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LNG Rising

Despite development challenges, LNG capacity is destined to play a bigger role in the U.S. energy mix.
Fortnightly Magazine - April 2004

vice president with Bechtel; Robert Ineson, a director with Cambridge Energy Research Associates (CERA); Jim Trifon, managing consultant with Wood Mackenzie; and Jacob Dweck, a partner and head of the LNG group at Sutherland Asbill & Brennan LLP.

Fortnightly: What are the biggest siting difficulties facing LNG facilities?

Tony Mayer, managing director, Marsh USA Inc.: NIMBY (not in my backyard) is a real stumbling block. No one wants a major LNG terminal near their industrial facility, or certainly near a residential area.

We've seen hydrocarbon incidents happen before. These are extremely volatile substances, and if they are not treated safely you have the potential for a tremendous explosion that could have far-reaching, third-party effects. That is the nature of the beast.

The main issue is the proximity of one facility to another, and the potential for an event to spread. The doomsday scenario would be for an incident to spread to an entire shipping terminal, and strain emergency resources.

Fortnightly: But is LNG fundamentally more dangerous than other petroleum or chemical substances, which we've become accustomed to living with every day?

Tony Mayer: They have different issues. With a crude-oil tanker the big issue is a pollution spill, and with an LNG tanker you don't have that risk. But you do have explosive potential. Like many petrochemical and refining facilities, care must be taken with LNG in terms of overall security.

Robert Ineson, director, Cambridge Energy Research Associates (CERA): LNG by itself doesn't burn. You need a mixture of gas and oxygen, in a narrow range, for it to burn. I have seen fires with these things. One is called a pool fire, which almost looks like you have a combustible thing floating on a liquid. How dangerous it is depends on how big the pool is. Many of the safety measures are intended to reduce the surface area of the fuel. If there is a leak, only a small area is exposed to the atmosphere.

Then there is concern about gas clouds. As it warms it will evaporate, and a gas cloud is potentially dangerous. 2

One thing not commonly appreciated is that the natural gas infrastructure in this country is everywhere. Pipelines are all over the place, and we've become accustomed to them. LNG is just natural gas in another form, and some of the things that we haul around in trucks are more dangerous.

Fortnightly: Why, then, is it facing such strong local opposition? And how should companies respond to that opposition?

Amos Aviden, principal vice president, Bechtel: There are legitimate and not-legitimate perceptions about the risks involved with LNG. I believe LNG is very safe, and it has an outstanding safety record. But in places where LNG terminals are not acceptable to the public at large, they will face a battle.

Robert Ineson: Any hydrocarbon has some danger associated with it. You take steps to manage it adequately, and 40 years of experience with LNG has been instructive in understanding what measures must be taken. One thing companies do is to look for an exclusion zone with a