhillips.
The company said it also would give “preferential treatment” to construction workers from Alabama.
ConocoPhillips said it is willing to sign contracts guaranteeing that at least half of the terminal’s estimated $200 million installation cost would be spent with Alabama contractors and vendors.
The overall project value would approach $1 billion, Lawless said. But much of that money is for tank construction, which the company has said must be completed in Texas.
“All of these are minimum estimates. The reality is we expect to go above and beyond” the projections, Lawless said.
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