Thursday, March 29, 2007

Shell Drops Proposal for an Offshore LNG Terminal

Shell has dropped plans to build an offshore liquefied natural gas terminal. Unfortunately for us, it’s not Broadwater but Gulf Landing, which was to be built in the Gulf of Mexico, off Louisiana:

The cancellation is part of ongoing shakeout in the LNG import industry, which spawned more than three-dozen proposals for sites around the United States after prices rose and concerns grew about an impending domestic U.S. gas shortage.

Now that prices and demand have flattened, a number of other projects have been delayed or canceled.

But others are going forward. Earlier this year, the U.S. Maritime Administration (MARAD) licensed two new terminals off Boston and the U.S. Federal Energy Regulatory Commission approved two more onshore on the Mississippi Gulf Coast.

I’ve been doing a fair number of talks and speeches lately, and people always ask me how we can stop Broadwater. One possibility for slowing the process down, if not stopping it, is to demand that the projects’s environmental impact statement be done over, as I argued here.

It’s obvious from all the written testimony submitted by various government agencies that the DEIS was inadequate, to say the least. So the Federal Energy Regulatory Administration needs to issue a supplement and then hold a new public review period. If we’re lucky, the “ongoing shakeout” will shake out the Shell-TransCanada proposal.

The other obvious course is to let New York State officials know what you think.

It’s worth keeping in mind that the state Department of State must determine that the LNG terminal is consistent with state policies for the use of the coastal zone. It’s also worth remembering that the Department of State has already hinted that the proposal is lacking in the consistency department. Read this, for example.

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Blogger Sam said...

As you now a venture called Neptune recently won a ship-board LNG gasification permit near the Boston area. It is a completely different technology from Broadwater, which relies on a quite large floating platform in the middle of Long Island Sound.

As to natural gas demand and prices, I had posts many months ago ago market "flattening" so I don't feel one way or the other about the LNG import industry, other than it is marginal at best and probaby has the highest risks.

The problem for the LNG market is that the Gulf and gas heads all over the country are being worked over with new found fields to produce incredible amounts of regular old CNG. Folks on the Eastern Seaboard, Florida Gold Coast, and California would never ever notice the intense increase in domestic drilling in the US. That's because it isn't in your backyard.

Is this any better?

Hold onto that sentiment because now with so much natural gas coming online I think the LNG import business will contract even more but win at the end of the day when our resources run out. The traditional customers for LNG are countries such as Japan, which has absolutely no energy finds. Watch for the EU to import some if the former Soviet Union keeps fooling with energy policy under Mr. Putin.

But man we got more "dinosaur farts" than many other countries. Instead of flaring it we pipeline it through the Henry Hub in Louisiana. The recent up-tick in natural gas exploration in the US is nothing short of incredible.

8:36 PM  

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