Thursday 28th April 2005


US Energy Bill could benefit T&T

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Atlantic LNG’s Train IV tank under construction.

By Daniel W Reilly

The United States House of Representatives passed a controversial Energy Bill last week which included some key provisions that give the Federal Government control over the construction and placement of LNG terminals.

If the bill passes the US Senate, it could be a major boost for T&T’s export of LNG to the US as it would clear the way for the construction of terminals along the East and Gulf coasts of the US.

While there is near consensus among US Government officials on the need to import more natural gas, especially in the face of rising fuel costs, overcoming local and State objections to the siting of LNG terminals in specific communities has proven to be a daunting task.

The LNG provisions of the current Energy Bill would give the Federal Energy Regulatory Commission (FERC) unprecedented jurisdiction over the location and construction of LNG terminals, requiring the FERC only to “consult” with the State in which the terminal is located and stating that the Commission “shall establish a schedule” for all Federal and State LNG proceedings.

However, even with the US Government streamlining the process and the obstacle of local and state objections seemingly overcome, there is no guarantee that the terminals will be built and accepting imports anytime soon.

Gerald Karey, Washington Bureau Chief of OilGram News and a keen observer of the Energy Bill, told the Business Guardian that the while the provision would help streamline the process, there was no specific language in the bill stating timelines for construction of terminals or for increasing future capacity or imports.

Karey also predicted the debate over the construction of the terminals would shift to a different arena.

“I don’t doubt that this battle will be fought in the courts,” he said. A lawsuit has already been filed in California, accusing the FERC of impeding states’ rights.

Opponents of the measure have long argued that it cedes too much control to the federal government and that it would put unsafe LNG terminals near major population centers.

“What we are against is the steamrolling over local and state concerns,” said Emily Kaplan of the United States Public Research Group, a public interest advocacy group that often focuses on environmental issues.

USPIRG is just one of the many environmental and community groups that have spoken out against the provision.

“We are not against (LNG terminals)... we think that the best places for them are away from major population centres.”

However, in a statement released on April 14, USPIRG said, “LNG storage and transportation is a business with a history of accidents” and that the provision would “prevent states and local communities from making important decisions regarding dangerous LNG facilities.”

Of the 55 proposed LNG terminals around the country, several are located near major cities, such as Los Angeles and Boston.

The 1,000 page Energy Bill included everything from such germane measures as extending daily-light savings time an extra two months to save electricity costs, to widely controversial provisions such as opening up Alaska’s Arctic National Wildlife Refuge (ANWAR) to oil drilling.

In addition to the LNG provisions, the bill also provides over US$8 billion in tax breaks to energy companies as well as a provision that would protect producers of the gasoline additive MTBE from lawsuits stemming from cases of groundwater contamination.

With so many controversial amendments and a major fight brewing over the MTBE and ANWAR provisions, the bill now heads to the US Senate where it faces an uncertain future.

While rising gas prices within the US have led to calls from President Bush and other lawmakers to pass the Energy Bill as soon as possible, critics remain skeptical that the bill will have any immediate impact on either fuel prices or energy supplies.

The fate of the bill, as well as the fate of future LNG imports to the US, remains unclear.




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