Feds to Rule - LNG in New York

This week, the federal government will weigh a controversial energy decision for the Northeast—whether to allow a floating liquefied natural gas terminal to be moored 10 miles off the shore of New York in the middle of Long Island Sound. The 1,200-foot barge would accept supercooled fuel from Africa and the Middle East, process it back into a gas, and send it by pipeline to New York and Connecticut.

I wrote this story explaining LNG and the environmental and security concerns. Such issues are very much alive in this Broadwater project, a joint venture of Shell and TransCanada Pipeline. Connecticut Gov. Jodi Rell leads the opposition on environmental grounds.

In the New York governor's office, which changes hands today, Eliot Spitzer was going to make his position known by April 12, but David Paterson, who succeeds Spitzer as governor this afternoon, says that timeline will probably be delayed. The Connecticut Post editorializes: "The dramatic downfall of New York Gov. Eliot Spitzer will have impacts far beyond the Empire State, and one of them might be in the middle of Long Island Sound."

Coast Guard Commandant Thad Allen said at a congressional hearing earlier this month that his forces do not have the resources to protect the LNG tankers from terrorist threats in Long Island Sound and that there needs to be a national discussion of security demands on hazardous freight.

Yet the federal siting decision isn't in the hands of the Coast Guard but the Federal Energy Regulatory Commission, which is slated to consider Broadwater at a hearing on Thursday. After that, the project still must obtain state approvals to proceed.

Just last week, there was a relevant discussion at the National Academy of Sciences energy summit—not about Broadwater but about the United States's evolution into a country that acquired all of its natural gas from North America (80 percent domestically) to a country that relies on natural gas imports through LNG.

Steven Specker, president and chief executive officer of the electric industry's Electric Power Research Institute, said that the price of LNG appears to be linked to the price of that other vital energy commodity we import, oil. That's the commodity that broke $110 a barrel last week, while natural gas prices recently have been relatively moderate. Natural gas fires a significant portion of the nation's electricity. So what happens with LNG will show up in consumer power bills.

"We are on a path for linking the price of electricity to the price of oil by 2012 to 2015," Specker said. "That is only going to get more so if we have limited options. Gas is the default option [for electricity] that we are going to use for the next few years. It's wonderful—it's much lower in [carbon dioxide emissions]. And we're going to have a good bit of LNG coming on the market between now and 2010. So we may have a situation where the price goes down and is delinked from oil for a few years. That will just be a head fake because, by 2012 and 2015, we may find ourselves in a real difficult situation."

So those who fear damage to Long Island Sound, or adding another terrorist target near New York, should add to their worries the possibility that we are carving out an energy future even more reliant on imports, where power for our homes is just as volatile in price as the fuel for our cars. But the reason we are vulnerable to any of these threats is because we haven't found a way to cut our insatiable demand for energy. The Big Oil/Big Natural Gas companies have done the calculations; they're betting they'll find buyers for what they're selling in the Northeast—even if it's at a newly global price.