So Long, LNG?

Is the Obama administration backing away from LNG terminals? 5

LNG tanker

Will the Obama administration back away from building liquefied natural gas (LNG) terminals along the coasts of the U.S.?  Obama’s appointee at the head of the Federal Energy Regulatory Commission suggests that it will.

Though George W. Bush talked a lot about weaning the U.S. off foreign oil, he wanted a massive increase in imports of foreign natural gas. The Bush administration, aided by the 2005 energy bill that gave the feds sole authority over LNG terminal siting, pushed for dozens of new terminals to be constructed in coastal areas of the U.S., where massive tankers could unload their cargo from overseas.

Communities targeted for the terminals, many of them densely populated, have protested fiercely, citing serious concerns about safety and the prospect that terminals could be targets for terrorist attack. In vapor form, natural gas is extremely flammable, so accidents can lead to huge, dangerous fires and explosions. There are currently only four active LNG terminals on U.S. shorelines.  At one point, some 30 additional terminals were being considered, but vigorous opposition has led to the cancellation of some projects and endless lawsuits over many others.

Among those caught up in litigation is the facility proposed for Bradwood Landing in Oregon, at the mouth of the Columbia River. FERC approved construction of the terminal in September 2008, over the complaints of local citizens and environmental activists. Oregon, Washington, a coalition of environmental groups, and the National Marine Fisheries Service all filed suit against FERC over the decision, alleging that the agency broke the law by approving the terminal before its environmental impacts were adequately assessed.

Enter the Obama administration. In March, the Justice Department said it would represent NMFS in its suit against the Bradwood terminal.

And the newly appointed chair of FERC, Jon Wellinghoff, told Grist in an interview that he thinks the Bradwood decision needs to be reassessed.  That’s consistent with his vote against the project [PDF] last year, when he was one of four FERC commissioners.

“My view has been that we need to look at those [proposed LNG terminals] very carefully, and we need to consider all of the regional needs when determining whether or not there has been a finding of need for the facility,” said Wellinghoff. “That was largely why I voted against the Bradwood decision in Oregon, was because I didn’t believe that there had been an adequate determination of need for that facility to meet the needs of the region.”

Wellinghoff challenged the idea that the U.S. needs to expand its infrastructure to import more LNG. Instead, he predicted increased use of domestic natural gas reserves.

“We’ve had, since a lot of this push for LNG several years ago ...  a vast expansion of the known resource reserves of natural gas in this country, based primarily on exploration in shales in Pennsylvania and Oklahoma and other regions of the country, that have allowed us to understand that we have much more natural gas resource reserves than we ever believed we had,” said Wellinghoff. “As such, we probably will be much more able to draw from domestic gas resources than we will be so concerned about foreign LNG sources.”

Of course, development of domestic shale is not without its own environmental and local concerns. Count on this to be an interesting topic to follow in the coming months.

But Wellinghoff also predicts that the U.S. won’t need big new sources of natural gas. “I think the potential is there to increase the efficient use of natural gas so rapidly that I don’t think we’re going to see significant increases in demand,” he said.

Watch for more from our interview with the FERC chairman soon.

Kate Sheppard covers energy and environmental politics for Mother Jones. She was previously the political reporter for Grist and a writing fellow at The American Prospect. You can find her work here and follow her on Twitter.

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  1. Delay And Deny's avatar

    Delay And Deny Posted 4:39 pm
    09 Apr 2009

    Government, like St. Jude, helps those who cannot be helped.   Conversely, there is no need for them to particpate in viable profitmaking industries.  Case in point, I welcomed Obama's decision to cut funding for Hydrogen Initiatives because this is the year that Hydrogen is taking off into a viable business.   All over the country, states, education and industry are building stations.   Buses are converting to hydrogen.    Fuel cell cars and even Segways have hit the road.
    Hydrogen answers all questions.   But it doesn't need Government anymore.   Just business leadership!

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  2. vbstenswick Posted 1:48 am
    10 Apr 2009

    In the upper Midwest we burn alot of natural gas to heat homes.  Much of this demand can be replaced by geothermal heat pumps.  The federal government recently removed the cap on the 30% tax credit.  I have urged my legislators to match that at the state level for new residential construction.  That would make a very strong incentive for new home builders to install geothermal heating systems rather than a fossil fuel solution, putting a cap on natural gas demand.  Since these are very good systems, more modest incentives on retrofits should be sufficient to get some homeowners to switch and start to reduce demand for natural gas.  While geothermal systems are expensive, the costs can be kept down by following the Canadian Office of Energy Efficiency guidelines, which state that the heat pump should be sized to 60%-70% of maximum load, with supplementary heat picking up the rest.  In the Minneapolis-St. Paul area, that should be about $15,000 for a 3 ton system and $18,000 for a 4 ton system before any tax credits or rebates.  A 3 ton system should cost 3 x $2200 = $6600 for the loop field, $4000+ for the heat pump, and a few thousand $ for the pump pack, supplementary heat, and hooking it up.

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  3. Sean Casten's avatar

    Sean Casten Posted 7:31 am
    10 Apr 2009

    The NIMBY fight against LNG is misplaced, and it may well be a dangerous economic fight as well.  Globally, a tremendous amount of natural gas is flared without serving any purpose to relieve pressure from oil wells.  Environmentally, this is like pissing in your water glass just because you don't have a toilet nearby - all the environmental pain of CO2 release with none of the economic gain that comes from capturing the energy trapped in fossil fuels.The flaring isn't because oil & gas companies are bad people, but because there is no profitable way to bring much remote gas to market - as a very low-density fuel, it just isn't cost-effective to throw it on ships to send to gas markets (or build transoceanic pipelines to do the same), so it gets flared in place in the course of extracting higher-density, easier to transport fossil liquids.  LNG has, to some degree, helped to fix this by creating a vehicle where that remote gas can be liquefied and brought to consumers. I'm not suggesting that this is an ideal end-game, nor that LNG terminals don't deserve regulatory scrutiny.  But we should be careful bashing LNG terminals categorically, to the extent that - in some cases - a failure to build those terminals causes the gas to be flared elsewhere, increasing the total rate of fossil energy use as we "double up", burning domestic supplies more rapidly to replace the foreign gas we're also burning in place.  In other words, the basic problem with NIMBY logic.  Piss in Algerian waters so that I don't have to see you piss in mine.

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  4. Erik Hoffner's avatar

    Erik Hoffner Posted 12:15 pm
    11 Apr 2009

    Interesting. Most failed LNG proposals I'm aware of have failed b/c they were poor proposals, very near large urban centers or in the case of Eastport, Maine, in dangerous waters and sure to defile land sacred to the Passamaquoddy tribe.But if, as Wellinghoff says, LNG curtailment leads to continued domestic gas exploration of sources like coalbed methane in the West, then this bodes ill for natural areas all along the Rockies.But Sean, is LNG not part of the world's fungible petroleum supply? Why not ship the stuff to those countries willing to use it? I don't think we can say that if the US doesn't use more of it, then wells will just continue to be flared.

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    1. Sean Casten's avatar

      Sean Casten Posted 2:41 pm
      11 Apr 2009

      Erik:I'm reluctant to oversimplify a complex supply story - but the generalizeable pointis that oil and gas tend to be co-located, but unless the oil well is also near an NG processing / distribution facility, the NG is flared.  I've not looked at the numbers in a while, but the fraction of all the NG we pull off the ground that simply gets flared in place as a byproduct of oil production is significant.The issue - and I think this is Wellinghoff's point - is that supply moves indepedently of demand.  So if NG demand rises but we curtail LNG supply, we are simply going to find ways to meet that demand with other sources.  The particular problem that raises with LNG is the double-burning for those fractions that now have a route to liquefaction but no route to market.A final point: LNG is a very international commodity.  LNG tankers headed to the US have been known to re-route to Europe in response to differential prices in Europe and the US.  So this is not exclusively a US issue - just one that demands more nuance than NIMBY allows.

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