Shell to build floating LNG terminal

Washington: TransCanada and Royal Dutch Shell won federal approval to build and operate a floating liquefied-natural-gas terminal in Long Island Sound.

"Without increased natural-gas supplies in the region, consumers will experience higher prices and reduced reliability of natural-gas supply," Joseph Kelliher, chairman of the Federal Energy Regulatory Commission (FERC) said at a meeting Thursday in Washington where the project was approved.

"That is certainly the case on Long Island and in New York City and Connecticut."

The Broadwater project, a joint venture of Trans-Canada and Shell, would be able to deliver 1 billion cubic feet of natural gas a day to markets on Long Island, in metropolitan New York and western Connecticut. It may provide about 25 per cent of the area's gas needs, according to the project's website.

The project is opposed by Connecticut Governor Jodi Rell, a Republican. New York Governor David Paterson, a Democrat, said last week he may delay a state decision on the terminal.

Broadwater is "one of the most difficult" liquefied- natural-gas projects in the US, Jamie Webster, senior consultant at PFC Energy, said.

"We question whether Broadwater will actually be built," he said, noting that pipeline companies are seeking to fill the need for delivering more gas into the region.

Doubts

Webster questioned whether TransCanada or Shell have adequate access to LNG cargo ships to keep the facility operating at sufficient capacity to make it economic.

FERC's decision "is an important step forward in bringing new clean, reliable, affordable natural-gas supply to a region where prices are volatile and climbing," John Hritcko, senior vice president for Broadwater, said in an e-mailed statement.

Connecticut Attorney General Richard Blumenthal said in a statement he would "fight this project at every agency and in every court up to the US Supreme Court, if necessary."

Rell sent a March 17 letter to the commission seeking a delayed decision, citing the need for Paterson to "fully acquaint himself" with the matter. Paterson became New York's governor last week after Eliot Spitzer resigned.

"FERC's decision is nothing short of a disgrace," Rell said in a statement. "It is an insult to the people of Connecticut and New York, a discourtesy to New York Governor David A. Paterson - who has been in office less than a week - and an assault on the most precious environmental asset our two states possess: the reinvigorated Long Island Sound."

The project still needs approval from two more New York state agencies plus the Army Corps of Engineers and US Coast Guard. "We're hoping to receive those before the end of the year," Hritcko said.

Broadwater will cost more than $700 million and may be operating early in the next decade.

Liquefied natural gas, or LNG, is fuel that is cooled to a liquid state at -126 Celsius), reducing its volume and allowing for transportation by ship.