First open loop LNG terminal launched

By AL ROGERS
Rodnreel.com

Last week, a 908-foot, $200 million super-cooled tanker, the Excelsior, left Bintulu, Malaysia, carrying a precious cargo of 3 billion cubic feet of liquid natural gas (LNG). It reached its destination this morning, in a veritable sea of controversy 116 miles off the coast of Cameron, Louisiana. As the tanker was moored to a $70 million submersible buoy, officials with a Texas-based oil company realized that history was being made.

The arrival of the Excelsior marked the start of Excelerate Energy’s Gulf Gateway LNG terminal, the first of its kind in the United States in more than two decades. LNG is being touted as the next big energy commodity and many major oil companies plan to establish terminals off the Gulf Coast. Because of the difficulties in grasping the potential impacts to marine resources and the environment, thousands of anglers who fish Louisiana waters have come out in opposition.

Their problems are not with the product – liquefied natural gas, or even the terminals that companies such as Excelerate, Shell, ChevronTexaco, ExxonMobil, Conoco Phillips’ and Freeport MacMoran hope to build. The concern, which has recently turned into emphatic opposition, centers on the open-loop process that will be used to convert LNG into natural gas for shipment. Marine and environmental advocates maintain that vast, unknown numbers of sea life will perish in these systems.

Officials with the Woodlands, Texas-based Excelerate Energy said they expect the project to be fully operational by Sunday. Until then project officials and engineers will meet with U.S. Coast Guard (USCG) inspectors who will scrutinize the tanker, personnel, navigational equipment and safety equipment. Gulf Gateway terminal will use open loop system for most of the time. But there are vast differences in the design when compared to conventional LNG terminals.

The project has been in the stages of finalization for some time, according to company and USCG officials. The problem was that Excelerate and the National Oceanographic and Atmospheric Administration (NOAA) could not agree on the terms of a requisite monitoring plan. However, after lengthy communications and compromises between NOAA and Excelerate on Wednesday, an agreement seems to have been reached.

NOAA scientists believe that the waters near the Gulf Gateway project may contain millions of fish eggs and larvae that could die in the process. NOAA officials have argued that the open loop warming process will harm marine life,

A report in Thursday’s Times-Picayune said the USCG plans to grant the company “interim approval” for a monitoring plan that had been rejected by NOAA. Messages left with the St. Petersburg, Fla.-based NOAA offices by Rodnreel.com were not immediately returned on Thursday.

However, Mark Prescott, chief of the Coast Guard’s Deepwater Ports Standards Division confirmed that interim approval had been granted.

“A lot of progress was made yesterday,” Prescott said. “There is a conceptual agreement on how the monitoring will be done, and the Coast Guard will be enforcing that. I truly believe that the sampling method we have will be approved.”

Prescott confirmed that there had been some disagreement on parts of the monitoring plan. He cited a lack of details on protocol, sampling methodology and other unspecified philosophical issues. Prescott said he is confident the current plan will receive final approval from MARAD.

Excelerate vice president Rob Bryngelson said he believes the both sides have agreed to the concept.

“We are in agreement with NOAA on what needs to be in the plan,” Bryngelson said. “I’m sure this (plan) will be finalized in the near future.”

The monitoring and sampling studies is a long-term endeavor, expected to take 10 years. The purpose, Prescott said, is to “get a handle on what’s out there” in order to make more accurate estimates of the potential impact to marine life.

Company officials said they believe the impacts on marine life from Gulf Gateway will be insignificant because of its location 116 miles offshore.

The terminal itself is essentially a very expensive submersible buoy connected to a network of pipelines. The liquefied natural gas is converted to natural by equipment on the, rather than a standard fixed terminal structure. The project is licensed to operate at a peak volume of 76 million gallons of water a day, for 248 days a year. The open loop system can be changed to a closed loop system, literally, with the flick of a switch, according to project engineers.

Excelerate officials said they have already hired an independent consultant who will be in charge of the monitoring. The consultant is required to implement the monitoring program and submit quarterly reports to NOAA.

They were the second company to file an after an amendment to the Deepwater Port Act of 1974 was passed a month earlier. They received their license from the Maritime Administration (MARAD) on May 24, 2004.

Figures released last month indicated there were only four active LNG import terminals in North America. However, there were plans for another 49. Of those 49 – nine had received final approval while 22 projects were in various stages of the approval process. Meanwhile, 18 LNG terminals remain in the planning stages.

There has been a growing concern about the proliferation of LNG terminals off the Louisiana coast. And oil and energy officials have made no secrets about their interests in the Gulf of Mexico, particularly off the southwest Louisiana coast. In this region there are currently plans for five LNG terminals, including Gulf Gateway. Three of these have already received federal approval.

A report published in today’s Houston Chronicle said, “Many (LNG terminals) are (planned) along the Gulf Coast, where communities have been less likely to object to the potential environmental and safety concerns.”

The Excelsior, one of three ships Excelerate has planned, has storage capacity for 3 billion cubic feet of LNG. It can re-gasify and offload up to 500 million cubic feet through the buoy each day. On April 25 the company’s the second ship, the Excellence will be launched. The third ship, the Excelerate, will be completed by Oct. 2006.