Other than finding several mega gas fields in the United States, Liquefied Natural Gas (LNG) represents the best way to fill the supply gap which North America faces in its energy supply. But there isn’t enough processing capacity now – and future capacity depends on overcoming perceived safety concerns. EMS believes that by assuring safe operations and maintenance of LNG facilities, we can move beyond the permitting delays that are eroding support for improved energy security.

There are four LNG terminals in North America. If all of the LNG terminals that have been proposed were to be approved and built, which is highly unlikely, we would have in excess of 40 – someday. Terminals are needed, because we need more natural gas in the form of LNG to meet our growing natural gas demand, to fuel our power plants and industries, to heat our homes, to keep energy costs manageable. But there’s a challenge that needs a solution.

Is the Supply There?
We know we need LNG to fill the energy gap we’re facing. According to the US Department of Energy (DOE), natural gas makes up 22% of total energy consumption in the US alone. In 2005, LNG made up only 2.8% of the natural gas supply. By 2030, the DOE estimates that LNG will need to make up 16% of the nation’s natural gas supply in order to meet demand.

But yes, the “supply” is there: potentially large supplies can come to our shores from all over the world, from Australia, Indonesia, Malaysia, Nigeria, Qatar, Trinidad and Tobago, with more yet from Equatorial Guinea.

The ability to convert natural gas to LNG, which can be shipped on highly specialized vessels to regasification/transportation terminals, provides our consumers with access to vast natural gas resources worldwide. It’s one issue we should not have to be worried about. The entire process, however, does have to be safe.

Safety in the Sights
Safety of LNG resources and facilities makes it a huge Not In My Back Yard (NIMBY) issue. The fervor and fixation on safety means that LNG is frequently demonized.

Yet EMS sees LNG as a resource supported by technologies with proven safety records. Companies worldwide have spent a considerable amount of time and money analyzing, assessing and managing potential LNG hazards and have either eliminated or developed mitigation techniques to reduce risks.

As a result, in more than 45 years of commercial LNG use there have been few accidents with liquefaction, transportation and regasification. Worldwide, the contemporary safety record is even better – especially when you consider that some countries are considerably advanced in their LNG infrastructures compared to North America.

It’s an area in which we at EMS can speak with considerable experience, and which we address with utter attention.

When a company decides to build an LNG import terminal, it goes through a lengthy and comprehensive review and permitting process with federal, state and local governments. During this process, from the initial meeting with lead federal regulators, through the rigorous permitting process, to construction and on-going inspections, the LNG terminal developer works closely with the governmental authorities.

One way to underscore and support a commitment to safety in terms of operations and maintenance is to team with highly experienced LNG companies in other countries – companies who themselves have proven safety records.

For example, we work closely with Korea Gas Corporation (KOGAS) and its subsidiary Korea Gas Technology Corporation. One KOGAS facility (in Inchon) has more capacity than all of the facilities in the US put together and the company itself has an exemplary safety record.

Cooperating with KOGAS fits with our own goal to be the safest operators and maintainers of LNG facilities in North America. It’s a “world-class” team that alleviates safety concerns, ranging from LNG unloading and storage to vaporization and transportation facilities.

At the same time, we’re looking at next-generation technologies. Double-containment tanks are just one example. KOGAS has developed the world’s largest above-ground full containment LNG storage tank with a gross capacity of 200,000 cubic meters. The main objectives of the development of the large-capacity LNG storage tank is to reduce construction costs as well as boil-off gas and use the tank building site more effectively.

Its full-containment construction adds exemplary safety to the facility as well. Some people will argue against full containment because of the added expense – we suggest embracing it, because of its safety features. Why shouldn’t we learn from other countries?

Energy Security is the Challenge
With so much attention given to processing LNG safely, why is energy “security” still open to question? If you read the newspapers or the World Wide Web, you might get the impression that we don’t need this gas. That an entire range of renewable resources such as wind power, solar or ethanol will meet the demand.

We believe that these sources, however valuable, won’t get the job done.

We suggest that the US government has to make a decision in favor of LNG as the fuel of choice in order to fill the supply-demand gap. Again, according to the DOE, LNG imports are going to have to increase more than 500% in order to meet our natural gas demand in 2030.

Those four existing facilities capable of importing LNG do not come close to being able to handle the amount of LNG we need.

Many of the new LNG terminals on the drawing board will never be built. The permitting process takes far too long. Despite capital expenditures and investment risks, the companies who wish to build LNG processing facilities don’t know whether or not they’ll be able to complete their plans.

The State of California, for example, recently blocked plans for a LNG receiving terminal that was to be built by Australia’s BHP Billiton. The $800 million Cabrillo Port LNG project was supposed to be located about 14 miles offshore of the Malibu city limits. Significant opposition from various groups seems to have convinced the state to cancel plans for the facility before it could move forward.

We propose that when it comes to energy security, the US ought to commit to LNG as a “national cause.”

Securing the ability to intake, process and transport LNG could be taken in stages. While the Federal Energy Regulatory Commission (FERC) pays appropriate attention to the LNG facilities already in place, more must be done to support connection of the LNG supply to an increased number of permitted facilities. And unlike other new energy sources, no one is subsidizing LNG participants – an even more difficult proposition. The US should consider a positive, long-term strategy as well as subsidies in support of LNG, which would go a considerable distance to addressing the issue of gapfilling energy security.

We believe it is time to take LNG off the shelf and get back to discussing it as a national policy. Permitting needs to move more quickly, to overcome the three–, four–, or even seven-year delays in building.

Safety is the Solution
By ensuring that safety is addressed in every detail, regulators and other LNG opponents can overcome their reluctance to building new LNG infrastructure. Otherwise, our nation (indeed, our continent) will pay an increasingly heavy price in the form of ever-higher energy bills, and, with that, a major impact on economic growth.