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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

large swath of land around it, so if gas vapor escapes and catches fire or explodes, there would be no one to be hurt by it. The other approach is containment, where you build a concrete bunker around it to contain gas leaks.

The largest concentration of LNG regasification terminals in the world is in Tokyo, a very densely populated city. They are familiar with it and have gotten accustomed to it. But there will be places where people are just not going to be able to get past the safety issue.

Jim Trifon, managing consultant, Wood Mackenzie: There are a number of issues a developer has to look at when siting a plant. Is the port big enough? How does it relate to the pipeline infrastructure? Can the site handle this facility? Where is it in relation to the population?

Exxon Mobil is putting the Mobile Bay [Ala.] project on the back burner. The local folks don't want it, and the company has determined it's not worth fighting for. The site has a variety of concerns.

Amos Aviden: Another class of terminals is proposed for offshore sites. No offshore receiving terminals yet exist for LNG, but similar terminals do exist for crude oil, LP gas, and other products. The technology and operations on the marine side are similar, and they should be just as safe and reliable as onshore terminals. But they tend to be more expensive.

Mayer: Major NIMBY issues are avoided when you site the facility offshore. There is still the potential for an explosion, but it would be some distance offshore.

Fortnightly: Will the explosion at Skikda, Algeria, set back LNG project development in this country?

Jim Trifon: We don't think it's going to be a very big roadblock. It will, however, be part of the various roadblocks that the industry will have to overcome through education, etc. We just need to get people used to seeing LNG come in on tankers.

Jacob Dweck, partner and head of the LNG group at Sutherland Asbill & Brennan LLP: Because projects are subject to both public and government scrutiny, and because authorities are trying to create a framework to account for all reasonable risks, attention appropriately focuses on all sorts of incidents, including the tragedy at Skikda. In order to properly assess the impact of the Skikda event for any site or proposal, we need to understand what happened and why. The incident should be given a thorough investigation and analysis. It's important that we do not turn the incident into a symbol of the risks posed by LNG, or conversely, dismiss it out of hand as an accident that can only occur at an old and operationally deficient facility. Only then can we learn the lessons that it has to teach us in assessing new facility proposals in the United States.

Fortnightly: What about permitting? Are developers facing a permitting quagmire?

Dweck: The federal government is continuing to adopt policies that make LNG more available, such as fast-track certification processes, and through the recognition that offshore facilities require a