Romney Approves Two Offshore LNG Terminals

Outgoing Massachusetts Gov. Mitt Romney on Tuesday approved two liquefied natural gas (LNG) delivery terminals for eventual construction off the coast of Gloucester, northeast of Boston. The Governor's action will help Massachusetts meet its growing natural gas supply needs without compromising public safety while minimizing environmental damage.

"Energy consumers have long recognized natural gas as a clean and efficient source of power, but our ability to supply this fuel has not kept pace with demand," said Romney. "These new terminals will allow us to safely expand gas supply without undue harm to the environment or to the fishing industry that is Gloucester's lifeblood."

Romney's approval, required under the Deep Water Port Act, pertains to two proposed LNG terminals, the Northeast Gateway and Neptune projects, to be sited in federal waters approximately 13 and 7 miles south-southeast of Gloucester, respectively.

Rising natural gas prices and the increased use of gas for electric power generation have highlighted the need for Massachusetts to increase its supplies of natural gas. Together, the two facilities would have the potential to provide on average an extra one billion cubic feet per day of natural gas to New England, a 20 percent increase over current peak supply that will help to enhance reliability and lower energy costs.

In addition to increasing overall gas supply, the new terminals will allow Massachusetts to become less reliant on gas shipments to the Distrigas LNG facility in Everett. On the coldest winter days, when demand is highest, roughly a third of the natural gas consumed in Massachusetts is provided by this facility. While deliveries there will continue, the addition of new offshore terminals will permit new deliveries without the risks associated with transporting gas through populated areas. Expanding the number of supply sources will also make Massachusetts less reliant on the gas it receives by more expensive transmission methods, such as interstate pipelines.

Offshore LNG terminals, such as the Northeast Gateway and Neptune projects, are essentially underwater buoys that attach to the bottom of LNG tankers for offloading gas in its vaporized form. Equipment on board the tankers converts the liquefied natural gas to vapor and then pumps the vaporized gas into a pipeline that will link to the existing Hubline Natural Gas Pipeline that crosses Massachusetts Bay.

A joint review undertaken by the U.S. Coast Guard and the Massachusetts Executive Office of Public Safety found that the projects properly addressed public safety concerns.

The two proposed LNG terminals lie within important ocean habitat, and construction of the facilities will present some impacts to natural resources and commercial and recreational fisheries in the area. To mitigate these impacts, the Executive Office of Environmental Affairs will require the companies involved to fund a range of activities. For example, both project proponents have agreed to a comprehensive mitigation package that will provide $47 million ($23.5 million for each project) to support the commercial fishing industry, carry out resource management research and improve recreational access to ocean waters. The mitigation packages require:

  • $16 million to mitigate impacts to commercial fishermen and lobstermen;
  • $14 million to mitigate impacts to public trust interests;
  • $9 million to mitigate impacts to marine habitat and resources; and
  • $8 million to mitigate impacts to marine mammals.
"This is a significant mitigation package that will advance our knowledge and management of marine resources in Massachusetts Bay," said Secretary of Environmental Affairs Robert W. Golledge Jr. "These kinds of projects show how to responsibly move forward with energy development while minimizing environmental impacts."

In addition to these direct environmental mitigation activities, the proponents have each committed to make contributions of $4 million over two years for gas efficiency and low-income fuel assistance programs.

Having approved both projects under the Deep Water Port Act, Romney has forwarded a letter to the U.S. Maritime Administration (MARAD) listing various conditions for inclusion in the DWPA licenses. If MARAD grants the licenses, Northeast Gateway could begin construction as early as the spring of 2007 with service beginning in December of that year. Neptune could begin construction in the spring of 2009 with operations following in December of that year.