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Siting LNG Terminals in theCalifornias - What is a GoodProject from Safety andEnvironmental Viewpoint?

Bill Powers, P.E.Border Power Plant Working Groupwww.borderpowerplants.org

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What is California’s Historywith Onshore LNG Terminals?

• California LNG Terminal Act of 1977 (later rescinded):• Transfers authority to permit one LNG terminal

from CA Coastal Commission (CCC) to CPUC• CCC directed to survey and rank terminal sites• Maximum population density 10 people per sq. mi

to one mile from fenceline, 60 people per sq. mi tofour miles from fenceline

• Same density standard for LNG shipping lanes• Power of eminent domain granted to terminal

operator to maintain low population densities

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What was Rationale forPopulation Density Restrictions? “The Legislature’s 4-mile restriction was

apparently based on estimates of the skin burnradiation limits from a major fire resulting from alarge LNG spill at the terminal. This 4-milecriterion does not specifically address the possibletravel of an unignited LNG vapor cloud beyondfour miles.”

Spills of 25,000 m3 and 125,000 m3 of LNG wereevaluated.

Source: CCC, Final Report Ranking LNG Terminal Sites, May 24, 1978, p. 68.

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Have Proposed California LNGTerminal Sites Been ConsideredBefore?• 1978 California Coastal Commission report, “Final

Ranking of LNG Terminal Sites,” 82 sitesevaluated, all but 4 sites rejected.

• Evaluation criteria: population density, land andwater site characteristics, maritime conditions,seismic activity, and coastal resources• L.A. Harbor site was rejected, due to population

density and siesmic concerns• Humbolt Bay site rejected due to populaton

density

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Have Offshore LNG TerminalsBeen Considered Before?• CCC Resolution - WHEREAS, it is possible that one or

more offshore sites and terminal types could provemore appropriate than the best onshore site andterminal type, considering safety, cost, timing and thepolicies of the (1976) Coastal Act . . . .

• Most appropriate offshore site - international waters(Ventura Flats) off the coast of Ventura County.

• Minimal adverse impacts on sensitive marine resourcesand public recreation along the coast.

• Offshore Long Beach identified as good potential site.CCC, Final Report Evaluating and Ranking LNG Terminal Sites, May 24, 1978, p. 57.CCC, Offshore LNG Terminal Study, September 15, 1978

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Is There a Cost DifferenceBetween Onshore andOffshore LNG Terminals?

Project Sendout(bcfd)

Capital Cost($ millions)

Shell/Sempra 1.3 600

ChevronTex (offshore) 1.0 650

Marathon/Golar 0.75 550

Mitsubishi 0.75 400

BHP Billiton (offshore) 1.5 600

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How Does U.S. Law AddressLNG Terminal Safety?

• Pipeline Safety Act Amendments of 1979:• Government Accounting Office (GAO),

investigative arm of Congress, states beforeSenate “We believe remote siting is theprimary factor in safety” (for LNG and LPGterminals)

• GAO recommendation incorporated in 1979Act

Source: Mobile Register article, Nov. 16, 2003

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Is Remote Siting of LNGTerminals Required by Law?• Pipeline Safety Act Amendments of 1979:

• Final bill states “Secretary of Transportationshall prescribe minimum safety standards fordeciding on the location of a new LNG facility

• The law lists six factors the Secretary mustconsider in setting these minimum standards

• Factor No. 6 states “the need to encourageremote siting”

• Factor No. 6 not incorporated into implementingregulations, according to author of legislation

Source: Mobile Register article, Nov. 16, 2003

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What is Intent of LegislationRegarding Terminal Safety?

Federal officials appear to be ignoring acongressional mandate designed todiscourage construction of liquefied naturalgas terminals in populated areas, accordingto U.S. Rep. Ed Markey, D-Mass., author ofthe 1979 House bill outlining minimumsafety standards for such facilities.

Source: Mobile Register article, Nov. 16, 2003

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How Does FERC Define WorstCase Accident Scenario?• A break in one LNG transfer arm that last for 10

minutes. Total spill is ~550,000 gallons. Thisrepresents less than 1.5% of the capacity of oneLNG storage tank.

• The LNG tanker, often considered the mostvulnerable element at the terminal, is not includedin the risk analysis.

• The LNG terminal owner must demonstrate viaapproved model that the distance to significantradiation impact is within the terminal property line.

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What is a Worst Case LNGTanker Accident Scenario?

• Scientific consensus is that rupture of a single25,000 m3 LNG tanker sphere would create a fireat least 1/2 mile wide, with significant radiationimpact another 1/2 mile out from the fire’s edge.

• There are five 25,000 m3 LNG spheres on atypical LNG tanker- a fire involving all five tankswould be considerably larger than the singlesphere example.

Source: Union of Atomic Scientists Bulletin article, LNG: Safety in Science, Jan/Feb 2004, pg. 30.

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Test of LNG Spill

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Combustion of 40 m3 of LNG

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Form of LNG Vapor Cloud/Fire

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What is Vulnerability of Siteswith LNG Storage Tanks andPropane/Ethane Spheres?• “A moderately sized commercial aircraft would

penetrate the three-foot thick concrete secondaryLNG storage tank containment shell. The tankscould also be vulnerable to attack from land- orship-borne weapons.”

• “Two 12-million gallon propane tanks nearSacramento where identified for attack in 1998.The perpetrators were caught in the planningstages.”

Source: City of Vallejo, LNG in Vallejo: Health and Safety Issues, Draft 6 Final Report, Jan. 8, 2003, pg. 45.

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What is Homeland Security’s Viewon LNG Terminal Vulnerability? Dept. of Homeland Security Nov. 21, 2003

warning of increased risk of terrorist attacks:

Of particular concern is “al-Queda’scontinued interest in aviation, includingusing cargo jets” to attack infrastructuresuch as bridges and dams “as well astargeting liquid natural gas, chemical andother hazardous materials facilities,” theDepartment said in a statement.

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Are FERC LNG Accident ModelingScenarios Conservative?

• “The author of a study (Quest) used by federalofficials to demonstrate that LNG facilities pose fewhazards for cities like Mobile has now written thoseofficials to warn that his study cannot be used inthat way.”

• “Federal officials have used the Quest study inpublic hearings, federal documents and in lettersto members of Congress to suggest that firesstemming from an LNG tanker accident wouldendanger only a small area around the ship.”

Source: Mobile Register article, December 4, 2003

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Recent Federal Developments -LNG Terminal Risk Evaluation• December 2003 - DOE Sec. Abraham instructs

DOE’s Sandia National Laboratory (SNL) toconduct review of LNG safety studies amidcontroversy that federal officials had misusedseveral LNG studies to open LNG importterminals in populated areas. Original SNLstudy narrowly focused.

• January 23, 2004 - DOE announces the SNL LNGsafety study will be greatly expanded, “to err onthe side of inclusion rather than speed.”

Source: Mobile Register article, January 24, 2004

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Recent State and InternationalSiting Developments• Jan. 14, 2004 - Gov. Bob Riley (AL) states intention

to block sale of Mobile Bay port site to ExxonMobiluntil independent safety study conducted. UrgesFERC to consider “most credible worst casescenario.” [Alternative - offshore].

• Jan. 20, 2004 - Explosion/fire at LNG complex inAlgeria, three liquefaction trains destroyed

• Jan. 27, 2004 - Incident will generate misinformedperceptions, doubts incident will influence FERCactions (Oil & Gas Journal).

Sources: Mobile Register article, January 15, 2004; Oil & Gas Journal article, January 27, 2004.

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How are LNG Projects in theRegion Being Designed?

Project Location Regasmethod

Distance topop. density> 60 sq. mi.

Shell/Bechtel onshore SCV 1-withdrawn-

CalpineHumbolt Bay

onshore unknown 1-controversial-

BHP Billiton20 mi. off Oxnard

floatingoffshore

SCV 20+

MitsubishiLong Beach Harbor

onshore processwater

<2-controversial-

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How are LNG Projects in theRegion Being Designed?

Project Miles toborder

Location Distance topop. density> 60 sq. mi.

Sempra 40 onshore 2.5-permit on hold-

Shell 40 onshore 3-permit on hold-

Conoco/El Paso 15 onshore <1-permit denied-

ChevronTexaco 10 offshore 6-sanctuary issue-

Marathon/Golar 3 onshore <1-controversial-

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Have There Been Any LNGStorage Accidents?Source: Vallejo LNG Safety Study (draft), January 8, 2003

Date Place Description1988 Boston ~30,000 gallons of LNG spilled during

interruption in LNG tranfer. Blown flangegaskets caused by “water hammer,” spillcontained. Still air conditions preventedmovement of vapor cloud.

1978 Das Is.,UAE

Failed bottom connection, LNG drainsinto containment. Vapor cloud, no fire.

1944 Cleveland LNG tank rupture, no containment, fire.128 dead, hundreds injured. Tankmetallurgy problem caused rupture.

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Have There Been Any LNGShipping Accidents?

Date Place Description2000 Elba

Island, GACargo ship loses control and hits LNGunloading pier. Not operational at time.Five 16-inch unloading arms replaced.

1999 Trinidad/Tobago

Engine failure during approach to LNGjetty. Ship struck and damaged pier.

1989 Algeria Wind blows ship from pier. All transferarms sheared, piping on ship heavilydamaged. LNG released, no fire.

1983 Japan Prior to unloading, ship suddenly movesastern under own power. All transferarms sheared and LNG spilled, no fire.

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Are Double-Hulled LNGTankers Impregnable?A double-hulled french oil tanker wasattacked off Yemen in late 2002:

• Explosion rips large hole in French crude oilsupertanker Limburg

• Small boat loaded with explosives causeddamage

• Both hulls breached, vessel set on fireSource: BBC News Online article, Oct. 6, 2002

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Long Beach Harbor Site: SupplyFlexibility vs. Increased HazardPotential at Terminal Site

• Processing plant included onsite to remove“hot gas” components, propane and ethane,so LNG can meet SoCalGas, ARB CNG specs.

• Hazard - propane (explosive) and ethanestored onsite in 85-foot diameter spheresnear LNG storage tanks.

• Hazard - up to 140 tractor-trailer trucksrequired to move propane/ethane offsite.

Source: Sound Energy Solutions, Resource Report 9, Long Beach LNG Import Project

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What is “Hot” (High Btu) LNG?Characteristics of available Pacific Rim LNG -high Btu (>1,100 Btu/ft3), high ethane.Far Eastern LNG customers want high Btucontent, these customers drive LNG business.SoCal Rule 30: heat content < 1,150 Btu/ft3

ARB CNG fuel spec: ethane < 6 percentInvestment risk issue - Who will pay to “cool”the hot gas to meet CA specs? Liquefactionplant? Receiving terminal?

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What is Air Emissions Impactof “Hot” Natural Gas?Millions of space heaters, hot water heaters,stoves with no controls to adjust for increase innatural gas Btu content.For these units, NOx increase roughlyproportionate to Btu content increase.SCAQMD test program - increased Btu contentfrom 1,000 to 1,150 Btu/ft3, NOx increased 20%.Not a major issue for combustion systems withadjustable controls (GTs, boilers, engines).

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Possible Upstream Source(s) ofLNG and Environmental Issues

Project LNGSource

Environmental Issues

Shell orMitsubishi

Sakhalin(Russia) orAustralia

600 km. long pipeline along length ofSakhalin, offshore gas field in areaconsidered key habitat for criticallyendangered Pacific Gray Whale

Sempra Peru orBolivia

Ex-Im Bank denied loan guaranteerequest (8/29/03) citing damage toPeruvian rainforest, Bolivia opposesChile as LNG shipping point – War ofPacific

Marathon/Golar

Sulawesi,Indonesia

MOU with Pertamina to receive LNGfrom new plant on Sulawesi

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Gaseous Fuel Accidents andMexico - Population Sensitizedto Fuel Storage Site Hazards

Site Year Fuel Dead InjuredMexico CityFire/explosion

1984 LPG 650 6,400

(same site) 1996 LPG 4 unknown

GuadalajaraTank leakage – fire

1992 mixed 170 500

ChiapasCactus gas plant - gasleakage – explosion/fire

1996 naturalgas

6 30

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Use of Large Amounts ofSeawater for Regas ControversialAll 4 existing continental U.S. regas terminals useportion of LNG for regas (1 - 1.5% of throughput)New coastal/river power plants prohibited fromusing once-through cooling. EPA 316(b) rule.Oil/gas production facilities, including LNGterminals, will be brought into program.SEMARNAT denied license to proposed 450 MWpower plant at Baja Shell/Sempra LNG site in 2000- impacts of seawater cooling on marine life cited.ChevronTexaco and Shell/Sempra proposingseawater regas in Baja.

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California Natural Gas DemandIssues

SoCalGas/SDGE Dec. 2003 projection: declinethrough ~2010, rebound to 2002 level in 2016.Backbone of California power generation is fleetof aging, inefficient utility boilers. Acceleratedreplacement with combined-cycle plants couldreduce demand by 400 to 500 mmcfd in short-and mid-term.Policy question: Spend $4 billion for one LNGsupply chain or $4 billion to repower fleet, andpotentially eliminate need for terminal?

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LNG - Bridge to RenewableEnergy Future? Do We Need theBridge?

California renewables generation target of20% by 2017.Interest in accelerating 20% target to 2010.Little short- or mid-term potential demandfor greenfield (other than replacement) gas-fired power plants if state chooses ambitiousrenewables track.

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ConclusionsMajor ongoing controversy over appropriateworst case accident/event to use for sitingonshore LNG regas terminals.All onshore regas projects encounteringresistance in the CaliforniasOffshore terminal with no seawater regasminimizes safety and marine impactconcerns.Significant distance from coast (> 10 miles)minimizes visual impact concerns.