Language fuels fear of power grab over natural gas

Consumer groups and state officials fear language tucked into a massive spending bill supports a federal panel’s contention that it can approve construction of natural-gas terminals in the face of local opposition.

While the language is not legally binding, critics fret that it could affect court cases regarding jurisdiction over so-called liquefied natural gas (LNG) terminals. LNG is gas that has been supercooled into a liquid to allow it to be economically transported by huge ocean-going tankers, and thus imported from countries with large gas reserves.

Viewed by some as potential terrorist targets, accidents waiting to happen or simply eyesores, LNG terminals are seen by others as energy life preservers of sorts, a way to boost supply without opening environmentally sensitive areas to drilling and to ease natural-gas prices that are three times historic market rates.
Consumer groups and state officials fear language tucked into a massive spending bill supports a federal panel’s contention that it can approve construction of natural-gas terminals in the face of local opposition.

While the language is not legally binding, critics fret that it could affect court cases regarding jurisdiction over so-called liquefied natural gas (LNG) terminals. LNG is gas that has been supercooled into a liquid to allow it to be economically transported by huge ocean-going tankers, and thus imported from countries with large gas reserves.

Viewed by some as potential terrorist targets, accidents waiting to happen or simply eyesores, LNG terminals are seen by others as energy life preservers of sorts, a way to boost supply without opening environmentally sensitive areas to drilling and to ease natural-gas prices that are three times historic market rates.
 
Rep. Lee Terry

Like most energy projects, LNG terminals face stiff “not in my back yard” opposition. The offending language seeks to clarify that siting and permitting decisions will be made far away from anyone’s back yard, in a federal hearing room in the nation’s Capitol.

It states that Congress recognizes that the United States will need to expand its LNG infrastructure to keep up with demand and that the Federal Energy Regulatory Commission (FERC) has final say in regards to where these terminals are built.

The language added in conference is similar to a bill introduced in May by Rep. Lee Terry (R-Neb.), which also sought to clarify that FERC had authority to permit and site LNG plants.

FERC, an independent agency that shares regulatory powers over some energy matters with state officials, already believes that when it comes to LNG its rule is law. But states disagree. California, for example, is locked in a dispute with FERC over a proposed LNG terminal there.

Claiming it had jurisdiction in the matter, FERC overruled state concerns with the proposed construction of an LNG terminal in Long Beach, prompting a court appeal by California state regulatory officials. The case is pending.

The jurisdictional dispute — hardly unusual in energy matters — is likely to grow more heated. According to a FERC website, there are 37 proposed LNG terminals in coastal states and in offshore waters. Only four are operating now, in Massachusetts, Maryland, Georgia and Louisiana. The terminals account for less than 2 percent of the natural gas consumed in the United States.

Experts doubt all those proposed facilities will be built, but with production declining and demand for the relatively clean-burning fuel growing, some proposed terminals almost certainly will be. While the number of drilling rigs has ballooned in recent years, as companies try to capitalize on high prices, domestic production has actually declined.

“You’ve got the [supply and demand] lines diverging, and the only thing that can fill the space between them is LNG,” said Robert Ineson, who follows LNG in North America for Cambridge Energy Research Associates.

The LNG language — one of dozens if not hundreds of alterations added in a closed-door conference committee — has caught the eye of others outside of California.

Rhode Island Attorney General Patrick Lynch worriedly wrote the state’s congressional delegation last week over what it would mean if efforts to stop proposed terminal sites in Providence and Fall River fail.

The prospect of “one thousand foot tankers” leaving “explosive material on the doorsteps of two densely populated cities” could “shut down our Ocean State,” Lynch wrote.

Tyson Slocum, research director for energy issues at the consumer group Public Citizen, which alerted reporters to the language, called LNG an “extremely hazardous thing.” The language, he added, “has the potential to influence court decisions.”

Industry prefers that FERC have jurisdiction over the plants to speed the application process.

“Without a clear process for approving and siting these facilities, it will be difficult if not impossible to expand [the LNG] infrastructure,” said Martin Edwards, a lobbyist at the Interstate Natural Gas Association of America.

Edwards added: “Hopefully, [the language] would have some influence over court reviews and send a signal that Congress is willing to legislate if further clarity is needed.”

LNG has so far received little discussion in the ongoing, three-year debate over national energy policy. But as chemical and agricultural companies — which rely on the gas both to fuel production lines and as a feedstock for their products — redouble their lobbying efforts, LNG is expected to take on greater prominence in the debate next Congress.