The Perception of Insecurity
January 1, 2007
Introduction
The cover article in the December 4, 2006 issue of Time magazine was entitled “Why We Worry about the Wrong Things.” The article explained that humans commonly miscalculate risk due to what is called probability neglect. When we dread something, we tend to greatly exaggerate its risk. For example, there is in the United States a great dread of AIDS. The idea of a heart attack is less fearful, and yet heart disease is by far a greater risk factor. In 2003, 685,089 Americans died of heart disease, while 13,658 died of AIDS/HIV. West Nile virus is another disease that causes anxiety, but only 264 deaths in the United States have been attributed to that mosquito-borne illness. Newspapers carry stories regarding the dangers of avian flu and mad cow disease, but no one in the United States has contracted these diseases.
Probability neglect is equally prevalent with regard to accidental injury or death. Flying as a passenger on a commercial airline in the United States is one of the safest methods of travel. Driving or riding in an automobile is one of the most dangerous. In 2003, there were 44,757 deaths from motor vehicle accidents, while only 22 people were killed commercial airline accidents. Between October and December 2001, Americans largely avoided airlines for fear of a repetition of the horrific terrorist attacks of September 11. Instead, they tended to drive. During those three months, traffic deaths in the United States rose by more than 1,000 over the same three months the previous year.
In 2003, there were 11,212 deaths in the United States from drug overdose; 594 from falling out of bed; 332 from drowning in the bathtub; 66 from bee or wasp stings; 47 from lightning; 22 from being crushed in a human stampede; 3 from playground equipment accidents; and 1 from shark attack.[1] As everyone here knows, there were no deaths in the United States during 2003 related to liquefied natural gas (LNG). And yet, fear of LNG facilities is a common condition, particularly in the northeastern states and in California. Californians don’t seem to fear anything except LNG facilities!
President Franklin Delano Roosevelt said it best when, in his 1933 inaugural address, he stated: So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself – nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.
Perception
Numerous studies have been undertaken of the safety and security issues inherent in the marine transportation of liquefied natural gas. The best known of these studies is the Sandia Report.[2] Rather than original research and experimentation, this report consisted of: (1) an in-depth literature search of evaluations of the safety and hazards of an LNG spill from an LNG carrier: (2) a detailed review of four specific spill modeling studies; (3) an evaluation of the potential for breaching an LNG carrier cargo tank, both accidentally and intentionally; and (4) development of guidance on a risk-based approach to analyze and manage the threats, hazards, and consequences of an LNG spill over water to reduce the overall risks to levels that are protective of public safety and property.[3] Given all the material available for consideration, it is unclear how the US Department of Energy and the prestigious Sandia National Laboratories selected these particular reports. One of the reports was authored by an individual who is publicly opposed to LNG development, particularly onshore.[4] Another report was generated at the direction of a community in California concerned about an LNG project that had been proposed in its vicinity.[5] The third report focuses on conditions at a particular location and may not be fully applicable elsewhere.[6] The fourth report was never finalized and is not readily available for public review.[7]
The Congressional Research Service (CRS) is an arm of the United States Congress. It mission is to provide Congress with comprehensive and reliable analysis, information, and research services that are timely, objective, nonpartisan, and confidential, thereby contributing to an informed national legislature.[8] The CRS has produced at least four separate reports in recent years on LNG issues.[9] Each of these studies regularly raises safety issues and cites the hazardous nature of LNG.[10] A recent CRS report on the increasing imports of gasoline into the United States, though, never once uses the words “safety” or “hazardous”.[11] While it is unlikely that the CRS has an inherent bias against LNG, it does appear that it has fallen into the common misperception that LNG is inherently dangerous, while other fuels, such as gasoline, are not.
Background
The United States has a moderate but growing appetite for imported natural gas. The United States also has the most robust maritime security program in the world. The intersection of these two developments makes life complex for LNG carriers and for the LNG import facilities in the United States to which they make deliveries.
The Energy Information Administration (EIA) projects North American demand for natural gas to increase at an average annual rate of 1.1% through 2030. While LNG imports currently only provide about 2% of the nation’s natural gas supply, that share is expected to grow to as much as 21% by 2030, as US and Canadian supplies become depleted. By 2030, the demand for regasified LNG is projected to be about 16.164 Bcf/d.[12]
In the United States, there are five operational onshore marine LNG import terminals (Lake Charles, LA; Everett, MA; Cove Point, MD, Elba Island, SC; and Peñuelas, Puerto Rico) and one LNG deepwater port [DWP] (Gulf Gateway located in the Gulf of Mexico). These operational facilities have a total regasification capacity of 5.235 Bcf/d. There is also one marine LNG export terminal (Kenai Peninsula, Alaska). Approvals have been granted for construction of twelve new shoreside LNG import terminals, the expansion of two existing terminals, and construction of two more LNG DWPs. Foreign LNG terminals that may provide supplies to the United States are planned in Canada, Mexico, and the Bahamas. A number of applications for additional LNG facilities and DWPs are undergoing consideration by federal agencies. No one expects all of these proposed facilities to actually be constructed, but it is certain that in the not too distant future there will be significantly greater LNG import capability in the United States than exists today.
History
Natural gas, in its common commercial form, is a fossil fuel derived from organic material buried in the earth millions of years ago (think of dinosaurs and tropical forests). The main component of natural gas is methane, but it may also contain small percentages of ethane, propane, and butane. Natural gas can be transported in pipelines, but (in its normal gaseous form) occupies too much space to be economically transported long distances by other means.
British scientist Michael Faraday conducted the first experiments in liquefying various gases, including natural gas. In 1873, the first practical compressor refrigeration device for liquefaction of natural gas was developed by German engineer Karl von Linde. Liquefaction reduces the space occupied by LNG to one-six hundredth of the same amount of natural gas. A prototype LNG plant was constructed in West Virginia in 1912, but the first commercial liquefaction plant was built in Cleveland, Ohio in 1941.
In January 1959, the first maritime LNG shipment took place when the METHANE PIONEER transported LNG from Lake Charles, Louisiana to Canvey Island in the Thames Estuary, United Kingdom. The METHANE PIONEER was a converted World War II Liberty tanker fitted with five 7,000 barrel aluminum prismatic tanks. Balsa wood was used for support and insulation was provided by plywood and urethane foam.
Maritime transport of LNG in commercial quantities began in 1964 when the British Gas Council began importing the cargo from Algeria. After the concept was proven, additional marine LNG liquefaction facilities and import terminals were constructed worldwide.
Experience and evidence show that LNG is no more dangerous than many other cargoes routinely carried by ships and that LNG carriers are some of the most robust commercial ships ever constructed. Even critics of the marine carriage of LNG concede the exemplary safety record of the industry.[13] Public perception, though, is otherwise. Thus, in our increasingly threat-conscious world, the security demands placed on the LNG industry generally exceed those placed on similar commercial activities.
Maritime Security
Most of the detailed maritime security requirements applicable to the LNG industry are a direct result of the horrific terrorist attacks of September 11, 2001. The international maritime security requirements have been developed largely by the International Maritime Organization (IMO), a specialized agency of the United Nations. The US requirements have been developed largely by the US Coast Guard.
An international conference sponsored by the IMO in December 2002 adopted a significant amendment to the International Convention for the Safety of Life at Sea (SOLAS Convention). The amendment established standards for an international maritime security regime, imposing responsibilities on flag states, port states, ship owners and operators, and operators of port facilities. The standards are generic but scalable. In other words, the requisite level of security in certain cases depends on the perceived vulnerability, threat, and consequences.[14]
In accordance with the International Ship and Port Facility Security (ISPS) Code, ships subject to the SOLAS Convention (including LNG carriers) must adopt a variety of security measures, including development and implementation of ship security plans; installation of ship security alarm systems; and affixing of permanent ship identification numbers. Facilities at which these ships call (such as LNG import terminals and LNG deepwater ports) likewise must adopt security measures, including development and implementation of facility security plans, access control, lighting, and monitoring capability.
These measures are enforced by nations that are party to the SOLAS Convention. Among other things, these nations (referred to as “port states”) are authorized to require ships intending to call at their ports to notify the nation in advance what ports they have recently visited. The nations may board and examine these ships to ensure compliance with the security requirements and may exclude from entry ships found to pose an immediate security threat.
The United States adopted the Maritime Transportation Security Act of 2002[15] (MTSA) and other measures to enhance maritime security in US ports and waterways. In addition, federal agencies such as the Coast Guard and the Customs and Border Protection (CBP) amended their regulations and operating practices for the same purpose. The Coast Guard promulgated security regulations applicable to most vessels (including LNG carriers) calling at US ports.[16] It also promulgated security regulations applicable to US onshore and offshore facilities at which these vessels call.[17]
The MTSA also amended the Deepwater Port Act to expand its coverage to include certain offshore facilities used to import LNG.[18] Subsequently, the Coast Guard promulgated revised regulations for US deepwater ports (DWPs).[19] These revised regulations focus on DWPs that handle LNG imports. The security provisions in the revised DWP regulations, on their face, largely mirror those found in the more-general vessel and facility maritime security regulations. As with the international requirements mentioned previously, however, the actual security requirements imposed by the Coast Guard on a particular vessel or facility are scalable and based on the perceived vulnerability, threat, and consequences.[20]
Many of the special security precautions the Coast Guard has established for LNG carriers derive from analyses of “conventional” navigation safety risks, such as groundings, collisions, and propulsion or steering system failures. These precautions pre-date the September 11, 2001, terrorist attacks and include:
Ø Special vessel traffic control measures that are implemented when an LNG carrier is transiting the port or its approaches.
Ø Safety zones around the ship to prevent other vessels from approaching.
Ø Escorts by Coast Guard patrol craft.
Ø Coordination, as local conditions warrant, with other federal, state, and local transportation, law enforcement, or emergency management agencies to reduce the risks to, or minimize the interference from, other port area infrastructure or activities.
Since the terrorist attacks, the Coast Guard has implemented additional security measures, including the requirement that all vessels calling in the U.S. provide the Coast Guard with a 96-hour advance notice of arrival (increased from the previously-required 24-hour advance notice).[21] The Coast Guard now subjects LNG carriers to at-sea boardings, in which Coast Guard personnel conduct special security sweeps of the vessel and ensure “positive control” of the ship is maintained throughout its port transit.
The end result is that, for a variety of reasons, LNG carriers and facilities are subject to some of the most intense maritime safety and security measures in the marine industry. It should be noted that tankers carrying and facilities handling gasoline or liquefied petroleum gas (LPG) are not subject to review and regulations of the same level of intensity as are LNG carriers and facilities.
Safety and security issues re LNG deepwater ports (DWPs)
While conventional crude oil DWPs have been in operation around the world for many years, LNG DWPs are an emerging concept. The first LNG DWP began operating in March 2005. This is the Gulf Gateway Energy Bridge DWP in the Gulf of Mexico about 116 miles off the south coast of Louisiana.
Several different designs are under development. Proposals include ship-form hull designs similar to existing floating production, storage, and offloading (FPSO) units, platform-based storage and regasification units, gravity-based structures, and innovative docking structures that attach directly to the LNG carrier as it ties off to a single-point mooring. These proposals will be subject to safety and security reviews by the Coast Guard before approval.
As noted above, after federal law was amended to address LNG DWPs, the Coast Guard promulgated an extensive amendment to its DWP regulations to accommodate this situation. The revised regulations address processing of applications, site evaluation, design, construction, and operation, among other issues. Primary jurisdiction over licensing and siting of LNG DWPs in waters subject to US jurisdiction and more than three nautical miles offshore is vested jointly in the Coast Guard and the US Maritime Administration (MARAD). The Coast Guard works with Federal Energy Regulatory Commission (FERC), the National Ocean Service of the National Oceanic and Atmospheric Administration (NOAA), the Environmental Protection Agency (EPA), and other federal agencies to ensure that the LNG DWP license application complies with all applicable federal requirements.
In addition to DWP regulations, the Coast Guard has issued guidance for oversight of post-licensing activities associated with development of deepwater ports. This guidance is heavily oriented toward safety and addresses the design, fabrication, and installation phases of the LNG DWP project, as well as maintenance and inspection after the facility commences operation.[22]
Safety and security issues re LNG import facilities ashore and in state waters
Until recently, it appeared that companies planning to construct and operate LNG facilities ashore (and in state waters up to three nautical miles offshore) had to comply with both federal and state safety requirements. In 2005, though, Congress amended the Natural Gas Act to provide that the Federal Energy Regulatory Commission (FERC) has exclusive authority to approve or deny an application for the siting, construction, expansion, or operation of an LNG terminal.[23] In making its decision, though, FERC is required with consult with the state regarding state and local safety considerations. These safety considerations include:
a) the kind and use of the facility;
b) the existing and projected population and demographic characteristics of the location;
c) the existing and proposed land use near the location;
d) the natural and physical aspects of the location;
e) the emergency response capabilities near the facility location; and
f) the need to encourage remote siting.
FERC is required to review and specifically respond to issues raised by the state. Once the LNG terminal enters into operation, the state is authorized to conduct safety inspections in conformance with federal regulations and guidelines.
As part of its review process, FERC also consults with the U.S. Coast Guard with regard to safety and security aspects of the maritime portion of the proposed LNG import facility.
An owner or operator that intends to build a new LNG facility or that plans new construction on an existing facility ashore or within territorial waters, must submit a “Letter of Intent” to the Coast Guard Captain of the Port (COTP) in whose zone the facility is to be located. This letter is submitted shortly after the owner or operator initiates its “pre-filing” process with the FERC and must provide information on:
Ø The physical location of the facility.
Ø A description of the facility.
Ø The characteristics of the vessels intended to visit the facility and the frequency of visits.
Ø Charts that show waterway channels and identify commercial, industrial, environmentally sensitive, and residential areas in and near the waterway to be used by vessels en route to the facility, within 15.5 miles of it.[24]
The COTP reviews the information provided by the applicant and determines the suitability of the waterway for LNG vessels. Factors considered include:
Ø Density and characteristics of marine traffic in the waterway.
Ø Locks, bridges, or other man-made obstructions in the waterway.
Ø Hydrologic features of the waterway (e.g., water depth, channel width, currents, tides).
Ø Natural hazards, such as reefs and sand bars.
Ø Underwater pipelines and cables.
The FERC and Coast Guard also cooperate to address the port security component of the environmental impact statement (EIS) for the facility. In addition to an evaluation of conventional navigation safety risks, EISs include a security assessment that takes account of the risks of the marine transportation component of the proposal, using the hazard distances established by the spill consequence models described in the recently published Sandia Report.
One part of the assessment will be to identify the level of Coast Guard, and other federal, state, and local resources necessary to ensure the risks of the operation can be managed responsibly. This means providing a deterrent presence sufficient to reduce the risks of an incident to a level acceptable to federal, state, and local port stakeholders, as well as ensuring sufficient resources are available to deal with the consequences of an incident, however unlikely. The assessment will identify both current resource levels and the resources necessary to mitigate the risks to the appropriate level of acceptability.
The Coast Guard has issued guidance on assessing the suitability of a waterway for LNG marine traffic.[25] The Coast Guard’s assessment covers the following broad topics: (a) port characterization; (b) characterization of the LNG facility and the LNG tanker route: (c) risk assessments [both safety and security]; (d) risk management strategies; and (e) resource needs for safety, security, and response. Upon completion of the assessment (which includes input from the applicant and from various stakeholders), the Coast Guard submits its conclusions and recommendations to FERC for consideration.[26]
A recent example of how this collaborative effort between FERC and the Coast Guard operates is found in the proposal for construction and operation of a floating storage and regasification unit (FSRU) in waters of Long Island Sound. The proponent, Broadwater Energy LLC, submitted its application to FERC and its letter of intent to the Coast Guard. The Coast Guard analyzed navigation, environment, safety, and security issues and issued its Waterways Suitability Report on September 21, 2006. FERC incorporated this into its Draft Environmental Impact Statement, issued on November 17, 2006. Public meetings will be held in New York and Connecticut in January 2007.[27]
The GAZ FOUNTAIN incident
A number of studies have been undertaken of the safety and security issues inherent in the marine transportation of liquefied natural gas. Ironically, due to the safety record of the industry, there are few real-world examples to which these studies can turn to validate their assumptions and conclusions. Unfortunately, the one analogous example has been totally overlooked in all of these studies.
On the morning of October 12, 1984, the liquefied gas tanker GAZ FOUNTAIN fell prey to an armed attack by three “Maverick” TV-guided, air-to-ground armor-piercing missiles. The missiles were fired by an Iranian fighter plane during the Iran-Iraq “tanker wars” in the Arabian Gulf. One missile hit and damaged the deck area forward. The other two missiles hit the area around the aftermost tank (Number 3). One penetrated the cargo tank resulting in a severe fire that eventually engulfed the superstructure. The cargo of butane in the tank ignited, but did not explode. Flames from the burning butane were thrust as high as 600 feet into the sky.
A conventional LPG carrier built in 1969, with three fully refrigerated, free-standing prismatic cargo tanks surrounded by loose perlite insulation, all the GAZ FOUNTAIN’s safety controls and fire-fighting equipment were either partially or wholly destroyed in the explosions or ensuing fires. After being hit, the GAZ FOUNTAIN crew tripped the cargo emergency shut-down system, stopped its engines, and then abandoned ship. A salvage tug arrived on scene shortly thereafter and successfully extinguished the fire using traditional water and foam techniques. Jury-rigged patches were placed over the hole in the cargo tank in order to restore some measure of gas-tight integrity and the ship was towed to Dubai, where it was subsequently successfully salvaged and put back into service.[28]
The attack and its consequences were largely ignored until recently. In fact, the incident is not mentioned in any of the numerous studies performed on the safety of LNG. The incident did receive brief mention in the latest revision to a Congressional Research Service (CRS) report, which devotes two paragraphs to this singular incident of a military attack on a liquefied gas carrier. The first paragraph recounts the basic facts. The second paragraph, reproduced in full below, does not do merit to the agency’s reputation for comprehensive, objective, and reliable analysis.
The Gaz Fountain attack and salvage provides some evidence as to the robustness of double-hulled gas tankers like those that carry LNG. But the relatively benign outcome in the Gaz Fountain attack does not necessarily demonstrate that attacks on LNG tankers would have similarly limited impacts. The Gaz Fountain was fortunate that its storage tank was breached only at the top. If missiles had been targeted at the hull of the ship rather than the deck, one might have penetrated the side of the storage tank, causing a major spill on water and an inextinguishable pool fire. Furthermore, if the gas involved had been LNG rather than butane, the Gaz Fountain might have been subject to cryogenic damage since LNG is transported at a much lower temperature than butane (‑260°F vs. +25°F). According to the Sandia report, such a combination could lead to cascading failure of adjacent storage tanks and, presumably, an even larger fire.[29]
Relative risk
Other than crude oil (which, while potentially polluting, poses little risk of explosion or fire), the major energy sources imported into the United States by ship are LNG, liquefied petroleum gas (LPG), and refined petroleum products (e.g., gasoline). One would expect that safety and security regulatory schemes for these three imports to be proportional, based on their relative risks.
LPG is a mixture of propane, butane, isobutane, propene, and butenes. While propane is usually the main component of LPG, followed by butane, the composition of LPG varies from supplier to supplier and from season to season. Petroleum gas has an energy content of approximately 99,000 BTU per gallon, while natural gas has an energy content of approximately 62,000 BTU per gallon. The main hazard of LPG is its flammability. As a rule of thumb, the lower explosive limit (LEL) of LPG is about 2%. When the concentration of LPG vapor in air is between the lower and upper explosive limits and an ignition source is introduced, the vapor will ignite, sometimes by powerful explosion. An LPG leak in a confined space is especially hazardous, because the vapor concentration can rapidly surpass the LEL, and LPG ignited within a confined space usually explodes. Because LPG vapor is heavier than air when at typical ambient temperatures, at high concentrations it tends to remain near the ground and settle in low areas. For this reason, it may mix with air and disperse relatively slowly, prolonging the explosive hazards.[30]
Gasoline is a petroleum-derived liquid consisting mostly of hydrocarbons and is enhanced with benzene or iso-octane to increase octane ratings. It is used mostly as a fuel in internal combustion engines, particularly in automobiles and trucks. Regular gasoline has an energy content of approximately 126,000 BTU per gallon.
Federal government data show that imports of LNG have decreased have decreased slightly during 2006. During 2006, imports of LPG and finished motor gasoline have both increased.
The Coast Guard has been somewhat candid, but shy, about its view of the relative risk of LNG. In its Marine Safety Manual (MSM), an internal publication on marine safety and security issues, it states: “Although concern about LNG hazards is justified, it should be remembered that most other liquefied gases are just as dangerous as LNG, some even more so.”[31]
Following the horrific terrorist attacks of September 11, 2001, rumors started that LNG imports presented an overwhelming safety and security risk in the United States. Allegations arose that “condo commandos” situated in high-rise condominiums and other buildings in Boston could fire rocket-propelled grenades at transiting LNG carriers, causing explosions and fires that would incinerate all persons and structures within several miles. The US Coast Guard temporarily banned LNG carriers from Boston Harbor while it undertook a review of safety and security issues. When the Coast Guard rescinded its ban, litigation ensued to permanently stop the maritime importation of LNG through Boston. The lawsuit was quickly dismissed.
Rear Admiral George Naccara was the Commander, First Coast Guard District, and was in operational command of Coast Guard assets and in charge of Coast Guard missions in the New England states during this period. Subsequent to these events, after LNG shipments into Boston and other US ports again became routine, Admiral Naccara acknowledged that LNG carriers were much more of a public relations problem than a safety or security threat. While the ships are some of the most robust ever constructed, they are big and highly visible.[32]
One of the most forthcoming analyses of relative risks of LNG, LPG, and gasoline was contained in a background paper prepared by the National Commission on Energy Policy (NCEP), an nonpartisan think tank based in Washington, DC.[33] In this regard, the paper states:
While crude oil does not combust as readily or with the same intensity as natural gas, refined products of oil, which are also routinely transported in large tankers, can be just as flammable (or more so) than LNG vapors. In fact, LNG vapors have a higher auto-ignition temperature than gasoline or propane vapors, meaning that a higher temperature is necessary for spontaneous ignition. In addition, the lower flammability limit for LNG is higher than that for gasoline, meaning that a greater concentration of fuel is necessary for combustion. The point of this comparison is not to suggest that tankers carrying petroleum products are unsafe. The important differences in the properties of these fuels combined with the manner in which they are handled and transported allow their risk profiles to be site-specific and case-specific. However, it is not clear that LNG poses a significantly greater hazard to society than, say, gasoline or propane.[34]
The NCEP paper discusses the historical safety record of the LNG industry, the risk of malicious attack, and regulation of the industry. It then concludes with the following:
It is clear that the cryogenic nature of LNG, its flammability under certain conditions, and its dispersion tendencies do present a number of potential safety hazards during transport and handling. However, the empirical evidence – based on the extensive track record of the industry – indicates that these hazards can be adequately managed under normal operating conditions. Based on current understanding, LNG does not appear to pose a greater societal safety hazard than other widely used sources of energy such as petroleum and its by-products.[35]
Legal aspect – requirement for realistic analysis
Federal law and an Executive Order require that federal agencies, as they undertake their responsibilities and particularly as they engage in rulemaking, perform their duties with a firm eye on reality. The Unfunded Mandates Act of 1995[36] provides that, before promulgating any general notice of proposed rulemaking that may result in the expenditure of $100 million or more by state or local government or the private sector, the agency must prepare a written statement containing a qualitative and quantitative assessment of anticipated costs and benefits, as well as the effect of the federal mandate on health, safety and the natural environment.[37] The agency must identify and consider a reasonable number of regulatory alternatives and from those alternatives select the least costly, most cost-effective or least burdensome alternative that achieves the objectives of the rule.[38]
Similar sentiments are expressed in the Executive Order promulgated by President Clinton when he stated:
The American people deserve a regulatory system that works for them, not against them: a regulatory system that protects and improves their health, safety, environment, and well-being and improves the performance of the economy without imposing unacceptable or unreasonable costs on society; regulatory policies that recognize that the private sector and private markets are the best engine for economic growth; regulatory approaches that respect the role of State, local, and tribal governments; and regulations that are effective, consistent, and understandable.[39]
The Executive Order requires, among other things, that, in setting regulatory priorities, each agency must consider the degree and nature of the risks posed by various substances and activities within its jurisdiction.[40] The agency must assess both the costs and the benefits of the intended regulation and propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs.[41] The agency must base its decisions on the best reasonably obtainable scientific, technical, economic, and other information concerning the need for, and consequences of, the intended regulation.[42]
While the Federal Energy Regulatory Commission (FERC) and the US Coast Guard are the two primary federal agencies that regulate or oversee the LNG industry, various other agencies are also involved. If the company elects to utilize a deepwater port, the federal license will be issued by the Maritime Administration (MARAD), acting on behalf of the Department of Transportation. Permits for use of submerged lands below navigable waters for such things as pipelines and piers are issued by the US Army Corps of Engineers. Environmental issues such as air emissions are the concern of the Environmental Protection Agency (EPA). Potential impacts on fisheries and other wildlife are the concerns of the National Marine Fisheries Service of the National Oceanic and Atmospheric Administration (NOAA) and the Fish and Wildlife Service (FWS) of the Department of the Interior. NOAA also oversees consistency with the coastal zone management plans of affected states. The requirement for consideration of the best reasonably available scientific, technical, and economic information is equally applicable to these agencies.
Conclusion
The evidence indicates that, for a variety of reasons, the federal agencies involved in the regulation of liquefied natural gas have exercised a degree of caution that far exceeds that used with regard to other fuels. This has resulted in greatly increased costs to the industry. It may also be a factor in why LNG facilities are less acceptable to the general public than are facilities handling gasoline or LPG. Until the federal government begins (as required by statute and Executive Order) to regulate in a manner consistent with the actual relative risks, rather than conjecture, the industry can hardly except more reasoned treatment by the general public. It is incumbent upon the LNG industry to help alleviate the natural concerns of citizens while fully complying with all applicable safety and security requirements. The industry should also assist the federal government in developing consistent and reasonable safety and security standards that better reflect the actual risks, rather than just the perceived risks. Only then will reality replace the present perception of insecurity that surrounds the liquefied natural gas industry.
© Holland & Knight LLP – January 2007
Redistribution authorized with attribution
* Dennis Bryant (dennis.bryant@hklaw.com) is Senior Counsel in the Washington, DC office of Holland & Knight LLP, where he specializes in regulatory and environmental issues relating to the maritime industry. He retired in 1995 as a Captain in the US Coast Guard, where, among other things, he supervised the promulgation of regulations to implement the Oil Pollution Act of 1990 (OPA 90).
[1] The data regarding deaths in the United States in 2003 due to disease or accident is taken from the referenced Time magazine article, which attributes it to US government agencies – the Centers for Disease Control and Prevention (CDC) and the National Transportation Safety Board (NTSB). For more information about how emotions impact rational thought processes, see, Antonio Damasio, Descartes’ Error – Emotion, Reason, and the Human Brain (G.P. Putnam & Sons, New York 1994) and Joseph LeDoux, The Emotional Brain (Simon & Schuster, New York 1998).
[2] Mike Hightower and others, Sandia Report SAND2004-6258, Guidance on Risk Analysis and Safety Implications of a Large Liquefied Natural Gas (LNG) Spill Over Water (Sandia National Laboratories, Albuquerque, NM, December 2004) [hereinafter Sandia Report].
[3] Sandia Report, page 13. Regarding the four specific spill modeling studies that were reviewed in depth, see page 79 of the Sandia Report.
[4] James A. Fay, “Model of spills and fires from LNG and oil tankers” in Journal of Hazardous Materials, B96, 171-188 (2003). See also, James A. Fay, Spills and Fires from LNG and Oil Tankers in Boston Harbor (Cambridge, MA – March 26, 2003); Fay, Is LNG Safe? MIT Alumni Association Newsletter (October 2005); Fay, Public Safety Issues at the Proposed Harpswell LNG Terminal (November 5, 2003); Fay, Spills and Fires from LNG and Oil Tankers in Boston Harbor (August 3, 2003).
[5] LNG Health & Safety Committee of the Disaster Council of the City of Vallejo, CA, Liquefied Natural Gas in Vallejo: Health & Safety Issues (2003). The project was eventually cancelled.
[6] Quest Consultants, Inc., Modeling LNG Spills in Boston Harbor (2003).
[7] W. Lehr and D. Simecek-Beatty, Comparison of Hypothetical LNG and Fuel Oil Fires on Water (Draft Report by the NOAA Office of Response and Restoration (Seattle, WA 2003)).
[8] 2 U.S.C. § 166.
[9] CRS Report RL32073, Liquefied Natural Gas (LNG) Infrastructure Security: Issues for Congress (Updated March 16, 2005); CRS Report RL32386, Liquefied Natural Gas (LNG) in U.S. Energy Policy: Infrastructure and Market Issues (Updated February 18, 2005); CRS Report RL32575, Liquefied Natural Gas (LNG): Jurisdiction Conflicts in Siting Approval (September 10, 2004); CRS Report RL32205, Liquefied Natural Gas (LNG) Import Terminals: Siting, Safety and Regulation (Updated May 27, 2004).
[10] Two of the reports (RL32073 and RL32205) begin with the same sentence: “Liquefied natural gas (LNG) is a hazardous fuel frequently shipped in large tankers to U.S. ports from overseas.”
[11] CRS Report RL32583, Gasoline Supply: The Role of Imports (September 14, 2004).
[12] EIA report, International Energy Outlook – 2006 (June 2006).
[13] “[T]here exists no relevant industrial experience with fires of this scale from which to project measures for securing public safety.” James A. Fay, Spills and Fires from LNG and Oil Tankers in Boston Harbor (March 26, 2003). “[T]he combination of current LNG ship designs and safety management practices for LNG transportation have reduced LNG accidents to the extent that there is little historical or empirical information on the consequences of breaches or large spills.” Sandia Report SAND2004-6258, Guidance on Risk Analysis and Safety Implications of a Large Liquefied Natural Gas (LNG) Spill Over Water (December 2004), pages 16-17.
[14] See, International Ship and Port Facility Security (ISPS) Code and SOLAS Amendments 2002 (IMO Publication I116E) (adopted 12 December 2002).
[15] Pub.L. 107-295, 116 Stat. 2064 (November 25, 2002).
[16] 33 CFR Part 104.
[17] 33 CFR Part 105 (Facilities); 33 CFR Part 106 (Outer Continental Shelf (OCS) Facilities).
[18] Maritime Transportation Security Act of 2002, Pub.L. 107-295, 116 Stat. 2064 (November 25, 2002), § 106, amending the Deepwater Port Act, 33 U.S.C. §§ 1501 et seq.
[19] Temporary interim rule, 69 Fed. Reg. 723 (January 6, 2004).
[20] 33 CFR § 150.15(v)(7).
[21] 33 CFR Part 160, Subpart C.
[22] USCG Navigation and Vessel Inspection Circular (NVIC) 03-05, Guidance for Oversight of Post-Licensing Activities Associated with Development of Deepwater Ports (DWPs) (May 16, 2005).
[23] The Energy Policy Act of 2005, Pub.L. 109-58, 119 Stat. 594, Title III, Subtitle B, §311(c) (August 8, 2005). This statute amended section 3 of the Natural Gas Act (15 U.S.C. § 717b). FERC quickly promulgated regulations to implement the amendments. Final Rule, 70 Fed. Reg. 60426 (October 18, 2005).
[24] See, 18 CFR § 157.21(a)(1). As an example of this process, see USCG Notice – Letter of Recommendation, Proposed LNG Project, Jordan Cove Energy Project, LP, Coos Bay, OR, 71 Fed. Reg. 36538 (June 27, 2006).
[25] USCG Navigation and Vessel Inspection Circular (NVIC) 05-05, Guidance on Assessing the Suitability of a Waterway for Liquefied Natural Gas (LNG) Marine Traffic (June 14, 2005).
[26] See, FERC publication, A Guide to LNG (2006). See also, Interagency Agreement among the Federal Energy Regulatory Commission, United States Coast Guard, and Research and Special Programs Administration for the Safety and Security Review of Waterfront Import/Export Liquefied Natural Gas Facilities (February 10, 2004).
[27] See, FERC Notice of Intent to Hold Public Meetings and hear Public Comment on the Proposed Broadwater LNG Project Draft Environmental Impact Statement, 71 Fed. Reg. 77009 (December 22, 2006).
[28] Captain J. A. Carter, Salvage of Cargo from the War-Damaged Gaz Fountain, Paper presented at the 1985 Gastech Conference held at Nice, France. See also, Reuters, Liquefied Gas Ship Set Ablaze in Gulf (New York Times – October 14, 1984).
[29] CRS Report RL32073, Liquefied Natural Gas (LNG) Infrastructure Security: Issues for Congress, page CRS-13 (Updated March 16, 2005). The CRS Report ignores various basic facts, such as that the sides and bottom of an LNG carrier are more robustly designed to withstand impact and penetration than is the tank top and that terrorists are unlikely to be armed with jet fighters and air to surface guided missiles.
[30] Hazardous Materials Response and Assessment Division, US National Oceanic and Atmospheric Administration (NOAA), Spills and leaks of LPG, LNG, and Natural Gas (2005).
[31] USCG Marine Safety Manual, Volume II, page F4-2.
[32] USCG Oral History Program; Interviewee: RADM George Naccara, USCG, Commander, First Coast Guard District, Boston, Massachusetts (2 April 2002).
[33] National Commission on Energy Policy, NCEP Staff Background Paper – The Safety of Liquefied Natural Gas (2004).
[34] NCEP Paper, page 5.
[35] NCEP Paper, page 13.
[36] Pub.L. 104-4, 109 Stat. 48 (March 22, 1995) codified at 2 U.S.C. §§ 1501, et seq.
[37] 2 U.S.C. § 1532(a)(2).
[38] 2 U.S.C. § 1535(a).
[39] Executive Order 12866 – Regulatory Planning and Review (September 30, 1993), found at 58 Fed. Reg. 51735 (October 4, 1993).
[40] EO 12866, Section 1(b)(4).
[41] EO 12866, Section 1(b)(6).
[42] EO 12866, Section 1(b)(7).
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