A proposed fuel terminal in Long Island Sound could reduce energy costs in New York state by $1.5 billion annually, a new study indicates.
Broadwater, a Texas-based joint venture between Shell Oil Co. and TransCanada Corp., proposes tethering a floating terminal measuring 80 feet high and 1,200 feet long in Long Island Sound. Ten miles south of the New Haven County shoreline, it would have a relatively low profile on the horizon, and even lower from Fairfield County”™s eastern beaches.
The liquefied natural gas (LNG) terminal would take ocean tanker shipments every few days, converting the natural gas from its superchilled liquid form in which its is transported back into its natural state, then feed it into the Iroquois Gas Transmission System pipeline, which snakes across Canada, New York and Connecticut before ending on Long Island.
At peak output, Broadwater says the facility would provide fuel to power electricity generation for 4 million homes, roughly 45 percent of all those in Connecticut and New York.
At present, there is no floating storage re-gasification unit operating anywhere in the world at the scale of the Broadwater proposal.
The company hopes to begin deliveries in 2010. When Broadwater formally proposed the terminal in early 2006, the project was expected to cost $700 million, but the costs of LNG terminals have been impacted by inflationary pressure for labor and materials.
The payoff for New York and Connecticut could be a 17 percent reduction in energy bills from what they otherwise would tally, to about $300 annually per household on median.
The Broadwater project has spurred intense debate in Connecticut and New York, with policymakers weighing the benefits of lower energy prices against environmental, tourism and safety factors.
With state backing, the Long Island Power Authority (LIPA) commissioned the $850,000 study, which was authored by Boston-based Levitan & Associates Inc. In addition to applying a new economic model to the project, the 176-page report summarizes findings from several previous federal analyses of Broadwater.
The new study pays scant attention to the Connecticut market except to state the terminal and connecting pipelines would have no significant environmental impact on Connecticut”™s shoreline.
Opponents of the project, including Gov. M. Jodi Rell, state Attorney General Richard Blumenthal and the Connecticut Fund for the Environment, argue the project teeters on the edge of a slippery slope in which Long Island Sound would be transformed from a recreational area into an industrial zone.
The Federal Energy Regulatory Commission (FERC) is in the process of finalizing a final environmental draft impact statement on the project, with a draft statement released last November asking Broadwater to use a more environmentally friendly dredging technique for the pipeline.
So far this year, FERC has approved a pair of onshore LNG terminals for Mississippi, and last week found that a proposed LNG expansion in South Carolina would not significantly impact the natural environment there.
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Report: risks and benefits
The Levitan Associates report is intended to quantify the economic benefits of the project; identify commercial considerations and risk factors; and compare Broadwater to other LNG projects proposed in the Northeast.
Most of those proposals will be abandoned, Levitan Associates opines, leaving New York and by extension Connecticut exposed to whipsawing natural gas prices during winter when utilities compete with households for natural gas.
BP has proposed an LNG terminal for New Jersey, which would not have the economic impact in New York of Broadwater, Levitan Associates found.
Absent Broadwater, existing pipelines can be expanded to satisfy demand for another decade, Levitan Associates determined. New York and Connecticut are at the farthest ends of natural gas pipelines from Canada and the Gulf of Mexico.
A 2006 study commissioned by the Connecticut Fund for the Environment found that pipeline upgrades from Canada will increase the region”™s supply of natural gas.
Broadwater previously had conservatively estimated total cost savings of $680 million annually in New York and Connecticut, and nearly that much more in indirect economic benefits to the commercial sector.
Levitan Associates said Broadwater”™s analysis did not take into account modeling techniques such as the project”™s potential to limit volatility in gas prices, and income multipliers on local earnings and savings generated by the project.
Given the proposed terminal”™s distance from shore, it would make it an unappealing target for terrorists, Levitan Associates found, and the firm noted the U.S. Coast Guard would not allow tankers to enter the sound in heavy winds and seas.
FERC has noted the increased disruption and risk from tankers passing through The Race, a 3.5-mile-wide shipping channel near the entrance to Long Island Sound.
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