Cover Story

By Rob Holbert Managing Editor

The question isn’t really if LNG – liquefied natural gas – is coming. Even those ardently fighting ConocoPhillips’ proposed Compass Port facility admit it’s only a matter of time before some sort of LNG facility lands in this area.

The question is when is LNG coming, in what form and to what economic and environmental end? ExxonMobil’s efforts to locate an LNG on Hollinger’s Island were met with stiff resistance last year and died. ConocoPhillips is finding it equally difficult to get clearance for its proposed facility 11 miles south of Dauphin Island – despite offering some very sweet economic incentives to the community – because of environmental concerns surrounding its desired use of an “open-loop” method of reheating the liquefied gas to its natural form.

Compass Port’s opponents hope by the time this article is published, Gov. Bob Riley will have made this particular project’s future a moot point by exercising his power to veto it. Gov. Riley is scheduled to speak about the LNG at the International Trade Club May 24, and Callaway hopes the governor will use that occasion to sink Compass Port.

“It’s what I hope and what I believe,” said Casi Callaway, executive director of Mobile Baykeeper, an environmental organization spearheading opposition to Compass Port. “The governor is keeping his cards close to his chest.”

For its part, ConocoPhillips hopes Riley will look at the company’s stated environmental and financial guarantees, which they say will ensure Compass Point does not damage the fisheries, while offering Alabama and Mobile in particular first dibs on a formidable amount of natural gas. The company has guaranteed at least 200 million cubic feet of natural gas will be available for purchase in Alabama, which company officials say could provide an energy source that would be appealing in areas of economic development, as well as in keeping energy costs down for the consumer. The company has also promised to spend at least $100 million in Alabama during construction and at least $15 million each year during operations and will hire at least 70 percent of the facility’s workforce from state residents. The company also has promised to spend $2 million annually to establish programs that will help strengthen the fisheries.

“We’re talking to the governor and his staff, and our view is that the governor is still open-minded and listening to the facts and concerns,” ConocoPhillips spokesman Steve Lawless said. “Our view is that he has not made up his mind. We think he’s taking the approach he should on our project and looking at the issue fully.”

Lawless said Riley has until June 11 to make a decision, and the company expects him to do so a couple of days prior to the deadline. Riley’s spokesman David Ford said simply that the governor is coming to Mobile to discuss the proposed LNG terminal as part of his decision process, but offered no indication as to whether a veto is forthcoming.

It’s the open-loop method of warming the gas that is the fly in the Compass Port ointment; one that has environmentalists and sports fishing groups painting dire pictures of the destruction of coastal Alabama’s fisheries, and ConocoPhillips willing to make modifications to its LNG design, as well as extremely tempting financial offers to get the deal done. Compass Port would use the Gulf’s naturally warm waters to heat the LNG after it comes off tanker ships from all over the world. The water would be sucked into the LNG terminal, where it would pass around the liquefied gas, transferring warmth until it vaporized and could be pumped via pipeline to the mainland.

Though the LNG facility would only pump water in at a rate of about half a foot per second, both sides agree it would likely kill the fish eggs and larvae sucked into the system. Mature fish and shrimp would likely have no trouble swimming out of the way. ConocoPhillips says it is working diligently to offset damage to the fisheries by having Dauphin Island Sea Lab collect data that would allow the facility to shift its water intakes to different depths in an effort to avoid the thickest concentrations of larvae and eggs.

Dr. George Crozier, director of Dauphin Island Sea Lab, says the limited data collected so far indicates Compass Port could avoid the thickest concentrations of eggs and larvae by shifting its water intake depth during certain times of the year, but cautions that they only have a little more than a year’s worth of data. The Sea Lab has done more than 1,000 drags of the proposed site over the past year-and-a-half, and has recorded concentrations at different strata in the water column in hopes of giving ConocoPhillips the best information possible, he said.

While Crozier says he isn’t satisfied they’ve gathered enough samples to be 100 percent certain of what sea life is at the site and where it is located, he is critical of the use of National Marine Fisheries Service data in the permitting process for Compass Port because he says none of their information is site-specific and it wasn’t gathered in a way that would allow anyone to know at which depth the eggs and larvae can be found.

“Ours is site-specific. They (NMFS) don’t have site-specific samples,” Crozier said. “The Coast Guard didn’t want us to be critical of the NMFS data. It’s not exactly fair to say ‘garbage in, garbage out,’ but it really looks like garbage in garbage out.”

Crozier says ConocoPhillips told him the data gathered thus far at the proposed site has allowed them to redesign the terminal to minimize impact.

“What we have at this point is data that has not surprised us,” Crozier said. “It is stratified. The fish eggs and larvae are found at different layers. ConocoPhillips says they have changed their engineering based on our data. It seems what NMFS recommended as the intake for this was probably the wrong place.”

Baykeeper’s Callaway said she “strongly disagrees” with Crozier’s characterizations of the data and said the information used in the Environmental Impact Study shows eggs and larvae throughout the water column, meaning Compass Port couldn’t take in water that was not laden with sea life.

“The populations are there,” Callaway said.

Callaway says her group is not anti-energy, but feels ConocoPhillips should have proposed a closed-loop facility that burns natural gas to vaporize the LNG from the beginning. She admits using a closed-loop system would cost the company more money than using seawater to heat the LNG, but says ConocoPhillips’ profit margins should allow it to easily absorb the additional cost.

“Nowhere else in the Gulf is even considering open-loop,” she said. Callaway said Mobile Baykeeper would support ConocoPhillips’ proposal if it were closed-loop, and she believes the company will resubmit its plans if the governor vetoes Compass Port.

“I believe they have one (a closed-loop proposal) in hand and will present it the next day,” she said. “They’ve refused to do this because they believe we will cave. This is only about profit. We know LNG is coming. There are eight proposed in the Gulf and 100 proposed around the country. They are coming. We are going to have them.”

Besides the Compass Port proposal, there are also two proposals for LNG terminals in Pascagoula. Neither has been listed as either closed- or open-loop at this point.

Lawless says Callaway is wrong in her assumption ConocoPhillips would simply resubmit its proposal as a closed-loop system.

“That’s not going to happen,” he said. “If the governor vetoes this, we’ll have to go back and decide whether we want to start over. I wouldn’t want to predict whether we would. The company will definitely take time on making a decision.”

The problem, Lawless says, is that LNG suppliers have a choice to sell their product anywhere in the world, and that operating a closed-loop system would make ConocoPhillips’ project less competitive and, subsequently, less likely to attract LNG suppliers. He says open-loop technology is used in 47 of 56 LNG terminals worldwide, especially in Europe and Japan, and those countries are very competitive in importing LNG as a clean-burning and affordable fuel.

Even if ConocoPhillips did resubmit its proposal as a closed-loop terminal, Lawless says there are no guarantees the company would again include the kinds of economic incentives now on the table.

“You’ve taken an economically marginal project as it stands and would further make it economically challenged,” Lawless said.

Besides losing eggs and larvae to the water intakes, opponents also cite the unknown effect discharging millions of gallons of cooler water back into the Gulf every day might have on the fisheries. After vaporizing the LNG, water going back into the Gulf would likely be 15-25 degrees cooler than surrounding water. However, Crozier dismissed those concerns completely.

“Cooler water is largely good. If it was hot, that would be a different story. I’ve never bought that one. It is a nonsense issue,” he said.

Crozier says the one good thing that has come out of the current debate is the information the Sea Lab is gathering. He believes several more years of data are needed in order to make definitive projections as to what a project like Compass Port might do to the fisheries, and he hopes that regardless of the outcome, data collection will continue.

“Yes, the fisheries are stressed,” Crozier said. “But if the LNG project was the straw that broke the camel’s back, do we blame the straw or the 50-pound blocks that are already on the camel’s back? My personal feeling is that this straw is not particularly bad compared to the other concrete blocks. People need to ask themselves, do we need the gas?”

Rob Holbert is Lagniappe managing editor. Contact him at rholbert@lagniappemobile.com.

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