Mark up another proposed LNG receiving terminal that has come under fire. The latest is Houston-based TORP (Terminal Offshore Regas Plant) Technology's planned Bienville Offshore Energy Terminal. Under TORP's plans, the terminal would be located 63 miles south of Dauphin Island, Alabama, in 425 feet of water. The terminal would have a maximum send-out capacity of 1.4 billion cubic feet per day and would be capable of docking up to the largest 250,000-square-meter tankers that are now being built. In making their application, the company says it selected the offshore Alabama site because of its strategic location downstream of the the Henry Hub and the high takeaway capacity to some key U.S. gas markets. But, as my grandmother use to say, the fly in the buttermilk is their proposed method of cooling the LNG when it comes off the tanker. Their plan would use an open-loop system that would use the ambient temperature of millions of gallons of seawater to heat the LNG and turn it back into a gas. The cooled-down water is then discharged back into the Gulf. A similiar plan by Freeport McMoRan Energy for its proposed Main Pass Energy Hub LNG terminal was vetoed in May 2006 by former Louisiana Gov. Kathleen Blanco. The McMoRan plan also used an open-loop system. Blanco became the first governor to veto an LNG project and the company withdrew its plan, retooled it to use a closed-loop system where part of the LNG cargo itself is used to warm up the frozen cargo and turn it back into a gas. This past week, the U.S. National Marine Fisheries Service filed an official objection with the U.S. Coast Guard over TORP's plans. In filing its protest, the fisheries service cited the potential damage to marine life. The service said the open-loop system could result in the destruction of both commercial and sports fishing stocks as well as damage other marine life. The service has recommended TORP use the closed-loop system instead. LNG industry backers have been against that system because it adds to their operating costs. However, without it, there is very little chance that it will succeed. Under federal law, offshore LNG terminals are under the jurisdiction of the U.S. Maritime Administration and the Coast Guard and the governors of the states where the terminals are located off their coasts have veto authority. On the land, LNG terminals are under FERC jurisdiction and states do not have the authority to reject the plans--leading to several states' rights vs. federal authority fights that are still ongoing. Stay tuned. More to come. The Coast Guard has not ruled on TORP's proposal yet, but the fisheries service report will carry a lot of weight in the decision-making process. This story will be ongoing for some time to come. –John A. Sullivan, News Editor, Oil and Gas Investor, www.OilandGasInvestor.com, firstname.lastname@example.org
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