The New Gas Station
With domestic natural gas in short supply, the nation looks overseas
At least 20 proposals for new LNG facilities are on the drawing boards, spurred by a recently streamlined federal approval process. And the Federal Energy Regulatory Commission relaxed antimonopoly regulations for LNG facilities, reasoning that companies that make such huge investments deserve sole access to markets they create. But it isn't only big money entering the fray. One ambitious firm, Cheniere Energy, which earlier this year changed its ticker symbol to "LNG," plans four Gulf of Mexico terminals and has signed big deals with two natural gas customers--Dow Chemical and Sherwin Alumina. "We want to be the primary gateway for LNG into the United States," says CEO Charif Souki.
No doubt the toughest hurdle will be state and local approval. Shell and Bechtel learned this with the Vallejo, Calif., LNG terminal on the site of a former nuclear submarine base offshore at Mare Island. The community, devastated by the 1996 base closure, has rebuilt as commuters discovered its Victorian homes a short ferry ride from San Francisco. The city envisions upscale redevelopment, green space, and bay views, not tanks and pipelines. "We all enjoy our air conditioning and lights going on in the evening, but it's an issue of where to place these facilities," says resident Rod Boschee.
Danger sign. A potent issue in Vallejo and elsewhere is the threat of terrorism. To reach Mare Island, the 900-foot tankers would have had to pass beneath the Golden Gate Bridge. The industry points out that commercial shipping began in 1959; Japan, for example, imports nearly all of its natural gas. And after more than 33,000 LNG voyages covering more than 60 million miles, no significant accidents have occurred. Insulated double-hulled tankers keep the fuel cold, and in its liquid form, natural gas doesn't burn. In gas form, it does not lend itself to rapid combustion. "Safety is one of LNG'S most crowning achievements," says Gus Noojin, CEO of Shell's U.S. gas division. "Even if there were a catastrophic event, there could be a fire, but not an explosion."
But skeptics say the systems that protect tankers and terminals from accidents may not prove as robust against deliberate attack. "I think there's a certain amount of denial," says James Fay, a retired Massachusetts Institute of Technology professor and LNG researcher. "A fire is far from benign." In LNG'S worst disaster in 1944, 128 Cleveland residents died when a substandard liquefied gas storage tank ruptured and the vaporizing LNG caught fire. More LNG plants certainly will require additional federal investment in security, Coast Guard escorts, and safety zones. But terrorism isn't the only security issue. Relying on foreign gas means worrying about events like the ethnic violence that interrupted flows this year from Nigeria, a key LNG producer.
The American Gas Association, which represents utilities, says that even with imports, the current demand rate would require the opening up of more federal lands for gas development. "It's wonderful that we can look to LNG as a safety valve," says AGA spokeswoman Daphne Magnuson. "But it's sad that policymakers have put off looking at the larger energy policy issues for so long that this is now seen as the best solution."
HOW IT'S DONE
TURNING LIQUID. Natural gas drilled from underground is superchilled at "liquefaction" plants. At -256° F, the gas reduces to a fraction of its size (like shrinking a gallon to a teaspoon.) Tankers ship the liquid gas to ports to be "re-gassed" and fed into pipelines to homes and businesses.