Deregulation, competition, and the back-to-basics utility strategy have created tremendous pressures for utilities to cut operating costs while improving customer service. In this...
Gas Supply:Too little, Too late?
subjected to formal peer review.
Even before the public review period was over, FERC began applying the results of the study, citing it in the final environmental impact statement for the Freeport LNG project. But upon considering the input it had received on the ABSG study, FERC issued a response that effectively made corrections and adjusted some of the assumptions and calculations.
In its response to comments on the ABSG study, FERC indicates that the ABSG models will serve as the commission's baseline technical model for evaluating LNG projects. However, the commission also notes that it will use other literature in its proceedings. It specifically points out that the ABSG study was intended to consider only the consequences of an LNG spill, not the risks of such a spill actually occurring. Thus the commission intends to apply other studies in its analysis of LNG hazard risks, and more broadly, it will adjust its science models as new understanding emerges.
Thus LNG developers can proceed with their project filings with a clearer knowledge of the science FERC will use to evaluate LNG spill hazards. The final chapter in the saga, however, has not been written. Public comments on the ABSG study note that the study does not address some big questions regarding the safety of LNG tankers and terminals-such as, what would happen if a U.S.S. Cole-style attack were carried out against an LNG tanker?
The non-peer-reviewed nature of the ABSG and Sandia studies leaves them open to skepticism, particularly in the context of recent misadventures over the Quest study. Irrespective of the quality of the science contained in the ABSG study, which most analysts seem to agree is fairly sound, the way officials have handled the process raises credibility questions that could come back to haunt LNG project sponsors.
Opponents of LNG terminals will attack the industry and its regulators no matter what they do. But by conducting permitting proceedings in a transparent manner, within a framework based on peer-reviewed science, projects might stand on firmer ground to withstand those attacks. Such approaches will take more time and raise more questions in the short term, but in the long term LNG developers would be better positioned to avoid the kinds of controversy that can bring a project-and an industry-to a screeching halt.-M.T.B.
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