Gas

LNG project developers need to work out details before presenting to citizens

By Lloyd Weaver

HARPSWELL, Me., Oct. 27, 2003 — Recently ConocoPhillips and TransCanada pipelines offered my town of Harpswell $8 million a year to lease a mothballed large Navy oil depot, dock and all. It has huge acreage and is now owned by the Town of Harpswell, Maine. Now the project appears to be in deep trouble. Local opposition has organized in the form of a new web site, http://www.fairplayforharpswell.com/, but fishermen are up in arms as well.

According to the proposed project, ships were slated to arrive every nine days at first and every four days eventually. The company said it would invest $350 million at the depot and employ 50 people.

What went wrong, how can oil companies approach communities like Harpswell and get their LNG terminals successfully built? Harpswell is not a NIMBY (not in my backyard) type of community and would welcome the lease payments. It is a land rich community, having over 150 miles of ocean frontage on two major fingers of land with dozens of offshore islands, part of Casco Bay’s 365 islands. The town is valued at over $1 billion with many expensive homes on its costal property and collects only $7,908,790 in taxes on all real estate.

To accept the LNG risk, the town was offered about $8 million a year to lease this facility, once operational. Theoretically, the town could then decrease its taxes to zero. One would think this is enough money to defray risk in this area of the community considering the size of the site, and it probably is. But serious public opposition has arisen for several reasons which are broken down as follows:

Real estate. The company offered the affected side of the community no real-estate value guarantees whatsoever. Yet, with a mishap, there would likely be some devaluation of their valuable shoreline homes. Thus, a problem was created by not addressing this concern up front. There should be minimal cost to putting in place a method to measure devaluation over time and offering to compensate (if required, and it probably wouldn’t be) any home-owner who happened to sell while the project was running.

Few would ever sell during this period anyway as they love it there too much. Measurement to determine any possible devaluation could be by comparing groups of property appraisals in affected and unaffected sides of town done, say, every three years or so. The point is that it should be relatively inexpensive for the company to implement a system that would guarantee property values which would essentially erase this fear. And it would seem better if this had the backing of company resources, not the town. But there should be minimal payouts in such a program and minimal costs to operate it.

Fishing industry. The company offered to bend over backwards on lost gear and fishing time losses due to ship propellers ruining fishermen’s gear and traps etc. But there were concerns during the construction period as well. In a recent Harpswell Anchor news article it was said “The Lobster and Shellfish Mitigation Program proposed to compensate fishermen for lost gear and days missed fishing is impractical.” It turns out fishermen don’t want to give up this valuable ship lane fishing habitat, some of the best in the town’s waters. To them, compensation for gear and time is therefore beside the point. It’s their way of life they want, not money.

But there is a way out of this dilemma with the right technology. Lobster buoys could be made to automatically sink and rise with a passing ship using a coded radio signal, for example, leaving fishing habitat and methods almost totally unaffected. This is the answer for the fishermen’s dilemma in Harpswell, and probably in many other places as well.

Project size. This is a difficult area as it strikes to the heart of the economics of a project. The company asked for a reasonable harbor ship entrance rate of only once every 9 days at first, but also wants to enter every 4 days if gas market conditions permit. This is vehemently opposed by fishermen because with a 24 hour unloading time and allowing for ships passage time, another ship could enter the channel in about 50 hours. However, similar economics could be achieved with larger ships being produced, and with say a six-day cycle. It would seem logical, therefore, for the company to offer to restrict the project to a maximum of five- to six-day ship intervals.

Nighttime ship traffic also minimizes this impact. And unlike pleasure boats which must stay 500 yards away from the ship when unloading, it’s believed designated lobster boats would be approved for fishing around the ship when it is docked and unloading. The point is, this is a solvable problem but no solution has yet been offered.

Noise. The company asked for up to 50 dB at the property edge. This is unreasonable since that noise level is like continuous light traffic in a shore area that is pristine and extremely quiet at night. People pay big bucks for ocean frontage to hear ocean waves beating on shore, not the growl of a 50,000 horsepower gas turbine. However, the company said it would go to great lengths to quiet it down, but stopped short of saying it would be whisper quiet on the properties edge.

Yet, it should be relatively easy to be that quiet and more by first doing the muffling suggested by the project, and maybe a little more for good measure. Plus, installing a tall sound-absorbing wall around the noisy part of the complex (like those used along interstate highways) should make the noise portion almost inaudible at property edge, especially considering the size of the property and the masking effect of waves breaking on the shore. Thus, the noise problem has a simple and inexpensive solution.

Concluding remarks. Now you see the project’s problems. Property values are not being guaranteed in the affected area, fishermen aren’t getting the technology they need so that fishing habitat and methods are unaffected, the project size is too large as it is being presented, the noise specifications and recommended noise infrastructure are not convincing. In addition, these days all major projects should do risk management planning for terrorist acts.

If developers of future LNG terminal projects take the time to get to know the needs of the community where they want to build and come up with reasonable solutions for the project’s local impact, like the ones listed above, such projects would have a much better chance of approval by local citizens. Indeed, opposition groups would have minimal justification to get started. I know of only one fisherman affected by the project who claims he has an open mind now, so it’s going to be an uphill battle to convince the rest.

Facing a potentially hostile voting public, developers have asked for and received permission to delay the vote. There is still time for Harpswell citizens to become convinced to vote for the project. The local community recognizes LNG as a national imperative to help minimize the expected natural gas shortage. But for the developers to succeed in their goal, they will have to meet the public halfway.