The LNG controversy between the USA and Mexico

Nov 05, 2004 01:00 AM

by Talli Nauman

What’s the LNG controversy between the United States and Mexico all about?
I think awareness of the environmental considerations is a worthy cause, so here’s a stab at examining them.

Natural gas is the cleanest-burning fossil fuel for electricity production. As such, it is a transition fuel. In other words, it is being used to create power and light because it’s more efficient than coal and oil; but it’s not as sustainable as renewable energy sources, such as solar and wind that have yet to be sufficiently developed.
Since energy companies, with US and Mexican federal administration support, aim to use more natural gas, they are trying to increase their supplies from Algeria, Indonesia and Russia. Getting the gas to the American continent entails liquefying it by super-cooling, hauling it here with tankers, and re-gassifying it for pipeline distribution by warming it.

The theory is that development of re-gasification plants, such as those proposed along the coast of California and Baja California, will help keep natural gas prices from continuing to spiral upward as the US gas demand gradually increases at a projected rate of 1.8 % annually and Mexican needs grow somewhat faster than that.
Thirty re-gasification terminals are proposed for the United States, which is Mexico’s prime natural gas supplier. Four are in operation, in the southern and eastern United States, accounting for less than 2 % of US and Mexican natural gas supplies. Four southern California sites and two Baja California locations are being targeted for potential terminal construction.

However, an accidental explosion that killed at least 30 people and wounded some 70 more in an Algerian cooling plant in January, caused activists and regulators alike to re-evaluate their positions on the technology. California community opposition was instrumental in cancelling Royal Dutch-Shell and Bechtel plans for a terminal at Vallejo, near San Francisco. Likewise, Calpine dropped its plans for one in Humboldt Bay after Eureka residents protested.
Storms of negative public sentiment have greeted three other California re-gasification terminals proposed by Mitsubishi in Long Beach, and by BHP Billiton and Crystal Energy off the Ventura County coast. Meanwhile a ChevronTexaco proposal near Camp Pendleton Marine Corps Base is purportedly unpopular there.

Nay-sayers have argued that hidden costs undermine the touted economic viability of LNG transfers: It will take an estimated $ 1.3 bn for recovery from the Algerian accident, not including compensation to victims and families. Subsidizing insurance for the entire, risky LNG chain is an ongoing concern, especially when terrorists are taken into consideration.
But that’s not all. A risk assessment by Mexican environmental officials concludes that an accident at a transfer terminal could cause second-degree burns within 20 seconds to anyone within a mile of it.

The efficiency quotient of natural gas is significantly reduced once gas-field CO2 releases, transfer costs, and liquefying considerations are factored. Gas pumping that releases relatively large amounts of CO2 to the atmosphere contributes to induced global climate change. High proportions of energy are used in shipping LNG across the ocean on tankers and in reheating the substance to its gaseous form.
The re-gasification process takes place in huge installations that typically damage sea life by inducting plants and animals along with ocean water used for heating the LNG and by releasing the water at a cooler temperature.

ChevronTexaco and Sempra Energy-Shell Oil are trying to build terminals near Ensenada, Baja California. But the binational ad hoc Border Power Plant Working Group, Grupo de Ecologia y Conservacion de Islas, and Greenpeace Mexico have marshalled resistance. While the companies are accustomed to catching flak from Californians, they have been surprised by Mexicans’ newfound capabilities to stand up for their beliefs in the need for minimum standards.
With a journey earlier aboard Greenpeace’s Artic Sunrise boat to Sempra-Shell’s proposed site just off the Coronado Islands, activists lent their support to Mexican legislators’ mandate last year for a protected natural area there, an initiative that the administration has failed to embrace. Protected status would bar the terminal on the grounds of the wide variety of fauna that are endemic, rare, threatened or endangered with extinction there. These include various species of seals, gulls, petrels, cormorants, snakes, lizards and salamanders.

Mexican constituents also note that development of LNG facilities effectively translates to increased dependence on foreign control, as opposed to self-reliance and domestic security. They complain that the bulk of the product transferred at proposed Mexican LNG installations would go to meet US needs while the lion’s share of risks and potential taxpayer subsidies would fall on the shoulders of the Mexican public. This is all the worse because Mexico lacks oversight capacity and enforcement muscle in comparison to the United States.
Mexico has had enough tragic accidents with gas to have learned its lessons. For that reason it makes sense that any LNG development should be in the United States, not in Mexico. Meanwhile, Mexico could well be advancing instead with its great potential for solar power. In Baja California, the plans for installation of wind generators combined with existing geothermal power could meet demand with no LNG development whatsoever.

Industry representatives have a valid point when they note that beefing up LNG development is justified because renewables are not yet immediately available to fill the void in the demand for clean energy.
But environmental lobbies score heavily with their argument that developers should place greater emphasis on increasing renewables, and less on LNG. We have to think about both the short term and the long term.

Talli Nauman is a founder and co-director of Journalism to Raise Environmental Awareness, a project initiated with support from the MacArthur Foundation.

Source: Latin Petroleum Analytics
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