LNG: Study on Interoperability of LNG facilities and … · of energy and to disseminate good...

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LNG: Study on Interoperability of LNG facilities and Interchangeability of Gas and Advice on the Opportunity to set up an Action Plan for the

Promotion of LNG Chain Investments

PART II: Environmental and Sustainability Perspective

FINAL REPORT

Study for the European Commission DG TREN

Expert:

Professor Peter D Cameron

Centre for Energy, Petroleum and Mineral Law and Policy (UK)

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Abstract ......................................................................................................................3 1. Introduction........................................................................................................6

1.1 The TOR ....................................................................................................6 1.2 The Questions ............................................................................................6 1.3 Scope..........................................................................................................7 1.4 The Wider Context.....................................................................................7 1.4.1 Interconnection Policy ...........................................................................7 1.4.2 Environmental Impact Assessment........................................................9 1.4.3 International Law.................................................................................12 1.5 Approach of this Study ............................................................................12

Part 1: Risks and Obstacles .................................................................................13 2. Risks.................................................................................................................13 3. Impact Assessment...........................................................................................19 4. Environmental Obstacles .................................................................................22

4.1 Brindisi.....................................................................................................24 4.2 Milford Haven..........................................................................................25 4.3 Gorgon LNG (Australia)..........................................................................29 4.4 Comment on Cases ..................................................................................29 4.5 The PIP.....................................................................................................31 4.6 Key Lessons for Siting.............................................................................31

5. Construction Authorization Limits ..................................................................32 Part 2: Sustainability Issues.................................................................................35 6. Generalised Impacts of the Industry ................................................................35 7. LNG Usage ......................................................................................................37 8. Relative Energy Efficiency ..............................................................................39 9. Gas and Global Warming.................................................................................40 Part 3: Findings and Recommendations ..............................................................44 10. Findings........................................................................................................44 11. Recommendations........................................................................................46 Annex: Selected Sources ......................................................................................48

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Abstract

• This study provides a response to the nine questions posed in the TOR on

environmental and sustainability aspects of LNG. It is divided into three parts:

Part 1 considers ‘risks and obstacles’ and Part 2 treats ‘sustainability issues’.

Questions 4, and 6-8 of the TOR are answered in Part 1. Questions 1-3, and 5

are dealt with in Part 2. For each Question, a short answer is provided in a

single paragraph, followed by a discussion that covers as much as possible of

the following four subjects: background information and an analysis of the

specific topic; consideration of the probable development of the topic over the

short, middle and long term; assessment of whether the subject matter can and

ought to be considered within the framework of an LNG action plan, and

where appropriate, proposed recommendations to the Commission on the kind

of action that might be taken. Part 3 addresses Question 9 and presents the

findings and recommendations.

• Risks The main industrial risks are operational risks arising from gas tanker

and terminal operations, which require close cooperation with port authorities

and protective location strategies. On the evidence of several decades of LNG

and pipeline gas use, the risks appear to be significantly less with LNG than

with pipeline gas.

• Impact Assessment Both LNG and piped gas create environmental

disruption during the infrastructure construction phase, but afterwards they

present different kinds of issues for an EIA: one with highly localised, largely

marine-based issues, the other with more extensive, usually land-based effects,

potentially affecting a wider range of communities and geographical area. As a

consequence of the latter, the EIA effects tend to be more favourable for LNG

than for piped gas. However, LNG terminals require the laying of new

pipelines to take the gas to the market, so in practice the EIA issues arising

from piped gas also arise when the LNG project is seen as a whole.

• Environmental obstacles Where LNG is a new industry in a particular

region, the starting point is an unknown risk profile (for the regions and

communities involved). Environmental and other effects may take some time

to be understood and evaluated. The recommendations in the PIP on

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coordination of planning appear to be adequate in relation to LNG, but the

time-limit for completion of a project of European interest (5 years) is

adequate for an LNG project for the authorization pre-construction.

• Construction Authorization This time-limit is reasonable for a final

construction authorization. Authorizations have been granted in shorter

periods in the EU. By contrast, the total process including consultation with

stakeholders requires an investment of time by the project developers before

the applications for consents go ahead. Failure to do this thoroughly can lead

to problems at later stages of the process and a loss to trust in the local

community or region. If the total period for project initiation and

implementation is considered, a period of 7 years would still be short; 8 years

would be more practical.

• General Impacts There are undoubted positive impacts of an expanding

gas sector on employment, competitiveness and sustainable development.

However, the gas sector is a relatively modest creator of employment, and has

contributed mostly as a substitute for coal in power generation so far, with

modest impacts on competitiveness but clear environmental gains. In the drive

to a low carbon economy, gas is a transitional fuel rather than the ideal fuel of

the low-carbon economy. It nonetheless contributes to policies of sustainable

development.

• LNG Usage LNG is used primarily to supplement piped gas and hence

benefits the same sectors of the economy. It is particularly beneficial in

tapping sources of gas that may be ‘stranded’, located in remote areas, and

creating links between these areas and the principal markets.

• Energy Efficiency It may be argued that the lower risk of leakage in LNG

transportation increases efficiency relative to piped gas. Both industries strive

to increase the degree of energy efficiency, but the more recent origins of the

LNG industry may offer greater opportunities for innovation in this respect

than with piped gas where the technology applied has been in operation over a

longer period.

• Global Warming Gas contributes to limit CO2 emissions and to climate

change mitigation as a transition fuel to a low carbon economy but not as the

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ideal fuel for a low carbon world. It is part of the problem with respect to

global warming, not the answer.

• Action Plan There is no compelling case for an Action Plan for LNG from

an environmental and sustainability point of view. Specific action points may

be considered however, not least to promote understanding about this source

of energy and to disseminate good practice in the industry itself.

• Best Practice The successful practice of a number of project developers

suggests that the following lessons may be noted:

• Involvement of stakeholders at an early stage in the siting process;

• The project plan has to be explained with mitigation of all potentially

adverse effects, including social and economic impacts;

• Communication should be made to the environmental community

about the use of any technologies that may minimise the impacts;

• Efforts should be made to raise the community’s knowledge of LNG,

especially on its safety record;

• An active engagement should be made with the community by making

the company’s representatives available to the community (from an

early stage), and by emphasising ‘partnership’.

The above lessons can contribute to minimising obstacles to LNG project

siting by building a relationship of trust between the developer and the

community.

• The European Commission could play a useful role in disseminating Good

Practice in stakeholder-industry-government relations and in providing a

package of standard information on what the risks are and what the generally

accepted technologies are to mitigate such risks, in its role as an independent

party. This could be carried out by means of a Commission appointed Expert,

rather than a Coordinator.

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1. Introduction

1.1 The TOR

Under ‘Tasks Specifications’, it is stated that Part II of the LNG study will focus on

the following two-part question:

• Does it make sense to design an LNG action plan in the Community for

the next 10 to 20 years?

• If so, what are the possible actions of this plan?

Any such action plan would have to be based on the main axioms of energy policy in

the Community, which are:

• Security of supply and world energy geopolitics;

• Sustainable development and environmental protection, and

• Investment, financial and market aspects

1.2 The Questions

For the environmental and sustainability section of Part II, there are nine broad sub-

questions listed in the TOR:

1. What is the impact on employment, competitiveness and sustainable

development of the gas sector in general?

2. Are there sectors of economy (i.e. power generation) or geographical areas (i.e.

remote regions and islands) where the usage of LNG is particularly

appropriate?

3. Is the LNG chain globally more (or less) energetically efficient than the piped

gas chain and why?

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4. What are the main industrial risks? Are they more (or less) important than for

the piped gas?

5. How does gas contribute to limit the CO2 emissions and global warming?

6. Is the environmental impact assessment globally more favourable for the LNG

chain than for the piped gas chain?

7. Why do LNG infrastructure projects encounter environmental obstacles in

certain Member States? Check if the recommendations included in the Priority

Interconnection Plan (PIP) on that subject could be improved or

complemented.

8. Is the 5 year limit mentioned in the PIP to get a final construction

authorization and decision for energy infrastructures realistic for the LNG

terminals (and storages)?

9. Is an LNG action plan justified from the environmental and sustainability

point of view?

1.3 Scope

Under Item 5 of the TOR, it says that the analysis should cover all Member States

where an LNG (regasification) terminal is in place or where new projects are planned.

The related liquefaction plants to be noted are those located in an economically

favourable position to supply the European market (Atlantic Basin, N Africa and

Middle East).

1.4 The Wider Context

1.4.1 Interconnection Policy

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A Priority Interconnection Plan (PIP) was published in January 2007 as part of the

Third Energy Package, and includes a number of statements about the difficulties

facing construction of new LNG terminals1. For example on page 8, it states that:

“work on the 29 LNG terminals and storage facilities has been seriously

hampered in various Member States. Nine projects had to be abandoned (all

in Italy or in Greece- PC) and it was necessary to look for alternative solutions.

Five other LNGs are currently blocked (all in Italy-PC)”;

The delays are all being caused by environmental concerns or by local opposition to

LNG terminals and related infrastructure. However, the problem is not uniform

throughout the Community. In Spain, for example, there has not been a repetition of

this pattern. In the UK, progress in terminal construction far outweighs the limited

delays caused by local opposition.

The benefits of an enhanced role for LNG to security of supply and competitiveness

in the Community are such that “the Commission will consider in 2007 whether

Community action is necessary to increase energy solidarity through an action plan

for LNG” (p.10).

A new set of TEN-E Guidelines were introduced in 2006 (Decision No 1364/2006/EC

of the European Parliament and of the Council of 6 September 2006 laying down

guidelines for trans-European energy networks and repealing Decision 96/391/EC and

Decision No 1229/2003/EC)2. They introduced the concept of a ‘project of European

interest’. These are priority projects of a cross-border nature OR which have a

significant impact on cross-border transmission capacity.

One of the options the Commission now has under the TEN-E Guidelines is to

designate a European coordinator to facilitate projects of European interest and to

intervene accordingly. However, for two reasons (at least) LNG projects fit very

uneasily into this framework. The difficulties are hinted at in the Annex to the PIP, 1 Communication from the Commission to the Council and the European Parliament, Priority Interconnection Plan, COM (2006) 846 final, 10.1.2007. 2 They are based on Art 154 EC. Arts 155 EC and 156 EC provide for the adoption of guidelines to define the objectives, priorities and broad lines of measures for them.

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where it is stated that LNG projects were not included in the list of projects of

European interest because they are not of a cross-border nature. This raises an

important issue about the competence of the Commission to intervene. At the same

time, the TEN-E Guidelines are aimed at promoting interoperability with the energy

networks of third countries (such as those of the Mediterranean, the Middle East and

the Gulf). An LNG connection could by analogy be seen as having a similar

importance. Secondly, the Italian cases (of obstruction to LNG proposals) illustrate

that a significant actor in delaying the authorisation of LNG facilities is the local or

regional authority, and it would be expected that this is more a matter in which the

Member States are better placed to resolve than the Commission. It may be that the

Commission’s role could be based on the goal of strengthening regional cohesion.

Among the actions proposed in the Priority Interconnection Plan (PIP) are two that

might be relevant to any specific action for the LNG sector. These are: enhanced

coordination of planning at regional levels, and streamlining of authorisation

procedures. These will be considered below in section 4.5.

While the TEN-E Guidelines encourage Member States to minimise delays, this is

only to be done in compliance with the relevant environmental rules. It may be useful

to recall the more important ones here.

1.4.2 Environmental Impact Assessment

In all countries where LNG terminals are operational or planned, an Environmental

Impact Assessment (EIA) procedure is required to ensure that the environmental

impacts and consequences are identified in advance and assessed before the relevant

authorisations or permits are given. The impacts will usually be considered over the

life cycle of the project and range from construction and operation to environmental

decommissioning.

In the EU, the public can give an opinion, which will be taken into account in the

authorisation process of the project, following which the decision will be published.

The amendment of the key legislation, Council Directive 85/337/EC of 27 June 1985

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in 2003 aligned the provisions on public participation in decision-making and access

to justice in environmental matters to make this possible (Directive 2003/35/EC of 26

May 2003).

Under Council Directive 85/337/EEC of 27 June 19853 on the assessment of the

effects of certain public and private projects on the environment, an assessment has to

be carried out by the competent national authority for certain projects that may have a

physical impact on the environment. It has to identify the direct and indirect effects of

the project on factors such as man, the fauna, the flora, the soil, water, air, the climate,

the landscape, the material assets and cultural heritage, and the interaction between

these various elements. An assessment is obligatory for certain projects, which

include dangerous industrial facilities such as oil refineries, nuclear fuel or nuclear

waste treatment facilities, integrated chemical installations. LNG regasification

terminals and related infrastructure such as modification to ports and pipeline

construction can be inferred to come into this list although they are not expressly

mentioned.

Directive 85/337 requires information to be provided and consultation to be carried

out with interested parties. The developer (the person who applied for development

consent or the public authority which initiated the project) must provide the authority

responsible for approving the project with specific kinds of information, such as a

description of the project (location, design and size); possible measures to reduce

significant adverse effects and the main alternatives considered by the developer and

the main reasons for this choice. This information must be made available to

interested parties sufficiently early in the decision-making process. This includes

other Member States, if the project is likely to have trans-boundary effects. Each

Member State must make this information available to interested parties on its

territory to enable them to express an opinion. Reasonable time-limits must be

provided for, allowing sufficient time for all the interested parties to react. These

opinions must be taken into account in the approval procedure.

3 OJ L 175, 5.7.1985, p.40.

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At the end of the procedure, the following information must be made available to the

public and transmitted to the other Member States concerned, including: the approval

or rejection of the project and any conditions associated with it; the principal

arguments upon which the decision was based after examination of the results of the

public consultation, including information on the process of public participation, and

any measures to reduce the adverse effects of the project. In accordance with national

legislation, Member States must ensure that the interested parties can challenge the

decision in court. As noted above, the Directive was revised in 2003 to make it

possible to incorporate certain provisions of the Århus Convention on access to

information, public participation and access to justice in environmental matters. This

Convention was signed by the European Community and its Member States in 1998.

The idea behind such legislation, at least so far as large-scale infrastructural projects

are concerned, is that the specific environmental and social impacts can be avoided or

mitigated by adhering to certain design criteria, guidelines and performance standards,

which are stipulated in the legislation itself. By adhering to certain procedural and

substantive requirements, the impacts will be avoided or at least mitigated. For LNG

terminal projects (regasification, that is), there are potential environmental, health and

safety and social impacts. These need to be analyzed within the framework of EIAs

and SEAs (Strategic Environmental Assessments). Such projects include ancillary

pipelines that connect the facility to the gas distribution networks. Such gas pipelines

will also require the preparation of an EIA and an SEA.

The Community environmental legislation provides a clear framework for the

implementation of large-scale infrastructure projects. It is therefore important for a

speedy authorisation phase that the provisions of the relevant legislation are complied

with. In addition to Directive 85/337/EEC4, the legislation that is particularly relevant

to LNG regasification terminals includes Directive 2001/42/EC of 27 June 2001 on

the assessment of effects of certain plans and programmes on the environment5. Each

project will also have to be in compliance with Community legislation on noise, water,

waste and the protection of flora and fauna. This includes Directive 79/409/EEC of 2

4 As amended by Directive 97/11/EC and Directive 2003/35/EC (respectively OJ L 73, 14.3.1997, p.5; OJ L 156, 25.6.2003, p.17) 5 OJ L 197, 21.7.2001, p.30.

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April 1979 on the conservation of wild birds6, Directive 92/43/EEC of 21 May 1992

on the conservation of natural habitats and wild fauna and flora 7 and Directive

2000/60/EC of 23 October 2000 establishing a framework for Community action in

the field of water policy8.

1.4.3 International Law

The environmental context of the European LNG industry is of course also affected

by measures taken by bodies in accordance with international treaties. Examples of

this include the International Maritime Organisation (IMO) and its MARPOL

Convention. Annex VI took effect in May 2005, and limits the sulphur content in

heavy fuels to 4.5% and in SOx controlled areas to 1.5%. NOx emissions are limited

to 17g/kw-hr, which is the same limit imposed by the US Environmental Agency.

1.5 Approach of this Study

In the light of the TOR and the above remarks on the setting of Community law and

policy, this study provides a response to the nine questions listed in the TOR on

environmental and sustainability aspects of LNG. There are two main parts to the

study: the first considers ‘risks and obstacles’ and the second treats ‘sustainability

issues’. Questions 4, 6-8 of the TOR are answered in Part 1. Questions 1-3, and 5 are

dealt with in Part 2. Question 9 is answered in Part 3 followed by a summary of the

findings and recommendations. In each case there is a short answer to the Question

asked, followed by a discussion that covers as much as possible of the following four

subjects:

o Background information and an analysis of the specific topic;

o Consideration of the probable development of the topic over the short,

middle and long term;

o Assessment of whether it can and ought to be considered within the

framework of an LNG action plan, and

6 OJ L 103, 25.4.1979, p.1. 7 OJ L 206, 22.7.1992, p.7. 8 OJ L 327, 21.1.2000, p.1.

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o Where appropriate, proposed recommendations to the Commission on

the kind of action that might be taken.

Part 1: Risks and Obstacles

2. Risks

What are the main industrial risks? Are they more (or less) important than for the

piped gas?

Answer: The main industrial risks are operational risks arising from gas tanker and

terminal operations, which require close cooperation with port authorities and

protective location strategies. On the evidence of several decades of LNG and

pipeline gas use, the risks appear to be significantly less with LNG than with pipeline

gas.

Discussion: Like most other infrastructural projects, those aimed at the delivery of

LNG to markets are subject to a battery of risks affecting health, safety, security,

environment, and technical, commercial, legal, contractual and economic matters. The

time required to identify and evaluate such risks in each case will be significant and

may lead to delays. However, the risks unique to LNG projects include operational

risks arising from gas tanker and terminal operations involving transport, storage and

the transfer of LNG. In particular, many gas terminals are located within the environs

of established ports. So their operations and those of the tankers serving them share a

common operational environment with other port users. The management of gas

shipping operations within ports is therefore a matter of some importance, and needs

to be taken into account by those who administer ports and provide essential services

in port areas9. As a protective device, the industry body, SIGTTO, has argued for the

9 This is well-known within the LNG industry: see for example the manual, ‘LNG Operations in Port Areas: Recommendations for the Management of Operational Risk Attaching to Liquefied Gas Tanker and Terminal Operations in Port Areas’, written by SIGTTO, the Society of International Gas Tanker and Terminal Operators (Witherbys Publishing, 2003, first edition). SIGTTO has a membership of over 100 companies who own or operate over 95% of the world’s LNG tankers and terminals and over 55% of the world’s LPG tankers and terminals.

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elimination of major risk elements by locating gas operations in places where they are

unlikely to be vulnerable to uncontrolled threats from outside their own operating

environments10.

There is also a dynamic factor affecting risk in LNG operating environments. Ports

tend to be competitive and seek to grow their businesses. Over time the promise of

new business or the demands of other users will have an impact, and therefore the

prospects of a changing risk profile should be anticipated from the outset. As a result,

the cooperation of port authorities with the gas businesses becomes important if the

required degree of safety is to be achieved. This is particularly true of risks arising

from the movement of gas tankers in port areas and from other activities carried out in

the vicinity of gas tankers and terminals.

There has never been a catastrophic failure of an LNG tanker’s hull and containment

system so it is not possible to draw on data that would permit the construction of

scenarios following the release of large quantities of LNG into the atmosphere.

Controlled releases of LNG however show that a cloud will develop and travel

horizontally from the spill point under prevailing winds. The flammable volumes of

gas will eventually disperse in the atmosphere. However, the SIGTTO manual notes

that in spite of an exemplary safety record:

“the risk profile of LNG tankers presents a very serious residual hazard in port

areas if the vital structure of the tanker is penetrated… Thus the paramount

objective in managing LNG shipping operations in port areas is the

elimination of any credible risk of a tanker’s containment system being

breached”11.

It also notes that

“…if very large quantities of LNG were released into the atmosphere the

resulting gas cloud could extend beyond the terminal area, or the immediate

10 SIGTTO Information Paper 14: Site Selection and Design for LNG Ports and Jetties, 1997. 11 SIGTTO, LNG Operations in Port Areas, section 1, at 3.

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vicinity of a tanker in transit through to a port, to affect adjacent port areas up

to several hundred metres from the source of the escape”.12

Further, there is a lack of data on the consequences of a large-scale and sudden

confluence of LNG and sea water, although it appears likely that it too would generate

a gas cloud in the atmosphere similar to that described above. There have been

incidents recorded of LNG escaping during cargo transfer at loading and receiving

terminals. However, the volumes have been very small and the effects confined to the

immediate environment of the terminals involved.

By contrast, the available data on risks arising from gas pipeline use suggests a

greater risk profile. The leading causes of accidents in both transmission and

distribution systems are digging near an existing pipeline, corrosion, a fire or

explosion causing a pipeline incident or even a vehicle striking an aboveground meter

or regulatory apparatus. In the very large US networks, including 2.2 million miles of

pipeline, about one third of the total number of incidents was attributable to

excavation damage13. Corrosion can sometimes result from excavation damage which

may weaken the pipeline and later render it more susceptible to corrosion. Studies

have been carried out and a body of international literature has developed on gas

accidents, permitting the development of different scenarios based on different kinds

of outcome (including fireball, vertical jet-fire and flash-fire)14. If the gas release

ignites immediately, the assumption is that a fireball will occur; if a release is ignited

but not necessarily immediately a jet-fire is always assumed to occur. Among the

documented accidents, there was a pipeline explosion in Belgium at Ghislenghien, on

30 July 2004, killing at least 23 people and leaving 122 injured. In Russia, sparks

from two passing trains detonated gas leaking from an LPG pipeline near Ufa, killing

an estimated 645 people on 4 June 1989. 12 SIGTTO, at 5. It recommends the use of a Quantitative Risk Assessment study as a decision tool to satisfy company safety policy and the authorities that the risk is acceptable. 13 American Gas Association, What Causes Natural Gas Pipeline Accidents? (2008) at www.aga.org/Kc/aboutnaturalgas/consumerinfo/14 A large set of pipeline incident reports is available in the US and Canada, and was reviewed in a British study carried out by Casella Scientific Consultants for the Health and Safety Executive in 2002: Report on a Second Study of Pipeline Accidents using the Health and Safety Executive’s risk assessment programmes MISHAP and PIPERS (RR 036). This draws on reports on accidents arising from releases from high-pressure gas pipelines. An earlier report also carried out risk modelling: Report on a study of international pipeline accidents, prepared by Mechphysic Scientific Consultants for the Health and Safety Executive (Contract Research Report 294/2000.

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Leakage from LNG The available literature on LNG emphasises a number of

positive features of this form of gas. Since LNG is odourless, colourless, non-

combustible, non-corrosive and non-toxic, it will not pollute land or water resources.

If it is released on water, it evaporates with no residual trace (although the pool will

simultaneously spread and evaporate and is able to sustain a fire if a source of ignition

exists). LNG is stored at ambient pressure so that a tank rupture will not cause an

explosion. LNG vapours (primarily methane) are harder to ignite than other types of

flammable liquid fuels. If LNG spills on the ground or on water, it will warm, rise and

dissipate into the atmosphere. However, potential hazards include an ignition source

near LNG vapours (which can cause a fire) and the risk of contact with an extremely

cold substance such as any direct exposure of skin or equipment.

Mitigation measures include the use of double hull features in LNG tankers to provide

a built-in form of secondary containment. According to the Centre for Energy

Economics15, there has been no off-site property injury or damage over 30 years as a

result of the mitigation measures taken (including appropriate and modern equipment,

facility design, safety and emergency systems, operational procedures and personnel

training). In the EU technical risks that may lead to leaks or other forms of accident

can be mitigated by adhering to the approved technical standards such as the BS EN

1473: 1977 on ‘Installation and Equipment for Liquefied Natural Gas – Design of

Onshore Installations’16. This gives functional guidelines for LNG installations and

recommends procedures and practices which will result in a safe and environmentally

acceptable design, construction and operation of LNG plants.

Relevant Data Experience with LNG is more limited in time and scope than

experience with high- and low-pressure gas pipelines. Accidents arising from the

latter have been infrequent but have been extensively documented and analysed. In

some cases, the cost in human life has been very high. By contrast, there have also

been a very limited number of studies carried out into the hazards, particularly on the

potential for an LNG spill and fire, whether caused by an accidental or intentional

15 October 2003. 16 This European industry standard was prepared by Technical Committee CEN/TC 282 (AFNOR).

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breach. The study by Sandia Laboratories in the US is a notable exception17. This

difference between the two forms of gas is less obvious, however, when one takes into

account the fact that the scale of use of the two kinds of gas is quite different, with

LNG playing as yet a very junior role to piped gas.

Such studies are there are have usually been conducted by promoters of LNG projects

and therefore have to be treated with some caution. They have tended to emphasise

some key facts, designed to highlight an undoubtedly impressive safety performance

of the LNG industry over the years relative to other industries. LNG has, for example,

been transported across the seas for about 45 years without a single major accident or

a safety problem of any magnitude. During that period there have been more than

40,000 LNG carrier trips. Today, about 250 LNG ocean tankers safely transport LNG

annually to ports around the world18. For most of this period, the bulk of such activity

has been regionally focussed: in the Asia-Pacific region. In the year 2000 every 20

hours one LNG cargo entered Tokyo Bay whereas one entered Boston Bay every

week. The US Department of Energy has stated that in the history of the LNG

industry there have been eight marine incidents worldwide, involving accidental

spillage of LNG. In these cases only minor hull damage occurred and there were no

cargo fires. Seven additional marine-related incidents have occurred with no

significant cargo losses. Known explosions or fatalities are very few.

Accidents There appear to be two exceptions to this track record. Firstly, there is

the accident which occurred at the world’s first commercial liquefaction plant in

Cleveland, Ohio (USA), in 1944. The plant liquefied natural gas and stored the LNG

in tanks which was vaporised later for use during heavy demand periods. An LNG

storage tank ruptured and spilled the uncontained liquid into storm drains, followed

by a large fire, which killed 128 people and injured more than 200. Tanks were

subsequently redesigned for the cold temperatures required by LNG and no further

tank failure has resulted since in the USA. However, the accident was probably

responsible for the dearth of construction of LNG facilities over the next 20 years. It

may be noted that the LNG tankers currently used carry five times the amount of

17 Sandia National Laboratories, Guidance on Risk Analysis and Safety Implications of a Large LNG Spill over Water, Rep No SAND 2004-6258, 21 December 2004. 18 CRE Report, at p.18.

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LNG stored in the Cleveland plant in only one of their four or five shipboard tanks. A

second known explosion occurred at the Skikda LNG plant in Algeria on 19 January

2003, killing 27 people and injuring 80. This was also an accident involving a

liquefaction plant.

To a large extent, the overall positive safety record is rooted in the limited risks

arising from LNG itself. Because LNG is stored at atmospheric pressure the major

hazard is fire, rather than explosion (in contrast to piped gas). Hence the need for

emergency fire detection and response as a way of combating this risk.

Terrorism The above risks are lower than those arising from pipeline gas since

the opportunities for explosions and for terrorist attack are greater in the latter case

than with LNG. Nonetheless, there are risks affecting employees in all parts of the gas

supply industries that have been noted and which require safety standards. These

include hazards and risks that are chemical, physical and psychological in character19.

Independently of the typical industry-generated risks, there are increased risks from

terrorist attacks, which may also have important and highly damaging environmental

consequences. Prior to September 11, 2001, the major security issue concerning LNG

infrastructure was accidental leakage from LNG storage and processing facilities.

Residents of densely populated areas where LNG plants were planned tended to

express their concerns that gas might escape, congeal and possibly ignite. Discussions

on risk and the likelihood of accidents in LNG transport have focussed on how to deal

with human errors. The current context is very different. One study has stated that the

international gas transport infrastructure seems to be “increasingly susceptible to risks

of accidents or even attacks of transport bottlenecks or other supply interruptions”20.

In 2002 there was a suicide boat attack on a tanker off the coast of Yemen. Such

events have contributed to public concerns about safety post 9/11. Facilities that

handle large amounts of hazardous materials like LNG terminals and ships have been

thought to be attractive targets for terrorists. The ships themselves could be perceived 19 Joint Statement of Eurogas, EPSU and EMCEF on Health and Safety in the Gas Supply Industry, 24.20.2000. 20 C Jepma and N Nakicenovic, Sustainable Development and the Role of Gas, May 2006 (Energy Delta Institute Report for the European Gas Union Congress 2006).

19

as potentially ‘floating bombs’. The fear has been a scenario involving a terrorist

using an explosive charge like a rocket or flying an airplane to breach and probably

detonate one or more storage tanks on an LNG ship at or near a populated port area. A

similar scenario is envisaged when LNG storage facilities are considered. It is feared

that such a detonation will be identical to exploding a nuclear bomb in intensity and

degree of damage, with similar casualties as a result. In January 2008 a US

Government Accountability Office study concluded that “the threat of seaboard

terrorist attacks on maritime energy tankers and infrastructure is likely to persist”21.

However, the greatest risk to the public from a suicide attack on a tanker ship carrying

LNG was deemed to be from fire, not an explosion. The ferocity of such a fire could,

according to some US Government studies, cause burns to persons standing more than

one kilometre away from the ship. LNG in its liquid form does not burn and is

inherently less volatile than many petrochemical products. The US report did however

note that plans for responding to a spill and to a terrorist threat are generally separate

from each other; ports have rarely tested these plans simultaneously to see if they

work effectively with each other. This particular risk factor can be expected to be

reviewed from time to time and to vary in the weight attached to it.

3. Impact Assessment

Is the environmental impact assessment globally more favourable for the LNG

chain than for the piped gas chain?

Answer: Both LNG and piped gas create environmental disruption during the

infrastructure construction phase, but afterwards they present different kinds of issues

for an EIA: one with highly localised, largely marine-based issues, the other with

more extensive, usually land-based effects, potentially affecting a wider range of

communities and geographical area. As a consequence of the latter, the EIA effects

tend to be more favourable for LNG than for piped gas. However, LNG terminals

require the laying of new pipelines to take the gas to the market, so in practice the

EIA issues arising from piped gas also arise when the LNG project is seen as a whole.

21 GAO, Maritime Security, December 2007.

20

Discussion: An important feature of LNG regasification projects is that they may well

require extensions and reinforcements to the existing pipeline network, in addition to

the construction of new pipelines. So, it is not possible to make a simple distinction

between the potential environmental effects of LNG projects on the one hand and the

construction and operation of natural gas pipelines on the other. There is an overlap.

There are also variations to be expected if the structures are located on-land or

offshore. In some recent LNG designs, the regasification terminal can be located

offshore and the gas piped to land and beyond to the market, offering significant

environmental benefits22.

LNG Environmental Impacts The most notable environmental impacts

associated with an LNG facility are those associated with permanent changes to the

morphology of the plant site, both onshore and offshore. Onshore, these are associated

with the marine loading facility, where there is the potential for changes to the

coastline morphology as a result of altered sediment transport caused by the

breakwater and the trestles of the pier to the loading area. Modelling can be used to

minimise the expected impacts. From a social point of view, artisan fishing may be

affected since access will be limited during the construction of the breakwater and

other components of the marine facilities. Fish may leave the area due to construction

disturbances, but this should be restricted to the areas where the construction work is

taking lace and should be temporary.

There may also be impacts associated with fishermen compensation and employment

expectations. The marine ecosystem (including fisheries) could be impacted on due to

dredging activities during construction and operation, as a result of sediment re-

suspension and the potential release of contaminants. Further impacts may arise from

the disposal site of the dredged sediments.

The health and safety impacts of LNG facilities are ones typical of large infrastructure

industrial facilities. They can be mitigated with standard health and safety plans and 22 The designs of the US company, Excelerate Energy, provide an example of the application of new technology to a positive end. It installed an LNG ship-based regasification system, the Gulf Energy Gateway, which can pipe gas to shore from 116 miles out in the Gulf of Mexico. Its permit allows the company to provide up to 500 million cubic feet of gas per day.

21

procedures, except for impacts and risks form the construction of the marine loading

facility. This represents potentially higher risks of accidents and drowning during

construction and operations and therefore requires specific health and safety

procedures.

An indirect long-term impact of an LNG plant is the change in the use of land in the

surrounding area with an increased development of industrial activities and

employment opportunities that could attract new labour from surrounding areas.

A positive feature of the shipping of LNG lies in the fact that these ships use steam

turbine technology in their engines, the last ship type to do so. This technology allows

for easy use of boil-gas in a gas boiler. When enough of such gas is not available, a

fuel oil boiler may be used to produce the steam. In addition, steam turbines require

less maintenance than diesel engines, another benefit from their use.

Natural gas pipeline environmental impact assessment For the construction and

operation of a natural gas pipeline a route corridor will have to be identified, possibly

covering several thousand square kilometres and potentially crossing areas of national

parkland, heritage sites and areas designated for military uses. Within this corridor a

preliminary pipeline route has to be identified, requiring the generation of

archaeological, ecological and environmental data on the basis of site visits and initial

assessments of available ecological data. The final route will be identified during the

environmental impact assessment stage, using results from a wide range of detailed

surveys and studies. The overall aim of these studies is to minimise the impacts of the

new structures and to identify measures to ensure successful restoration of the

environment after construction. Consultation with numerous key bodies such as

landowners, local government, conservation groups and individuals, is part of the

process. It may be noted that in addition to the pipeline itself, above ground

installations are required at intervals along the route to accommodate the valves and

other essential plant and equipment for the operation of the pipeline. These require

planning consents.

22

Eight major environmental and engineering constraints need to be considered in the

process of moving forward with a pipeline construction plan23:

• Populated areas: how to route the pipeline away from areas of population;

• Archaeology: how to avoid important sites;

• Engineering issues: roads, railways, rivers, cables and other pipelines;

• Construction issues: how to avoid steep slopes and difficult ground conditions;

• Landscape and topography: how to minimise effects on national parkland and

similar areas of natural beauty;

• Safety of personnel involved in construction;

• Nature conservation: how to avoid rare species and difficult-to-restore

woodland areas;

• Mineral extraction: how to avoid previous mining areas and suspected

contaminated ground.

On the basis of the foregoing lists of features of LNG and pipeline construction, the

features that need to be taken into account when evaluating a pipeline project

according to its environmental impact are greater and potentially more onerous than

those facing an LNG project proposer. There is also the proven fact of much higher

incident levels leading to large losses of life in the case of natural gas pipelines, which

is not present in the LNG industry. The only caveat is that made at the beginning: the

two kinds of project are not absolutely distinct, even if subject to quite different kinds

of permitting procedures, and hence many of the environmental complexities facing a

pipeline project can be present as a result of a proposed LNG terminal project.

4. Environmental Obstacles

Why do LNG infrastructure projects encounter environmental obstacles in certain

Member States? Check if the recommendations included in the Priority

Interconnection Plan (PIP) on that subject could be improved or complemented.

23 Source: National Grid (UK).

23

Answer: Where LNG is a new industry in a particular region, the starting point is an

unknown risk profile (for the regions and communities involved). Environmental and

other effects may take some time to be understood and evaluated. The

recommendations in the PIP on coordination of planning appear to be adequate in

relation to LNG, but the time-limit for completion of a project of European interest (5

years) is adequate for an LNG project for the authorization pre-construction.

Discussion: The difficulties encountered by LNG projects in Member States are

highly uneven. They vary from one Member State to another and also within Member

States. In Spain there appear to be no difficulties, while in Italy there are many.

Within the UK, most LNG proposals have been uncontroversial; one has not, but the

terminal has been built nevertheless. There is no evidence that these difficulties faced

by LNG plans are uniquely triggered by a perception that LNG per se is a

fundamentally unsafe, life-threatening process as some might consider nuclear power

or one that causes damage to the environment on a scale typical of a large-scale coal

mine, for example. However, LNG terminal projects are sited in marine ports in

coastal regions which support other resources such as marine life, fisheries and

beaches and in some cases a tourism industry. With such a diverse constellation of

interests, it is a challenging task to develop a consensus behind a particular project

proposal.

Engagement with Stakeholders There does appear to be a lack of public

awareness of LNG and hence a need for the project developer to allocate time and

resources to explain the resource, its benefits and its risk profile. This willingness to

engage with communities appears to have been responsible for some of the successes

in various Member States. Another feature that recurs in different contexts is a kind of

cost-benefit analysis that may be carried out at the local level. Given the enormous

amounts of investment required by LNG facilities, what are the benefits in relation to

the costs to the local community? In terms of employment benefits and direct or

indirect economic benefits versus the environmental costs (possibly very significant),

the argument has to be made that overall the balance is a favourable one to the local

community.

24

Given the importance of ensuring a high level of environmental protection in the text

of the EC Treaty, it is hardly surprising that key EC directives have figured in protests

by citizens and groups against proposed LNG infrastructure in certain Member States.

These laws impose important, demanding and sometimes complex requirements on

Member States with respect to information collection and dissemination, transparency

and consultation. The EIA Directive (discussed in section 1.4.2 above) is the most

notable of these legal instruments. A perceived failure to comply with these

requirements can precipitate a break-down of trust and an exploration of channels for

objection through the courts of the Member State concerned.

4.1 Brindisi

An example of this use of environmental impact assessment legislation is the

experience of Brindisi LNG SpA in the Puglia region of south-east Italy. The

company, owned by BG, planned to develop an 8 billion cubic metre per annum LNG

regasification terminal. The Government suspended a decree that allowed BG to build

the LNG terminal in the port of Brindisi until an assessment of the environmental

impact of the 500 million euro ($720.6 million) project was completed. An

authorisation had been granted in January 2003 but, in the face of claims that the EIA

process was flawed, and that the authorisation was therefore invalid, the promoters of

the terminal decided to submit the Brindisi LNG project to a new EIA process. It

agreed in October 2007 to a request to carry out a new environmental evaluation of its

plan to build an LNG terminal at Brindisi. In January 2008 it initiated the EIA process

and subsequently began consultation with the city and the region generally. The delay

in commencement of the project not only means that it will go ahead two or three

years later than planned and at a significantly higher cost, but its very future is in

doubt until the new EIA process has reached its conclusion.

The Brindisi experience is not unique in the Italian context, but is perhaps the most

vivid example of a proposed LNG project which has run into the ground due to a

break-down in trust among the various parties concerned. In this case, the

environmental objections appear to be combined with a failure of the argument that

the project offered significant additional employment opportunities to the local

25

population. Another example of environmental obstacles has occurred in the UK,

concerning two proposed LNG terminals at Milford Haven in Wales. Since it has

involved an unusual recourse by opponents of the project to both EC law and

Community institutions, it may justify an extended treatment as a case study.

4.2 Milford Haven

The proposal was to construct two LNG import terminals in Wales, consisting of three

elements: the construction of two terminals, including facilities for ships to unload, at

Milford Haven, by Exxon-Mobil at South Hook and by Dragon LNG at Waterston,

with a pipeline to take gas through South Wales and on into England, plus a

reinforcement of the existing pipeline system. The pipeline project was separate and

subject to a different permitting process; it has since been completed. It is expected to

provide 15.6 million tonnes of LNG capacity and supply around 20% of UK demand

for gas from 2009. The site was chosen partly because there was already land

designated for large-scale industrial development, some land was available that had

formerly been occupied by an Esso oil refinery (shut down in 1982), and the marine

area had a well developed infrastructure and sheltered deep-water access.

The developers of the LNG terminals carried out an environmental impact assessment

according to domestic (and EC) law, which included consultations with a variety of

groups and individuals. The objectors argued that the requirements of Directive

85/337/EEC were not complied with, since (i) the public authorities did not have the

benefit of essential information on which to base their decisions, and (ii) the lack of

essential information meant that the public were unable to provide input to the

decisions and to make arrangements for their own protection (if they disagreed with

the decisions). Recourse to the domestic courts produced no review of the decision to

approve the terminals. The objectors also noted that the regulation of the port area is

carried out by a Port Authority which also has a commercial interest in the use of the

port for LNG importation.

The developers’ case is that an EIA was carried out, leading to the publication of an

Environmental Statement. For the Dragon LNG terminal alone, consultation was

26

carried out with over 50 organisations, including statutory and non-statutory bodies

and local interest groups. The issues raised in the consultation process were

subsequently addressed in the environmental assessment process. The driver in

identifying solutions was a minimum impact philosophy. The EIA concluded that the

proposed construction of three LNG tanks and associated infrastructure would not

have an adverse impact upon the local environment in the Milford Haven area. The

reasons were that the proposed development was in line with existing industrial usage

on the northern side of the Haven area, and was to be located in part within a site that

is currently being operated as a bulk liquid storage terminal by a company called 4Gas.

The main negative effects identified arose from the visual impact of the facility, the

loss of terrestrial habitat and disturbance to some species and the noise levels during

construction. Many of these impacts are of a localised, temporary nature and

associated with the construction phase. Mitigation measures were taken to reduce the

overall impact. During the operation of the terminal, atmospheric emissions will be

mainly combustion emissions from the burning (sulphur-free) natural gas; this is to be

monitored by the England and Wales Environment Agency under the Pollution

Prevention and Control Regulations.

The application to the courts, known as ‘judicial review’, was rejected by the High

Court for being too late and therefore too prejudicial to the commercial operators of

the facility. A higher court, the Court of Appeal, decided that the delay itself was not

a problem if health and safety issues were involved but these issues had already been

assessed by the relevant public agencies. In the event that was not correct, but in a

further hearing the judges decided that the local authorities were entitled to rely upon

the assurances given to them by the respective agencies (even though it was alleged

that they were wrong and that there had been no EIA carried out by them). A

complaint was raised before the European Court of Human Rights, and two petitions

were submitted to the European Parliament.

On hearing the matter in January 2008, the Parliament petitions committee decided

that further investigation was required into the LNG terminal and the related 316 km

pipeline (which opened in November 2007) to identify whether Directive 85/337/EEC

and other environmental directives had been breached. It referred to matter to the

European Commission for this investigation, the results of which have to be reported

27

back to the Parliamentary committee and may lead to an infringement action being

taken against the UK Government. It may be noted that the reason behind the referral

to the Community institutions is that the ECHR has a long backlog and will take years

before it can decide on the case. It is perfectly likely that similar attempts to involve

Community institutions in objections to LNG terminal construction may be made in

future.

An interesting feature is that while press reports on this case variously claimed that as

many as seven Directives had been violated, most of the attention was on Directive

85/337/EEC. In fact, there are more than 200 legal instruments in force that concern

the environment and which the Commission must enforce if required24. An example

relevant to the petition on the pipeline is the ‘Seveso II’ Directive (96/82/EC,

extended by Directive 2003/15/EC). With such a wide range of matters dealt with in

EC law, there is therefore a very wide scope for a developer or public authority to be

caught out with a procedural or substantive lapse.

The arguments used against the process were not that an EIA process had not been

initiated but that it had been a flawed one, lacking essential elements to be considered

a valid one in EC law. For example, it was argued that the EIA was not carried out for

the project as a whole but rather for parts of the project such as individual pressure

reduction stations and compressors and the pipeline and for each LNG receiving

terminal. The EIAs for the terminals were alleged to contain errors such as a lack of

any proper assessment of marine risk, particularly to a ship unloading at one or other

of the terminals or manoeuvring along the Milford Haven waterway, and a large spill

occurring. In the case of the Dragon LNG terminal an assessment was made of

collision incidents at the jetty but while this was included in the EIA it was claimed it

did not use the correct data for this exercise, making its assessment of the marine risk

of no value. In the case of the South Hook LNG terminal, the complaint was that there

was no marine risk report made available and that no information was given to the

local authorities who were asked to grant the planning permission and hazardous

24 These legislative measures cover all environmental sectors, including water, air, nature, waste, and chemicals, and others which deal with cross-cutting issues such as access to environmental information, and public participation in environmental decision-making.

28

substances consents for the two terminals about what the actual risks were and what

the consequences would be of an accident; all of this information is integral to a

properly conducted EIA process.

The arguments about the risk of an accident produced by the objectors do not

correspond with the experience of several decades of LNG use internationally (see

section on Risk above). They turn on the possibility that an LNG spill in very large

quantities may not prove harmless if it is blown onto a town and ignites, a risk that

was not apparently addressed in the procedures leading to the grant of consents. This

was tied to the risk of collision in the harbour which it was alleged was a strong one.

Even if such arguments were open to question (the risk of a moving gas cloud appears

to be real if the SIGTTO manual is to be taken as an authority, but is a remote and

historically unprecedented one), there appear to be lapses in procedures on

information disclosure in the EIA process that support their case that the decision-

making authorities should have developed a wider information base on which to make

their judgment. There were also potential conflicts of interest among the regulatory

authorities that exposed the decision-making to charges that it may have been

influenced by the probable economic benefits that would result from construction and

operation of the two terminals. Most important of all was the perception that the

procedures had not been complied with, and that the authorities were not sufficiently

rigorous in their approach to the assessment. In effect, the Parliament (and now the

Commission) was being asked to take emergency action to ensure that EIA rules are

complied with before the terminals start being used and to require that decisions

already made be reviewed. The desired outcome might have been analogous to that

initiated by the Italian Government in the Brindisi LNG case, mentioned above.

However, in this case the various authorities appear to have decided that the benefits

to the area from the LNG project outweigh the risks, and that it should go ahead.

It may be worth noting briefly what the role and the powers of the Parliament are in

this area. Basically, every European citizen has the right to petition Parliament to ask

for problems to be remedied in areas within the sphere of activity of the European

Union. The European Parliament also has the power to set up a committee of inquiry

to look into violations or wrong application of Community law by Member States.

29

One of these committees was set up, for example, at the time of the ‘mad cow disease’

outbreak, leading to the establishment of a European veterinary agency.

4.3 Gorgon LNG (Australia)

By way of comparison with a non-EU context, the experience of the Gorgon LNG

project in Australia may be noted. In early September 2007, the Gorgon project

received final approval from the Western Australian (WA) state government, a major

hurdle that had threatened the stop the project. However, this approval was only

granted once WA’s Environment Ministry had set “stringent” environmental

conditions, among which Gorgon must establish a reservoir for a CO2 reinjection and

expert panels to protect the biodiversity of Barrow Island surrounding marine

environment. The sequestration plan includes a proposal to reinject about three

million tonnes of CO2 a year under Barrow Island at a cost of about $850 million

(Aus.) over the following 10 years. The plan also includes a $60 million (Aus.) extra

commitment by the Gorgon operators to conserve rare flatback turtles and other

endangered species.

4.4 Comment on Cases

It is not possible to draw any firm conclusions from a small sample of cases as are

presented above. It should also be noted that these cases are far outweighed by the

various LNG projects in the EU which are moving ahead successfully in conformity

with environmental impact assessment (and other appropriate) procedures. It is

probable that even with a much wider sample of ‘problem’ cases, there would be

significant variables arising from local, regional and national circumstances that

would limit the potential for generalisation. The Milford Haven case is interesting not

so much by illustrating the pervasive impact of the EIA Directive and EC

environmental law but in underlining the potential recourse to Community institutions

by objectors to obtain redress when Member State solutions have been exhausted.

However, there have been other LNG terminals constructed in the UK recently that

have not generated the same controversy. For example, the Isle of Grain LNG

terminal, which was built on a site in which there already were LNG storage facilities.

30

National Grid, the developer, owned a significant area of land and the site had an

existing connection to the high pressure National Transmission System; it was also

close to the main centre of demand in the UK. In that instance, three new LNG

storage tanks were constructed and no recourse to Community institutions by

objectors was evident. It is possible that where protests were more widespread within

a Member State against the construction of an LNG facility, as in Italy, each location

had at least some unique features that triggered local opposition. There is certainly no

general evidence that LNG per se is responsible for some automatic opposition among

local and regional communities (although the ‘new and unknown technology’ factor

alluded to earlier in Part 1 may play a role in triggering opposition).

A clue as to possible difficulties is given in a recent report by the French Commission

for Energy Regulation (CRE). In its discussion of the use of public debates by a

special commission to which the project owner submits a file for the public debate, it

notes that the process involves holding the debate very early in the life of the project.

At this stage, the technical and environmental studies have not yet been completed

and the project sponsors may not be able to answer all of the questions raised by the

public. In turn, this fuels the fears of the local population. Such fears include the

following:

• A lack of public understanding of the future rise in demand for natural gas

when government communication has tended to focus on the development of

renewable energy;

• The positive effects of competition for end consumers; so the local community

cannot agree on the development of LNG terminals sponsored by private

operators, sometimes from other countries;

• Safety and industrial risk;

• Protection of biodiversity;

• Tourism;

• Visual impact of these infrastructures.

The report concluded that the situation in which there was strong opposition to new

terminals in France, “is very similar to local opposition seen in the USA, although the

31

‘nimby’ syndrome … and the fear of terrorist attempts on industrial sites are more

predominant”25.

4.5 The PIP

There are two recommendations in the PIP which are relevant to environmental issues:

the first concerns the streamlining of environmental procedures and the second

concerns the coordination of planning at regional levels26. Both appear to be very

relevant in the light of this study.

With respect to the first, it appears that information may not be available to all

stakeholders at the early stages of a project development, and that this can lead to

misunderstandings and a lack of trust among the community in which the project is to

be carried out. Streamlining need not (and should not) imply a reduction in the time

available to stakeholders to consider the information involved but a better

coordination of its supply with the project timetable might be sought. With respect to

the second recommendation, the coordination of planning at regional levels is clearly

essential but this is probably best left to be achieved by the Member States. The

problems do not seem to be principally ones of coordination but rather ones of

communication and trust. Perhaps this needs to be better appreciated.

4.6 Key Lessons for Siting

The successful practice of a number of project developers suggests that the following

lessons may be noted:

• Involvement of stakeholders at an early stage in the siting process;

• The project plan has to be explained with mitigation of all potentially


• Communication should be made to the environmental community


25 CRE Report (April 2008), at 33. 26 Priority Interconnection Plan, 12-13.

32

• Efforts should be made to raise the community’s knowledge of LNG,


• An active engagement should be made with the community by making



The above lessons can contribute to minimising obstacles to LNG project siting by

building a relationship of trust between the developer and the community.

5. Construction Authorization Limits

Is the 5 year limit mentioned in the PIP to get a final construction authorization

and decision for energy infrastructures realistic for the LNG terminals (and

storages)?

Answer: This time-limit is reasonable for a final construction authorization.

Authorizations have been granted in shorter periods in the EU. By contrast, the total

process including consultation with stakeholders requires an investment of time by the

project developers before the applications for consents go ahead. Failure to do this

thoroughly can lead to problems at later stages of the process and a loss to trust in the

local community or region. If the total period for project initiation and

implementation is considered, a period of 7 years would still be short; 8 years would

be more practical.

Discussion: If a project proposal is to be a success, it is essential to involve key

stakeholders early in the siting process, and to promote communication and

engagement between all parties. There is, as we have noted already, an important

educational dimension here, with both positive and negative aspects of LNG disclosed,

to build up trust in the community. This point is appreciated by the project developers

themselves. The UK South Hook LNG terminal was begun in early 2002 (evaluation

followed by planning permission two years later). This is unusual however since it

benefited from having its venture partners working in close cooperation throughout

the LNG chain (from liquefaction in Qatar to regasification in Wales).

33

The construction period may be as short as three years but the other phases,

particularly consultation leading up to the grant of a construction authorization, may

take longer. It is notable that in the Brindisi case, the perception that mistakes or

irregularities had occurred in the EIA procedure was sufficient to require the process

to be re-started.

There are reasons for optimism about the implementation of LNG infrastructure plans

which may not be present in other plans for large-scale infrastructure, such as those

for construction of petrochemical or nuclear plants (and perhaps even in the case of

large-scale wind parks in some Member States). These are rooted in a significantly

lower level of risk and impressive safety record to date. The trust factor gains

significance in relation to the relative novelty of LNG technology to local and

regional communities where siting may be envisaged. There are successes so far

which show that the obstacles can be overcome.

However, in every case the broad scope of current environmental legislation (and

planning law in many Member States) means that procedures are open to challenge at

several levels of government and in the courts. It is also clear that Community

institutions may be drawn into such challenges. This means that for a project to be

implemented, it is essential to ensure that all legal steps have been fully considered

and the relevant documentation has been provided. However, there is nothing in the

evidence provided here (nor in this expert’s reading on the subject) that suggests that

LNG facilities are worse-placed than other infrastructure projects in this respect.

It is possible to conjecture that as Community institutions such as the European

Commission become more involved in ‘priority interconnection projects’, objectors to

such projects will seek to use the mechanisms available to them in EC law to argue

their case before Community institutions. This would be entirely in line with the

democratic base of such institutions and their political values. However, it may add a

further level of complexity to a process of decision-making that is already a fairly

intricate one. It may also contribute to a lengthening of the total time required to

complete an LNG project.

34

Given the success that the Community has had with target-setting in other areas such

as emissions trading, it seems not inappropriate to include a figure of a specific

number of years for authorisation of an LNG project. However, any such figure

should be included only after consultation with the developers themselves to ensure

that it is a realistic and feasible one. The practical influence of such a target, however,

is another matter since the procedures concerned are, and are likely to remain for the

foreseeable future, national or sub-national ones, with Community institutions having

only a very small role until it appears that national channels of protest have been

completely exhausted (as happened in the Milford Haven case).

Within the context of an EU Action Plan for LNG, a specific year target for

completion of a specific LNG project may be appropriate to include. However, it

should be clear that the principal drivers behind the achievement of this target are and

will continue to lie with, the Member States. This is not simply a matter of adhering to

the doctrine of ‘subsidiarity’. There are at least two other compelling reasons.

Firstly, several Member States are currently reviewing or in the process of changing

their national laws on planning controls. The UK (both England and Wales and

Scotland) have legislation pending on this, with the express aim of accelerating the

planning approval process, not least because of the need for new large-scale energy

infrastructure projects. It would be important to ensure that a possible Action Plan

contributed to and possibly enhanced these ongoing national developments which will,

if successful, have positive impacts not only on LNG projects but on energy

interconnections in general. The difficulties at the Member State level should also not

be underestimated since in several cases the current planning reforms are ones that

follow closely upon earlier attempts that appear to have failed to meet their objectives.

Secondly, in most Member States there are already a significant number of regulatory

bodies and public authorities involved in the planning process. Any proposed Action

Plan should not make that process more confusing. One planning lawyer in England

has stated about the current regime: "It ends up being a mess. It is not a case of too

many cooks spoiling the broth but more that they cannot even decide on the recipe".

Clearly, where a cross-border project is involved, the role for the Community is

35

nonetheless evident, but with LNG projects the justification for such a role is far less

straightforward.

Part 2: Sustainability Issues

6. Generalised Impacts of the Industry

What is the impact on employment, competitiveness and sustainable development

of the gas sector in general?

Answer: There are undoubted positive impacts of an expanding gas sector on

employment, competitiveness and sustainable development. However, the gas sector

is a relatively modest creator of employment, and has contributed mostly as a

substitute for coal in power generation so far, with modest impacts on

competitiveness but clear environmental gains. In the drive to a low carbon economy,

gas is a transitional fuel rather than the ideal fuel of the low-carbon economy. It

nonetheless contributes to policies of sustainable development.

Discussion: The employment benefits of the natural gas industry have been modest

relative to say the coal industry in its prime, but they are scarcely insignificant. Its rise

has accompanied and contributed to the continued decline of the coal industry, which

has entailed job losses in that sector. In terms of the industry’s impact on

competitiveness, it could be argued that it has promoted the green credentials of EU

goods and services by facilitating the transition from coal-fired power generation to

low carbon energy use.

A review of several studies on proposals for new LNG plants reveals some concern

about the impacts on employment. The construction of an average sized LNG

terminal (with regasification capacity of around 6 BCM/year) is not likely to generate

more than about 1000 jobs, directly and indirectly, for typically three years from the

start of work, and afterwards, it generates perhaps as few as about 250 jobs on a

36

continuing basis27. It could lead to the closure of other energy infrastructure such as

an oil refinery and consequent loss of jobs. An additional issue is the relationship

between local job creation and imported labour, with concerns reported about house

price inflation (and rent inflation) associated with the construction projects.

Overall, a potential source of local concern is the asymmetry between the very large

degree of disruption and scale of investment on the one hand and the minimal increase

in employment created on the other. These concerns are likely to be exacerbated

rather than assuaged by the argument that an LNG terminal is necessary in the

National Interest (in terms of say energy security) when it appears to local

communities that they are subsidising the establishment and operation of the

necessary infrastructure.

With respect to sustainability, the picture is more complicated. The concept of

sustainable development emerged at a time when there was little LNG used in the

world’s energy scene. It emerged in the work of the World Commission on

Environment and Development (the Brundtland Commission) in 1987. It means

‘development that meets the needs of the present generation without compromising

the ability of future generations to meet their own needs’28. The challenge is how to

secure sustainable development. The idea is one that is enabling rather than

suggesting a path forward: it identifies conditions couched in terms of opportunities,

capacities and capabilities29.

Natural gas is generally considered to make a positive contribution to sustainable

development because it has been responsible for a declining reliance on coal in power

generation, at least in the European context. Natural gas is the cleanest of all

hydrocarbon energy sources, but virtue of emitting very low amounts of key

pollutants such as sulphur and nitrogen oxide and emitting less than half of the CO2

27 These estimates are controversial. The demand for labour fluctuates and will include non-local labour from time to time, as well as jobs created as ‘spin-off’ from the terminal construction. Evaluating LNG Options for the State of Hawaii”, Facts Inc, January 2004; “Economic and Fiscal Impacts of a Proposed LNG Facility in Robbinston, Maine”, University of Maine, November 2005; “Social Impacts of LNG”, Report to the Pembrokeshire Haven Spatial Planning Group, November 2005. 28 p.43. 29 See Pearce and Atkinson, 1998.

37

emitted by burning coal. However, the greater weight given to climate change

mitigation in public policy means that the CH4 emissions from methane take the shine

off natural gas as ‘the fuel of the future’ or even as a transitional fuel to a low carbon

economy. This aspect is discussed in Section 9 below at some length.

The link between LNG and sustainability is rather different. There are at least four

positive connections between LNG and the notion of sustainability. These are:

• It provides clean natural gas supplies;

• Liquefaction technology is an efficient way to monetise stranded gas reserves

and create benefits for the developing countries that seek to export them;

• LNG is a relatively safe and secure fuel with an excellent track record in

safety and environmental respects, and

• LNG solutions are flexible and scalable: small scale distributed LNG offers

supplies to remote areas while liquefaction technology can capture waste

streams from flare gas and landfills;

7. LNG Usage

Are there sectors of the economy (i.e. power generation) or geographical areas

(i.e. remote regions and islands) where the usage of LNG is particularly

appropriate?

Answer: LNG is used primarily to supplement piped gas and hence benefits the same

sectors of the economy. It is particularly beneficial in tapping sources of gas that may

be ‘stranded’, located in remote areas, and creating links between these areas and the

principal markets.

Discussion: The principal sectors of the economy in Member States that are likely to

benefit from natural gas use are power generation, petrochemicals and chemical

companies, and the fertilizer industry. There appear to be no particular economic

38

sectors that benefit especially from LNG sourced gas. However, in terms of reliability

(or security) the addition of LNG sources makes a positive contribution to the overall

gas supply in a particular Member State that is beneficial to its gas users. In general,

the function of LNG at the present time is that of a supplement to piped gas, rather

than a replacement. This feature is particularly evident when investments in LNG by

large chemical companies are considered. In recent years, inflated natural gas prices

have had a negative effect on manufacturing including the price-sensitive chemical

industry, which uses natural gas as a critical feedstock and also as a fuel. To remain

globally competitive and offset the negative impact of price rises, two scenarios are

notable. Dow Chemical purchase a 15% stake in an LNG import terminal called

Freeport LNG Development in Texas. This was treated as part of Dow’s effort to

bring a reliable supply of affordable gas to the region and to help fuel growing

consumer demand. However, a different response to higher natural gas is not to invest

in the LNG business but to relocate production capacity to parts of the world with

lower natural gas prices, perhaps located near to centres of production, such as

Trinidad and Tobago.

In terms of usage of LNG, the location of terminals in peripheral areas makes little

sense. The very large scale of the investment encourages location as near as possible

to a market so as to reduce the transport costs involved in taking it to the market.

However, there may be environmental reasons for locating it in a remote geographical

area, or reasons connected to objections in other areas. In the USA promoters of LNG

projects have focussed on the Gulf of Mexico as a most promising area because not

only has the public been more willing to accept the problems that occur with

industrial infrastructure in return for benefits and jobs: it is also where there are

petrochemical and chemical companies based. An interesting illustration of the issues

that may arise is provided by the US chemical companies’ reaction to the devastation

caused by hurricanes Katrina and Rita30. They recommended LNG terminals as a way

of reducing the concentration of the country’s energy infrastructure, especially in

coastal areas. They also argued that in setting any goals for the number of terminals, it

was important that not all of them should be located in the same place.

30 Dow Chemical Company – American Chemistry Council: Statement for the Record to the Senate Energy and Natural Resources Committee Hearing on Hurricanes Katrina and Rita’s Effects on the Gulf Coast Region, 6 October 2005.

39

8. Relative Energy Efficiency

Is the LNG chain globally more (or less) energy efficient than the piped gas chain

and why?

Answer: It may be argued that the lower risk of leakage in LNG transportation

increases efficiency relative to piped gas. Both industries strive to increase the degree

of energy efficiency, but the more recent origins of the LNG industry may offer

greater opportunities for innovation in this respect than with piped gas where the

technology applied has been in operation over a longer period.

Discussion: The degree of energy efficiency will pertain to the pipeline/LNG

transportation system, and the focus will be on the engineering or technological

efficiency of the equipment and processes utilized. A technology-based approach to

the energy efficiency issue would address the liquefaction technology, compressors

and other equipment utilized in the LNG chain, the LNG ship (gas for fuel or electric

propulsion) – how energy efficient all these are, and who their manufacturers are, and

what technology is used. The same would apply for the pipeline chain – the pipe

material and diameter, the type of compressors used, the types of pumps used along

the pipeline (electric or diesel), etc. The energy efficiency of the pipeline chain will

also depend on the pipeline distance/ terrain as well as the equipment technology and

manufacturers.

There is another aspect to the energy efficiency of the respective chains. LNG has

usually more indirect effects on global warming than natural gas. It is extracted in a

foreign country, liquefied, placed in tankers that transport it across the high seas, and

then regasified and injected into pipelines to reach the final markets. At each step

there are environmental impacts such as the CO2 emissions that result from

conversion from natural gas to liquid and regasification. There are also environmental

impacts from these steps.

40

Innovations applied to enhance energy efficiency in LNG operations are notable.

Examples include the recent use of excess heat from a nearby 1275 MW power station

to warm LNG used to supply the national gas system from National Grid’s import

business in the UK31. Prior to this, natural gas was used as a fuel source to warm LNG

into its gaseous form at the import terminal and then deliver it into the national

transmission system to meet gas demand. The innovation led to ‘waste’ heat from a

nearby power station being used instead, creating both environmental and efficiency

benefits. In a very different case, an energy efficiency programme introduced at a

production facility in Malaysia led to the adoption of measures to reduce and stabilise

the hydrocarbon content of sour gas released to the incinerators. The operation of the

latter was optimised and overall fuel use was reduced as a result32.

Given the relatively recent increase in interest in LNG, it is not surprising that no

global comparative study appears to have been carried out on the relative energy

efficiencies of piped and LNG gas chains.

9. Gas and Global Warming

How does gas contribute to limit the CO2 emissions and global warming?

Answer: Gas contributes to limit CO2 emissions and to climate change mitigation as

a transition fuel to a low carbon economy but not as the ideal fuel for a low carbon

world. In spite of the many positive contributions it makes, it is part of the problem

with respect to global warming, not the answer.

Discussion: The European Commission’s Third Energy Package of proposals is part

of a new Energy Policy for Europe that heralds the transition from a carbon based

economy to one with a significantly reduced dependence on fossil fuels. The 2008

‘green package’ takes that broad policy commitment further into the realms of 31 National Grid Press Release: National Grid sign ground-breaking deal for greener heat to convert LNG into gas, 29.3.2007 32 Shell Global Solutions, Smooth operator: Malaysia LNG enhances production through improved energy efficiency (2006).

41

specific legislative proposals in areas that interface between energy and climate

change mitigation. However, natural gas occupies an uncomfortable position in this

programme. Its status as the environmentally friendly ‘fuel of choice’ has been called

into question in recent years. This is particularly evident if we contrast the current

situation with that in the 1990s when there was a surge in the construction of natural

gas power plants, fuelled by cheap supplies of natural gas, low investment

requirements and the realisation that natural gas was less carbon intensive than coal.

Currently, natural gas prices are significantly higher than in those days and in some

parts of the EU have been quite volatile. However, more importantly, there has been a

growing appreciation of the environmentally damaging effects of natural gas as a

fuel.

The starting point: Methane or CH4 is the principal component of natural gas and is

a potent GHG with 23 times the radiative forcing impact of CO2 on a weight basis

over a one hundred year period33. CH4 is the second largest contributor to GHG

emissions after CO2 but in practice most of it that is of human origin is generated by

agriculture, waste management and biomass. In global terms the natural gas industry

accounts for about 15%. However, CH4 has a lifetime of only 12 years in the

atmosphere and therefore it has a more immediate effect on the climate system than

other GHG sources.

It is a measure of how seriously this is being taken that industry bodies have

established partnerships with government authorities to try to find ways of reducing

CH4 emissions. They include: Natural Gas STAR, a voluntary partnership between

the US Environmental Protection Agency and 110 partners with the aim of cost-

effectively reducing CH4 emissions from natural gas operations (within the US but

with an international partnership bolted on); the Methane to Markets Partnership, a

cooperative agreement between 18 countries designed to reduce CH4 emissions from

all man-made sources, including the oil and gas industries, and the Global Gas Flaring

Reduction Partnership, an agreement between 15 countries, nine international oil

companies, the World Bank, OPEC and the EU to support developing countries and

the petroleum industry in their efforts to reduce flaring and venting. The future

33 As defined in the IPCC Third Assessment Report (2001).

42

success of their efforts is unclear since, while a variety of technologies exist to reduce

CH4 emissions from natural gas production and use, there are various barriers that

need to be overcome. These include regulatory and legal obstacles, affecting access to

gas resources, or forcing associated flaring of natural gas, as well as traditional

industry practice of using high pressure natural gas in pneumatic devices to extract

petroleum. On the positive side, the Clean Development Mechanism (CDM), and

Joint Implementation (JI), two of Kyoto’s Flexible Mechanisms, allow carbon credits

for CH4 emission reduction projects. These may be used in the EU ETS.

An important caveat to this is that a wasteful use of natural gas as in flaring for

example contributes significantly to global warming and is avoidable (but not in many

places, avoided). Leakages and flaring have important GHG effects. To the extent that

such gas could be tapped by means of an LNG chain, it would have positive

environmental benefits in this respect. The establishment of LNG links would

contribute to valorising gas in such places where, currently, it is seen as having no

market value or use, either because it is associated with oil exploitation or because it

exists in quantities that are deemed to be too small or too far from a market for

pipeline development.

Yet, ironically, these concerns about the relationship between methane and climate

change are likely to be ones that are shared by Community institutions and Member

State Governments but not necessarily local communities. A natural gas industry

association report makes a sobering assessment of this. It says:

“Consideration of the climate change benefits of natural gas infrastructure

development is low on the agenda for local communities. Local groups are

primarily interested in the real and perceived near-term impacts of projects

such as economic, health and local environmental effects”34.

LNG in particular has come under some scrutiny in relation to its climate change

impacts, driven by the significant increase in plans submitted to regulatory authorities

for the construction of new terminals for regasification and related infrastructure in

34 IPIECA, Natural Gas as a Climate Change Solution, September 2006, 10.

43

the United States and to a lesser extent in the EU. The resulting studies have noted

that an answer to the question of natural gas’ relationship to global warming requires

consideration of all stages of the LNG supply chain (extraction, collection,

liquefaction, shipping, regasification and pipelines. The supply chain entails leakage

losses which are small. These appear insignificant until it is recalled that methane is

more than twenty times more potent as a global warming agent than CO2. This has to

be taken into account when statements are made along the lines that – a gas-fired

combined-cycle power plant emits less CO2 than a coal-fired plant of equivalent size.

The Carnegie Mellon University did a study of LNG emissions in 2007 and in its

conclusions it warned that while LNG had low overall life-cycle greenhouse gas

emissions, it had high life-cycle NOx emissions since emissions from liquefaction and

regasification are significant. Indeed, these emissions and indeed those arising from

natural gas use could be “very similar to those of coal” in terms of NOx (the Report

placed more emphasis on NOx than on CO2). The latter is a local pollutant and may

well not be taken into account by national governments in calculating the impacts on

global warming, particularly if they pollute the local area of another country. Looking

ahead, as newer generation technologies and CCS are installed, the study concludes

that the overall life-cycle GHG emissions from electricity generated from coal,

domestic natural gas (i.e. within the USA), LNG or synthetic natural gas (from coal

gasification) could be similar. However, for NOx emissions, LNG would have the

highest life-cycle emissions and “would be the only fuel that could have higher

emissions than the current average emission factor from electricity generation even

with advanced power plant design”. Their conclusion was that investing very large

sums in LNG infrastructure would increase the environmental burden from the energy

infrastructure.

How might this affect the treatment of LNG in a possible Action Plan designed by the

Commission? Given the Community’s commitment to climate change mitigation in

relation to its future energy policy, some recognition of the above doubts would seem

unavoidable. The presence of critical, slightly negative views about the short- to

medium-term impacts of LNG on the climate suggests that it would be necessary to

provide a clear justification for the support of an expansion of LNG infrastructure and

use. Natural gas is not regarded as the fuel of the future that it once was believed to be,

44

although in the short- to medium-term it still has clear advantages over coal. In the

medium to long term, other carbon mitigation technologies are introduced

commercially. This change of status needs to be taken into account if such a Plan is

developed. A more detailed examination of this issue might be appropriate, focussing

on how ‘energy security’ can be balanced with ‘sustainability’ and any other, relevant

Community policies and priorities with respect to environmental protection.

Part 3: Findings and Recommendations

Is an LNG action plan justified from the environmental and sustainability point of

view?

Answer: There is no compelling case for an Action Plan for LNG from an

environmental and sustainability point of view. Specific action points may be

considered however, not least to promote understanding about this source of energy

and to disseminate good practice in the industry itself.

10. Findings

• The case for a dedicated plan for LNG promotion based on

environmental and/or sustainability grounds is not a strong one. There are

very few features of LNG that distinguish it from natural gas from this point of

view and few features of LNG infrastructure development that distinguish it

from other forms of infrastructure. Some features of LNG infrastructure

development are notable: the lack of a cross-border element, at least in any

conventional sense; the methane composition, meaning that like natural gas it

cannot claim to be a positive contributor to climate change mitigation; the

need for close coordination with the port authorities for safety reasons; the

high level safety features and excellent track record, giving it a distinct

advantage over pipeline gas, which has a number of documented accidents

following from explosions due to leakage and/or corrosion; the fact that this is

a new source of energy and not well understood by local communities which

may be asked to host it.

45

• The scope for an institutionally interventionist role for the European

Commission is very limited on matters that are environmental or related

to sustainable development. The EC is promoting ‘grand energy strategy’ but

the challenges to LNG expansion appear to be largely local; Member States

are already grappling with the issues and so there is a risk that EC intervention

will confuse the issues; the Community institutions may be approached by

local interests to require assistance in objections against national, regional or

local authorities within a particular Member State; Community policy on the

environment requires Community institutions to aim at a high level of

protection by Article 174 EC, taking into account the diverse situations in the

various regions of the Community; the EC therefore has a possible dual role of

umpire and coordinator; there is a potential policy conflict in an active EC role

between energy policy goals such as diversification and sustainability goals

since LNG is not climate change-friendly;

• Responsibility lies and should remain with the Member States. There are

two aspects of LNG promotion that make close cooperation with the Member

States imperative: firstly, there is the possibility of competence overlaps

between the Commission and the Member States (LNG projects may well

have a European significance, especially in promoting security and

diversification, but they typically lack a cross-border dimension and have a

strong local or regional aspect); secondly, there is a potential conflict between

the policy priority in LNG promotion (‘security’ of EU energy supplies

through diversification) and the goal of climate change mitigation, which will

have implications that vary from one Member State to another. The promotion

of LNG involves a choice between priorities;

• Unevenness of Member State experiences. The case studies presented here

do not allow us to draw any firm conclusions. The sample of cases is small. It

is also probable that even with a much wider sample there would be

significant variables arising from local, regional and national circumstances

that would limit the potential for generalisation. The Milford Haven case is

interesting not so much by illustrating the pervasive impact of the EIA

Directive and EC environmental law but the recourse to Community

institutions by objectors to obtain redress when Member State solutions

46

appeared unsuccessful. However, there have been other LNG terminals

constructed in the UK recently that have not generated the same controversy.

Experience in this respect is uneven in the EU. There is certainly no general

evidence that LNG per se is responsible for some automatic opposition among

local and regional communities.

• Better safety record for LNG than Pipeline Gas. The variety of risks that

can arise from pipeline use (leakage, corrosion) is greater than with LNG and

the track record on safety is worse with piped gas than with LNG. At the same

time, the scale of pipeline use is still considerably greater than that of LNG so

this record of excellence may yet be challenged by events as LNG use expands.

• Inadequacy of planning and approval processes. The planning and approval

processes in Member States are generally recognised to be not conducive to

achieving a rapid response to a perceived shortage of the appropriate

infrastructure. Engaging with local and regional authorities and initiating new

legislation is already underway in many Member States, so the scope for

intervention by the Commission is therefore limited, even if the preferred

instrument was to be a ‘soft’ one.

11. Recommendations

• Since a greater role for LNG would have useful but not necessarily extensive

impacts on energy security and has a climate change impact which is relatively

speaking acceptable in the short to medium term at least, the Community

could adopt an Action Plan which draws attention to the benefits and

attractions of LNG as a choice in Member States’ energy policies. However,

the case for such a Plan from an environmental and/or sustainability point of

view is not a strong one.

• The Plan’s principal purpose might be to publicise the LNG option, but it

would need to note (at least) to the less-than-ideal contribution it makes to

climate change mitigation.

• In terms of particular actions, the Plan might attempt to identify general and

specific actions that Member States could adopt to ensure that a balance was

achieved between the Community interest in a diverse energy supply (security)

47

and the provision of local and regional benefits from any such large-scale

investment. It might seek to list the practices that have been adopted by

terminal promoters and local authorities in Member States to engage with

stakeholders in the initial consultative stages of an LNG project.

• From the environmental and/or sustainability point of view, there may be a

role for the Community in providing an Expert Adviser to Member States

(rather than a PIP Coordinator). LNG remains perceived by local communities

as an unknown, new technology. The Community may be able to offer the

Expert Advisor as a resource to either local communities or Member States,

but would only be able to have a role in a particular project if the Member

State requested such a role.

• The European Commission could play a useful role in disseminating Good

Practice in stakeholder-industry-government relations and in providing a

package of standard information on what the risks are and what the generally

accepted technologies are to mitigate such risks, in its role as an independent

party. This could be carried out by means of a Commission appointed Expert,

rather than a Coordinator.

• To minimise obstacles to siting new installations, the following lessons should

be widely disseminated:

o Involvement of stakeholders at an early stage in the siting process;

o The project plan has to be explained with mitigation of all potentially


o Communication should be made to the environmental community


o Efforts should be made to raise the community’s knowledge of LNG,


o An active engagement should be made with the community by making



48

Annex: Selected Sources35

• Communication from the Commission to the Council and the European

Parliament, Priority Interconnection Plan, COM (2006) 846 final, 10.1.2007;

• CRE, The Regulation of LNG Terminals in France, a summary report by the

Working Group, April 2008;

• C Jepma and N Nakicenovic, Sustainable Development and the Role of Gas,

May 2006 (Energy Delta Institute Report for the European Gas Union

Congress 2006);

• SIGTTO, ‘LNG Operations in Port Areas: Recommendations for the

Management of Operational Risk Attaching to Liquefied Gas Tanker and

Terminal Operations in Port Areas’ (SIGTTO = the Society of International

Gas Tanker and Terminal Operators), Witherbys Publishing, 2003, first edition.

• SIGTTO Information Paper 14: Site Selection and Design for LNG Ports and

Jetties, 1997;

• Report on a Second Study of Pipeline Accidents using the Health and Safety

Executive’s risk assessment programmes MISHAP and PIPERS (RR 036),

Casella Scientific Consultants for the Health and Safety Executive, 2002.

• Sandia National Laboratories, Guidance on Risk Analysis and Safety

Implications of a Large LNG Spill over Water, Rep No SAND 2004-6258, 21

December 2004;

• Evaluating LNG Options for the State of Hawaii”, Facts Inc, January 2004;

• Economic and Fiscal Impacts of a Proposed LNG Facility in Robbinston,

Maine, University of Maine, November 2005;

• IDB report on Peru LNG Camisea project, Environmental and Social Strategy;

• Social Impacts of LNG: Report of the Pembrokeshire Haven Spatial Planning

Group, November 2005;

• Submission to the European Parliament Petitions Committee by the Safe

Haven Group (R Buxton) (2008);

35 The views of a number of individuals with diverse involvements in the LNG industry and its social and economic effects were sought and taken into account in writing this study. Their cooperation is gratefully appreciated. They bear no responsibility for the contents of the final study however.

49

• IPCC Third Assessment Report;

• UNDP, Energy at the World Summit for Sustainable Development, 2002:

‘World Energy Assessment Overview, chapters I, V (Are Sustainable Futures

Possible?) and VI (Policies and Actions to Promote Energy for Sustainable

Development);

• Eurogas, EPSU & EMCEF Joint Statement on Health and Safety in the Gas

Supply Industry;

• David Pearce and Giles Atkinson, ‘The Concept of Sustainable Development:

An Evaluation of its usefulness Ten Years After Brundtland’, 1998, Centre for

Social and Economic Research on the Global Environment, University

College London and University of East Anglia;

• The UK Government Sustainable Development Strategy, 2005, Cm 6467;

• Carnegie Mellon University: ‘Comparative Life-Cycle Air Emissions of Coal,

Domestic Natural Gas, LNG and SNG for Electricity Generation, by Paulina

Jaramillo, Michael Griffin and Scott Matthews, in Environmental Science and

Technology, 2007, 41, 6290-6296;

• Natural Gas as a Climate Change Solution: Breaking down the Barriers to

Methane’s Expanding role, IPIECA, Summary Report of Workshop, 26

September 2006 (IPIECA = International Petroleum Industry Environmental

Conservation Association);

• US Government Accountability Office (GOA), Maritime Security: Federal

Efforts Needed to Address Challenges in Preventing and Responding to

Terrorist Attacks on Energy Commodity Tankers, December 2007, GAO-08-

141;

• J Makansi, LNG: Will it or Won’t it (meet US natural gas demand)? In

Combined Cycle Journal, First Quarter 2006.

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