Lake Charles Cameron LNG Terminal: Model for Success or Recipe for Disaster?
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As the fourth quarter of 2006 draws near, a plethora of proposed LNG terminal projects that are in various stages of the approval process dot the coastal landscape all across North America. Before any of these projects can become a reality in answer to the exploding demand for LNG, especially here in the United States, the minefield of requirements demanded by the Federal Energy Regulatory Commission (FERC), United States Coast Guard (USCG) and the U.S. Maritime Administration (MARAD) must be carefully navigated. Those projects lucky enough to make it past this stage of the ordeal then must face the seemingly ubiquitous - and ferocious - local opposition which dogs each and every project, at every step of the way. Or so it seems.
In Lake Charles, Louisiana, Sempra Energy’s $750 million dollar LNG facility on the Calcasieu Ship channel appears to be sailing through every stage of the fight with flying colors. And, not because there are not parties who vigorously oppose its construction. The marine facility is, by some accounts, 60 to 70% complete, and in most places, this is as close to a “done deal” as it gets in the LNG game. Unlike the west and east coasts, the climate on the U.S. Gulf Coast for proposed LNG terminals has until recently been one of pragmatic realism, and most industry observers felt like the best prospects for building the much-needed terminals lay in the Gulf Coast states. The recent setbacks in Louisiana and other places - punctuated by a high profile veto by Louisiana’s governor of one such facility - has considerably dampened industry enthusiasm in recent months.
Curiously, the primary and most vocal opposition to Sempra’s Cameron LNG Terminal comes from unusual places. Located smack in the middle of the industrial petrochemical complex of the port of Lake Charles, the facility at least outwardly would not seem out of place. After all, hundreds of thousands of barrels of oil pass through the myriad of refineries and petroleum terminals located up and down the Calcasieu River, every day. There’s even another LNG facility right up the river from this ongoing terminal project, which has completed an expansion of its own in recent months. Two thousand deep-draft ship movements already occur annually in the area. What kind of difference will a few hundred more make?
Sempra’s Cameron LNG Terminal could be completed and on line within a year’s time. In the meantime, the Lake Charles Harbor Safety Committee, spurred largely by CITGO Petroleum and other major channel users, have commissioned a “Calcasieu Channel Passing Study” for the facility. The $200,000 consulting project will attempt to determine whether previous studies and computer modeling were flawed or indicative of serious marine safety issues with the way the terminal’s docks are being constructed. Ron Foster, CITGO’s local marine consultant and former Gulf Coast Manager for Marine & Pipeline Operations, for one, says that they are. He goes on to say that the approval process through the U.S. Coast Guard and FERC was both flawed and pushed through with unusual speed, without the necessary due diligence for any number of issues which might have killed other nascent projects elsewhere.
In usual practice, the crusade to prevent the building of an LNG marine terminal is usually led by environmental watchdog groups, politicians and outraged local residents. Not so in the Sportsman’s Paradise. CITGO Petroleum Corporation is only one of many large, high profile and powerful corporations who are stepping forward in the 11th hour to voice opposition to a terminal which they say has serious safety, security and design flaws. Beyond this, CITGO personnel say that the solutions to potential security and safety issues related to the terminal will create an onerous financial burden for the many other users of the ship channel.
In the current industrial regulatory environment spawned by the EXXON VALDEZ spill and the 9/11 terrorist attacks, it is quite a feat to get any sort of marine terminal project off the ground, never mind seeing it to near-completion. Just ask anyone who’s tried to build a new refinery anywhere in the United States over the past three decades. And yet, the Cameron LNG Terminal on the Calcasieu Ship Channel is on track and now, seemingly unstoppable. In the coming weeks, the MarEx e-newsletter will examine the political and regulatory process that has led the bustling Louisiana port of Lake Charles to this juncture, the players involved and the downstream implications of bringing a much-needed LNG distribution facility on line.
Coming Soon: Sempra, Safety, Security and Selective Data…
Contact Managing Editor Joseph Keefe with comments or questions at: [email protected].