The shale gas boom in the U.S. has used unconventional drilling practices like fracking to lower natural gas prices, to increase supply, and to soon transform America into a net gas exporter. This last development has elicited a huge controversy, and ground zero could be the small town of Lusby on Maryland’s Chesapeake Bay.
That’s the home of a proposed liquefied natural gas (LNG) export terminal called Cove Point. Dominion Energy has received conditional approval to convert the site’s existing import facility into an export terminal from the Department of Energy, FERC, and a key state regulatory body. But local opposition to the proposed project is mounting.
On Sunday, July 13, there will be a rally on the Mall in Washington, D.C., organized by a host of green groups, billed as the “first national rally to stop fracked gas exports at Cove Point.” They want FERC to decide not to give the project final approval. Mike Tidwell, director of the Chesapeake Climate Action Network, said in May that the risk of a fire or explosion at the facility to nearby houses was too great: “if anything goes off site … homes are going to be incinerated. They’re just too close.”
A report commissioned by nearby residents and Tidwell’s group highlights the risks posed by the plant to homes within 0.8 miles from its borders. Though the LNG industry has a very safe track record, the consequences of an accident at an LNG facility would be dire. A 2004 Energy Department study suggested that a catastrophic leak and ignition at an LNG plant would cause a fireball hot enough to melt steel at 1,200 feet and give second-degree burns a mile away.
It’s not just environmentalists that oppose Cove Point. “Maryland’s religious communities are heartbroken by the harm climate change is already causing to our neighbors, close to home and around the world,” says Joelle Novey, Director of Interfaith Power & Light, a network of religious institutions which engages congregations in responding to climate change. “And we’re praying that FERC won’t let a Goliath corporation stomp into Maryland and make a mockery of our good work to protect our air, our water, and our climate.”
“We have often felt outmatched in this struggle, but we can only do what David did — this weekend, we’ll stand up faithfully for clean energy that doesn’t frack our water or protects our climate.”
Natural gas is a funny product in that when a driller wants to transport it to market, it relies on a pipeline system because it’s a gas. Unlike crude oil or potatoes or Snuggies, it can’t be poured into a tank or thrown on the back of a truck — it just floats away if it’s not in a pipeline or container. In the middle of last century, the industry began experimenting with the practice of liquefying natural gas by cooling it to -259°F. This made it 600 times smaller than normal room-temperature gas, and allowed you to pump it into an unpressurized super-cold tank on land or on a special ship and keep it for later, or send it to market almost anywhere in the world. It was expensive to do, and expensive to build the import and export facilities, but in some places it was worth the cost. Qatar, for instance, became one of the largest gas exporters in the world after ExxonMobil built several liquefaction facilities there, and other countries followed suit.
As American traditional gas reserves dwindled, it started to import natural gas, building a half-dozen import terminals, but as the market oscillated back and forth, those terminals were mothballed, seemingly for good as the shale boom transformed the industry. Yet with the fracking boom, U.S. domestic gas supply has grown enough that energy companies want to export their product abroad. That means more gas liquefaction facilities — export terminals.
The Energy Department has given conditional approval to six LNG export terminals, and final approval to one export facility in Louisiana. In May, however, the Department proposed a rule that would ensure it could no longer conditionally approve LNG export terminals without first doing an environmental review under the National Environmental Policy Act. Christopher Smith, Principal Deputy Assistant Secretary for Fossil Energy, said that the move would streamline the process, while critics of the administration said that it would “unilaterally slow” gas exports.
In May, the Maryland Public Service Commission gave Dominion Energy approval to build the power plant that would fuel the export terminal. The project had to satisfy 179 conditions because it concluded the project would not provide a net benefit to Maryland residents. Those conditions include millions in clean energy investment, aid to low-income Marylanders, and various pollution protection measures.
Congress is likely to support any expansion of LNG exports, with bipartisan support evident from recent hearings and even climate advocates like Sen. Mark Udall (D-CO) pushing legislation that would speed up Energy Department approvals for LNG export facilities. President Obama has all but committed to natural gas production as a climate-friendly way to fuel switch from coal, the Goliath that Novey mentioned has allies at the federal level. But so does the David.
The Energy Information Administration released a report earlier this year showing how natural gas exports would lead to a lot more fracking. More fracking, as the Sierra Club noted in a recent report, leads to increased environmental risks across the country.
The Energy Department said in a May report that the benefits of using cleaner-burning natural gas is largely offset by the methane leaks prevalent in gas extraction and LNG exports. The report used the optimistic estimates of methane leakage, which are unrealistically low.
Sen. Ed Markey (D-MA) noted that the Energy Department warned that approving a sixth LNG export terminal would lead to U.S. domestic prices rising 54 percent, or $62 billion a year in additional energy costs. A recent study from Charles River Associates found that under a high export scenario, U.S. gas prices would triple by 2030. Using the gas domestically rather than abroad translates to more jobs and lower prices. Sen. Debbie Stabenow (D-MI) asked why Americans should want to give up the current advantage of cheap natural gas prices. And as LCV’s Dan Weiss (formerly of the Center for American Progress) noted in congressional testimony, increasing gas exports will mean more methane leakage, which is something that the Energy Department must assess when considering LNG export terminals.
Since the conflict between Russia and Ukraine intensified earlier this year, many people have advocated exporting LNG to Ukraine as a way to loosen Russia’s hold. The problem is that even if the U.S. exports a significant amount of gas to the region, Russia will maintain its dominant position in the European market because Europe is unlikely to build adequate import infrastructure when it could easily turn into a bad investment. Russian gas will also still be cheaper because it’s delivered via pipeline. LNG is expensive because of all the effort used to liquefy, export, transport, import, and distribute it.
The bottom line is that shipping more natural gas abroad will increase production here in the U.S., and likely decrease supply — which would lead to higher prices. The increased production would lock us in to more fossil fuel production because the investors in a $400 million LND terminal are going to want to reap the value of their investment. This means a continued reliance on natural gas, which, while it burns cleaner than coal, comes with enough methane leakage to override much of the benefit of lower emissions when we burn it. That message will be spoken loud and clear on the National Mall on Sunday by residents who stand to lose most from the approval of the Cove Point LNG terminal.