LNG Ports in US Gulf Face Continued Local Opposition

In the face of an expected veto by Governor Bob Riley of Alabama, ConocoPhillips on Friday withdrew its application for a port off Alabama's coast. ConocoPhillips also said that they intend to review its options with regard to changing their system to an open-loop LNG system. In a separate development, a federal appeals court upheld the decision to license a Shell LNG port off of Louisiana's coast. The Sierra Club and the Louisiana Charter Boat Association, among others, is pushing Shell US Gas & Power LLC to change the technology of its already-licensed LNG port to be built 38 miles south of Cameron Parish.

Last March, the environmental activists took the Department of Transportation to court to fight that license, which is issued in conjuncton and through the U.S. Maritime Administration. But, the 5th U.S. Circuit Court of Appeals has since denied the groups' petition to review the decision. The Sierra club and others have vowed to continue the fight.

Environmentalists, and the Gulf Restoration Network in particular, have been battling the proposed development of open-loop LNG ports in the Gulf of Mexico that use seawater to warm the supercooled gas. Environmentalists say that the ports will be harmful to gulf fisheries. They achieved a key victory last month when Gov. Kathleen Blanco vetoed an LNG port proposed by McMoran Exploration that was to have used open-loop technology. McMoran has since said that it would alter its plans and pursue a closed-loop technology that uses natural gas rather than seawater to heat the gas. The latter process is preferred by Blanco and environmentalists and the issue was at the heart of Blanco’s veto of the project last month.

The use of “open loop” LNG systems may no longer be an option for firms hopeful of building gulf coast LNG facilities. Critics of the "open loop" vaporization systems say that it could damage marine life because of the huge volumes of warm water used to reheat the gas. Once again, Alabama, like Louisiana, has proven that when it comes to the building of LNG marine facilities, “All politics are local.” Industry analysts, however, caution that LNG terminals which are denied here in the United States will eventually be built elsewhere, taking investments, jobs and tax income with them.