Order Code RL32073
CRS Report for Congress
Received through the CRS Web
Liquefied Natural Gas (LNG)
Infrastructure Security:
Issues for Congress
Updated March 16, 2005
Paul W. Parfomak
Specialist in Science and Technology
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress
Liquefied Natural Gas (LNG) Infrastructure Security:
Issues for Congress
Summary
Liquefied natural gas (LNG) is a hazardous fuel frequently shipped in large
tankers from overseas to U.S. ports. LNG is also manufactured domestically and is
often stored near population centers. Because LNG infrastructure is highly visible
and easily identified, it can be vulnerable to terrorist attack. Since September 11,
2001, the U.S. LNG industry and federal agencies have put new measures in place
to protect LNG infrastructure and respond to the possibility of terrorism.
Nonetheless, public concerns about LNG risks continue to raise questions about LNG
security. While LNG has historically made up a small part of U.S. natural gas
supplies, rising gas prices and the possibility of domestic shortages are sharply
increasing LNG demand. Faced with this growth in demand and public concerns,
Congress is examining the adequacy of federal LNG security initiatives. Proposed
legislation, including S. 684 and H.R. 173, would increase regulation of LNG
security.
LNG infrastructure consists primarily of tankers, import terminals, and inland
storage plants. There are seven active U.S. terminals and proposals for numerous
others. Potentially catastrophic events could arise from a serious accident or attack
on such facilities, such as pool or vapor cloud fires. But LNG has a record of relative
safety for the last 40 years, and no LNG tanker or land-based facility has been
attacked by terrorists. The likelihood and possible impacts from LNG attacks
continue to be debated among experts.
Several federal agencies oversee the security of LNG infrastructure. The Coast
Guard has lead responsibility for LNG shipping and marine terminal security, and has
issued new maritime security rules under the Maritime Transportation Security Act
of 2002 (P.L. 107-295). The Office of Pipeline Safety (OPS) and the Transportation
Security Administration (TSA) both have security authority for LNG storage plants
within gas utilities, as well as some security authority for LNG marine terminals.
The Federal Energy Regulatory Commission (FERC) approves the siting, with some
security oversight, of on-shore LNG marine terminals and certain utility LNG plants.
The Coast Guard, OPS and FERC have agreed to cooperate in the siting approval of
new LNG facilities, inspection and operational review of existing facilities, informal
communication, and dispute resolution.
Federal initiatives to secure LNG are still evolving, but a variety of industry and
agency representatives suggest they are reducing the vulnerability of LNG to
terrorism. As Congress continues its oversight of LNG, it may consider whether
future LNG security requirements will be appropriately funded, whether these
requirements will be balanced against evolving risks, and whether the LNG industry
is carrying its fair share of the security burden. Congress may also act to improve its
understanding of LNG security risks. Costly “blanket” investments in LNG security
might be avoided if more refined terror threat information were available to focus
security spending on a narrower set of infrastructure vulnerabilities. Finally,
Congress may initiate action to better understand the security implications of new
LNG terminals offshore. This report will be updated as events warrant.
Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Scope and Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
What is LNG? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Expectations for U.S. LNG Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Overview of U.S. LNG Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
LNG Tanker Ships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
LNG Marine Terminals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
LNG Peak Shaving Plants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
LNG Risks and Vulnerabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Physical Hazards of LNG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Safety Record of LNG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
LNG Security Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
LNG Tanker Vulnerability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Recent LNG Security Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Coast Guard Maritime Security Activities . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Federal Pipeline Safety and Security Agencies . . . . . . . . . . . . . . . . . . . . . . 16
Federal Energy Regulatory Commission (FERC) Oversight . . . . . . . . . . . . 17
Federal Interagency Cooperation in LNG Security . . . . . . . . . . . . . . . . . . . 18
Industry Initiatives for Land-Based LNG Security . . . . . . . . . . . . . . . . . . . 19
Key Policy Issues in LNG Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Public Costs of LNG Marine Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Uncertainty About LNG Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Security Implications of Offshore LNG Facilities . . . . . . . . . . . . . . . . . . . . 24
Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
List of Figures
Figure 1: U.S. Natural Gas Wellhead Price ($/Mcf) . . . . . . . . . . . . . . . . . . . . . . . 3
Figure 2: LNG Storage Sites in Utilities and Marine Terminals . . . . . . . . . . . . . . 8
List of Tables
Table 1: LNG Terminals with Pending Federal Approvals . . . . . . . . . . . . . . . . . . 6
Liquefied Natural Gas (LNG) Infrastructure
Security: Issues for Congress
Introduction
Liquefied natural gas (LNG) facilities are receiving a great deal of public
attention due to their increasingly important role in the nation’s energy infrastructure
and their potential vulnerability to terrorist attack. LNG has long been important to
U.S. natural gas markets, although energy economics and public perceptions about
LNG risks have limited the industry’s growth. Concerns about rising natural gas
prices and the possibility of domestic gas shortages have been driving up demand for
LNG imports. But LNG is a hazardous1 liquid transported and stored in large
quantities. Consequently, LNG infrastructure may directly impact the security of
communities where this infrastructure is located. Faced with the widely perceived
national need for greater LNG imports, and persistent public concerns about LNG
risks, some in Congress are examining the adequacy of security provisions in federal
LNG regulation.2
Measures before Congress would affect LNG infrastructure security. The
Liquefied Natural Gas Safety and Security Act of 2005 (S. 684), among other
provisions, would require the Federal Energy Regulatory Commission (FERC) to
incorporate Coast Guard security recommendations and resource requirements into
their review of new LNG terminal siting applications; would require LNG terminal
developers to reimburse local government security costs; would require LNG
developers to complete facility security plans before FERC issued siting application
reviews; and would require federal standards to promote the remote siting of LNG
facilities. The Anti-Terrorism and Port Security Act of 2005 (H.R. 173), among
other provisions, would make it a crime to interfere with ships or maritime facilities;
to put destructive devices in U.S. waters; or to knowingly discharge or release
hazardous substances into U.S. navigable waters or the adjoining shoreline to
endanger human life, health, or welfare.
This report provides an overview of recent industry and federal activities related
to LNG security. The report describes U.S. LNG infrastructure, the industry’s safety
record and security risks, and the industry’s security initiatives since September 11,
2001. It summarizes recent changes in federal LNG and maritime security law and
related changes in the security roles of federal agencies. The report discusses several
1 49 CFR 172.101. List of Hazardous Materials. Office of Hazardous Materials Safety,
Department of Transportation.
2 U.S. Representatives Edward J. Markey. “Markey, Other Key Lawmakers Asks GAO to
Investigate LNG Security.” Press release. Jan. 31, 2005.
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policy concerns related to federal LNG security efforts: 1) public costs of marine
security, 2) uncertainty regarding LNG terrorism risks, and 3) security implications
of building offshore LNG facilities.
Scope and Limitations
This report focuses on industry and federal activities in LNG infrastructure
security. The report includes some discussion of state and local agency activities as
they relate to federal efforts, but does not address the full range of state and local
issues of potential interest to policy makers. The report also focuses on shipping,
marine terminals and land-based storage facilities within gas utilities; it does not
address LNG trucking, special purpose LNG facilities, or LNG-fueled vehicles. The
report discusses activities in LNG safety only as they relate to security. For further
discussion of LNG terminal safety, see CRS Report RL32205, Liquefied Natural Gas
(LNG) Terminals: Siting, Safety and Regulation, by Paul W. Parfomak and Aaron M.
Flynn.
Background
What is LNG?
When natural gas is cooled to temperatures below minus 260°F it condenses
into liquefied natural gas, or “LNG.”3 As a liquid, natural gas occupies only 1/600th
the volume of its gaseous state, so it is stored more effectively in a limited space and
is more readily transported by ship or truck. A single tanker ship, for example, can
carry huge quantities of LNG–enough to supply the daily energy needs of over 10
million homes.4 When LNG is warmed it “regasifies” and can be used for the same
purposes as conventional natural gas such as heating, cooking and power generation.
In 2004, LNG imports to the United States originated primarily in Trinidad
(75%), Algeria (16%), and Malaysia (3%). Some shipments also came from Qatar,
Nigeria, Oman, Australia and other countries.5 Brunei, Indonesia, Libya, and the
United Arab Emirates also export LNG, and may be significant U.S. suppliers in the
future. In addition to importing LNG to the lower 48 states, the United States exports
Alaskan LNG to Japan.
Expectations for U.S. LNG Growth
The United States has used LNG commercially since the1940s. Initially, LNG
facilities stored domestically produced natural gas to supplement pipeline supplies
3 Natural gas typically consists of at least 80% methane, although LNG is usually over 90%
methane. It may also contain other hydrocarbon gases (e.g., propane) and nitrogen.
4 Behr, P. “Higher Gas Price Sets Stage for LNG.” Washington Post. Washington, D.C.
July 5, 2003. pD10.
5 Energy Information Administration (EIA). Natural Gas Monthly. Washington, D.C. Feb.
2005. Table 5.
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during times of high gas demand. In the 1970's LNG imports began to supplement
domestic production. Due primarily to low domestic gas prices, LNG imports stayed
relatively small–accounting for only 1% of total U.S. gas consumption in 2002.6 In
countries with limited domestic gas supplies, however, LNG imports grew
dramatically over the same period. Japan, for example, imported 97% of its natural
gas supply as LNG in 2002, over 11 times as much LNG as the United States.7 South
Korea, France, Spain, and Taiwan also became heavy LNG importers.
Natural gas demand has accelerated in the U.S. over the last several years due
to environmental concerns about other energy sources, growth in natural gas-fired
electricity generation, and historically low gas prices. Supply has not been able to
keep up with demand, however, so gas prices have recently become high and volatile.
As Figure 1 shows, gas prices at the wellhead have risen from between $1.50 and
$2.50/Mcf through most of the 1990s to an average above $5.00/Mcf and a peak
above $6.00/Mcf in 2004.8 At the same time, international prices for LNG have fallen
because of increased supplies and lower production and transportation costs, making
LNG more competitive with domestic natural gas.9 While cost estimation is
speculative, some industry analysts believe that LNG can be economically delivered
to U.S. pipelines for approximately $2.50 to $3.50/Mcf.10
Figure 1: U.S. Natural Gas Wellhead Price ($/Mcf)
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0.00
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: Energy Information Administration. Natural Gas Weekly Update. Feb. 3, 2005.
In 2003 testimony before the House Energy and Commerce Committee, the
Federal Reserve Chairman, Alan Greenspan, called for a sharp increase in LNG
6 Park, G. “List of Planned LNG Ventures Grows.” Petroleum News. Haines, AK. June 29,
2003.
7 Energy Information Administration (EIA). “World LNG Imports by Origin, 2002.”
Washington, DC. Oct. 2003.
8 Mcf = thousand cubic feet
9 Sen. Colleen Taylor. “LNG Poised to Consolidate its Place in Global Trade.” Oil & Gas
Journal. Jun. 23, 2003. p73.
10 Hughes, P. “Outlook for Global Gas Natural Markets.” BP, Gas Power & Renewables
Division. Presentation to the World Bank Energy Week 2004 Conference. Mar. 8, 2004.
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imports to help avert a potential barrier to U.S. economic growth. According to Mr.
Greenspan’s testimony
“...notable cost reductions for both liquefaction and transportation of LNG... and high
gas prices projected in the American distant futures market have made us a potential
very large importer... Access to world natural gas supplies will require a major
expansion of LNG terminal import capacity.”11
If current natural gas trends continue, the Energy Information Administration (EIA)
projects U.S. LNG imports to account for approximately 21% of total U.S. gas supply
in 2025.12
Overview of U.S. LNG Infrastructure
The physical infrastructure of LNG consists of interconnected transportation and
storage facilities, each with distinct physical characteristics affecting operational risks
and security needs. This overview focuses on the three major elements of this
infrastructure: tanker ships, marine terminals, and storage facilities.
LNG Tanker Ships
LNG is transported to the United States in very large, specially designed tanker
ships. LNG tankers are double hulled, containing several massive refrigerated tanks,
each sealed and insulated to maintain safe LNG temperature and prevent leakage
during transit. There are currently 176 tankers in service around the world, with a
combined cargo capacity of over 21 million cubic meters of LNG, equivalent to over
seven times the average daily U.S. natural gas consumption in 2004. Another 111
tankers with 17 million cubic meters of capacity are on order. There are no U.S.-
flagged LNG tankers.13
LNG Marine Terminals
LNG tankers unload their cargo at dedicated marine terminals which store and
regasify the LNG for distribution to domestic markets. These terminals typically
consist of docks, LNG handling equipment, storage tanks, and interconnections to
regional gas transmission pipelines. There are seven active U.S. LNG terminals:
•
Everett, Massachusetts. The Everett terminal is located across the Mystic
River from Boston; tankers must pass through Boston harbor to reach it. The
first LNG import facility in the country, the Everett terminal began service in
1971. According to Tractebel, the Belgian company which owns the terminal,
11 Greenspan, Alan, Chairman, U.S. Federal Reserve Board. “Natural Gas Supply and
Demand Issues.” Testimony before the House Energy and Commerce Comm. June 10, 2003.
12 EIA. DOE/EIA-0383(2005). Feb. 2005. Table A13. p159.
13 LNG OneWorld. Internet home page. Drewry Shipping Consultants, Ltd. and Maritime
Content, Ltd. London. March 7, 2005.
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it “serves most of the gas utilities in New England and key power producers”
altogether meeting “between 15-20% of New England’s annual gas demand.”14
The terminal received 66 LNG shipments in 2004.15
•
Lake Charles, Louisiana. The Lake Charles terminal is located approximately
nine miles southwest of the city of Lake Charles near the Gulf of Mexico. The
terminal began service in 1981 and is owned by CMS Energy.16 The Lake
Charles terminal received 59 LNG shipments in 2004, although it was closed
for construction for part of the year.17 After ongoing expansion, the terminal
could receive up to 175 shipments per year by 2006.18
•
Cove Point, Maryland. Cove Point is located on the Chesapeake Bay 60 miles
southeast of Washington, DC. The Cove Point terminal, owned by Dominion
Corporation, began service in 1978 but closed in 1980 because low domestic
gas prices made imports uneconomic. In 1995, the terminal reopened to liquefy,
store and distribute domestic natural gas in the Mid-Atlantic.19 In July, 2003,
the terminal reopened for LNG imports. The terminal received 77 LNG
shipments in 2004.20 Under current expansion plans, the terminal could receive
up to 150 shipments per year by 2008.21
•
Elba Island, Georgia. The Elba Island terminal, owned by El Paso
Corporation, is located on a marsh island approximately five miles down the
Savannah River from Savannah, Georgia and ten miles from the Atlantic coast.
Like Cove Point, the Elba Island terminal began service in 1978 and closed in
1980, but reopened in late 2001.22 The terminal received 41 LNG shipments in
2004.23 After ongoing expansion the terminal could increase shipments to
approximately 118 per year by 2006.24
14 Tractebel. “New LNG Vessel to Serve Tractebel’s Atlantic Basin Customers.” Press
release. Brussells, Belgium. June 17, 2003.
15 Dept. of Energy, Office of Fossil Energy (OFE). “Imports of Liquefied Natural Gas
(LNG).” Unpublished data. Washington, D.C. Feb. 23, 2005.
16 Panhandle Energy (CMS Energy Corp.). “Trunkline LNG Lake Charles Terminal.”
Internet web page. Houston. July 16,2003.
17 OFE. Feb. 23, 2005.
18 Federal Register. Vol 67 No34. Feb. 20, 2002. p7684.
19 Dominion Corp. “History of Cove Point.” Web page. Richmond, VA. July 17, 2003.
20 OFE. Feb. 23, 2005.
21 Martin, S.O. “Projections Not Promises.” Bay Weekly. Deale, MD.. May 20, 2004.
22 Energy Information Administration (EIA). “U.S. LNG Markets and Uses.” Office of Oil
and Gas. Washington, D.C. Jan. 2003. p3.
23 OFE. Feb. 23, 2005.
24 Federal Register. Vol 67 No181. Sept. 18, 2002. p58784.
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•
Gulf Of Mexico, Louisiana. The Gulf Gateways (Energy Bridge) terminal was
completed in 2004 and received its first LNG shipment in March, 2005. The
terminal, owned by Excelerate Energy, consists of an offshore gas pipeline buoy
system and is served by specialized tankers which regasify their LNG cargoes
on board. The terminal expects up to 60 LNG shipments per year by 2006.25
•
Peñuelas, Puerto Rico. The Peñuelas terminal, located on the southern coast
of Puerto Rico, began service in 2002. The terminal is dedicated to fueling an
electric generation plant which supplies 20% of Puerto Rico’s power.26 Both
the terminal and power plant are owned by EcoElectrica, a joint venture of
Edison Mission Energy and Gas Natural, a Spanish company. The terminal
received 14 LNG shipments in 2004.27
•
Kenai, Alaska. Built in 1969, this is the oldest LNG marine terminal in the
United States and the only one built for export (to Japan). The Kenai terminal,
owned by Phillips Petroleum and Marathon Oil, is located in Nikiski near the
Cook Inlet gas fields. Since 1969 the terminal has exported an average of
approximately 34 LNG shipments each year.28
In addition to these active terminals, developers have proposed over 70 new
LNG import terminals to serve the U.S. market. Many of these proposals are well-
advanced, with recent or pending federal permit approvals. Table 1 lists summary
information for these proposed LNG terminals located in the United States.
Additional LNG import terminals have been proposed in several of the states in
Table 1, as well as in Alaska, Maine, Oregon, and Washington. Terminals to serve
U.S. markets have also been proposed in Mexico, Canada and the Bahamas.
Offshore LNG terminals, such as the newly built Gulf Gateways and the
proposed Cabrillo Port projects, connect to land only by underwater pipelines. These
offshore terminal designs seek to avoid community opposition, permitting, and
operating obstacles which have hindered the construction of new on-shore LNG
terminal facilities.29 Because offshore terminals would be located far from land, they
also would present fewer security risks than on-shore LNG terminals. Offshore
terminals do present environmental concerns, however, since they would use
seawater for regasification. Such a process cools the waters in a terminal’s vicinity
with potential impacts on the local ecosystem due to the lower water temperatures.30
25 Natural Gas Intelligence. “Energy Bridge Terminal Prepares for First 3 Bcf LNG Delivery
This Month.” Intelligence Press, Inc. March 7, 2005.
26 “Gas Natural Acquires Enron’s 50% Stake in 540-MW Gas Plant in Puerto Rico.” Platt’s
Global Power Report. McGraw-Hill. July 10, 2003. p11.
27 OFE. Feb. 23, 2005.
28 Marathon Oil Corporation. 2003 Annual Report. Houston. March 8, 2004. p11.
29 Zeus Development Corp. “Six New Offshore Terminal Designs May Expedite LNG
Deliveries.” Latin Petroleum Analytics. Houston, TX. June 11, 2003.
30 O’Driscoll, M. “LNG: Shell's Gulf Landing Offshore Project Gets Green Light.”
(continued...)
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Offshore LNG terminals also employ new engineering systems, so they may also
need to overcome technical challenges associated with their floating designs.31
Table 1: Proposed U.S. LNG Terminals with Federal Permit Applications
Location
Name
Developer(s)
Type
Permit Status
Hackberry, LA
Cameron LNG
Sempra
Onshore
Approved 9/03
Gulf of Mexico, LA
Port Pelican
ChevronTexaco
Offshore
Approved 11/03
Freeport, TX
Freeport
Cheniere Energy
Onshore
Approved 6/04
Sabine Pass, LA
Sabine Pass
Cheniere Energy
Onshore
Approved 11/04
Gulf of Mexico, LA
Gulf Landing
Shell
Offshore
Approved 2/05
Sabine Pass, TX
Golden Pass
Exxon Mobil
Onshore
Applied 11/03
Fall River, MA
Weaver’s Cove
Poten & Partners
Onshore
Applied 12/03
Corpus Christi, TX
Corpus Christi
Cheniere Energy
Onshore
Applied 12/03
Oxnard, CA
Clearwater Port
Crystal / Woodside
Offshore
Applied 1/04
Long Beach, CA
Long Beach
Mitsubishi / Conoco
Onshore Applied
1/04
Oxnard, CA
Cabrillo Port
BHP Billiton
Offshore
Applied 1/04
Gulf of Mexico, LA
Main Pass
McMoran
Offshore
Applied 2/04
Mobile, AL
Compass Port
ConocoPhillips
Offshore
Applied 3/04
Ingleside, TX
Vista Del Sol
Exxon Mobil
Onshore
Applied 9/04
Providence, RI
Fields Point
KeySpan
Onshore
Applied 5/04
Logan Twp., NJ
Crown Landing
BP
Onshore
Applied 9/04
Ingleside, TX
Corpus Christi
Occidental Petrol.
Onshore
Applied 11/04
Gulf of Mexico, LA
Beacon Port
ConocoPhillips
Offshore
Applied 2/05
Gloucester, MA
Neptune
Distrigas
Offshore
Applied 2/05
Sources: Trade press; Company websites
LNG Peak Shaving Plants
Many gas distribution utilities rely on “peak shaving” LNG plants to supplement
pipeline gas supplies during periods of peak demand during winter cold snaps. The
LNG is stored in large refrigerated tanks integrated with the local gas pipeline
network. The largest facilities usually liquefy natural gas drawn directly from the
interstate pipeline grid, although many smaller facilities without such liquefaction
capabilities receive LNG by truck. LNG tanks are generally surrounded by
containment impoundments which limit the spread of an LNG spill and the potential
size of a resulting vapor cloud.32 LNG peak shaving plants are often located near the
populations they serve, although many are in remote areas away from people.
30 (...continued)
Greenwire. E&E Publishing, LLC. Washington, D.C. Feb 18, 2005.
31 Shook, B. “Environmental, Safety, Security Issues Add to Cost of Offshore LNG.” Oil
Daily. Energy Intelligence Group. Aug. 5, 2003.
32 California Energy Commission (CEC). Liquefied Natural Gas in California: History,
Risks and Siting. No.700-03-005. Sacramento, CA. p5.
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According to the Energy Information Administration (EIA) there are 96 active
LNG storage facilities in the United States distributed among approximately 55
utilities.33 These facilities are mostly in the Northeast where pipeline capacity and
underground gas storage have historically been constrained. Figure 2 shows the
locations of U.S. LNG storage facilities within utilities and on-shore terminals.34
Figure 2: LNG Storage Sites in Utilities and Marine Terminals
Source: Energy Information Administration
LNG Risks and Vulnerabilities
The safety hazards associated with LNG terminals have been debated for
decades. A 1944 accident at one of the nation’s first LNG facilities killed 128
people and initiated public fears about LNG hazards which persist today.35
Technology improvements and standards since the 1940's have made LNG facilities
much safer, but serious hazards remain since LNG is inherently volatile and is
usually shipped and stored in large quantities. The January 2004 accident at
Algeria’s Skikda LNG terminal which killed or injured over 100 workers has added
to the ongoing controversy over LNG facility safety.36 Because LNG infrastructure
is highly visible and easily identified, it is also potentially vulnerable to terrorist
attack.
33 Gaul, D.and Young, L. Energy Information Administration (EIA). “U.S. LNG Markets
and Uses.” Washington, DC. Jan. 2003. pp1,11.
34 Figure 2 excludes seven small sites associated with vehicular fuel or niche applications.
35 Bureau of Mines (BOM). Report on the Investigation of the Fire at the Liquefaction,
Storage, and Regasification Plant of the East Ohio Gas Co., Cleveland, Ohio, October 20,
1944. Feb. 1946.
36 Junnola, J. et al. “Fatal Explosion Rocks Algeria’s Skikda LNG Complex.” Oil Daily. Jan.
21, 2004. p6.
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Physical Hazards of LNG
Natural gas is combustible, so an uncontrolled release of LNG poses a serious
hazard of explosion or fire. LNG also poses hazards because it is so cold. Experts
have identified several potentially catastrophic events that could arise from an LNG
release. The likelihood and severity of these events have been the subject of
considerable research and testing. While open questions remain about the impacts
of specific hazards in an actual accident, there appears to be consensus as to what the
greatest LNG hazards are.
•
Pool fires. If LNG spills near an ignition source, the evaporating gas in a
combustible gas-air concentration will burn above the LNG pool.37 The
resulting “pool fire” would spread as the LNG pool expanded away from its
source and continued evaporating. Such pool fires are intense, burning far more
hotly and rapidly than oil or gasoline fires.38 They cannot be extinguished–all
the LNG must be consumed before they go out. Because LNG pool fires are so
hot, their thermal radiation may injure people and damage property a
considerable distance from the fire itself.39 Many experts agree that a pool fire,
especially on water, is the most serious LNG hazard.40
•
Flammable vapor clouds. If LNG spills but does not immediately ignite, the
evaporating natural gas will form a vapor cloud that may drift some distance
from the spill site. If the cloud subsequently encounters an ignition source,
those portions of the cloud with a combustible gas-air concentration will burn.
Because only a fraction of such a cloud would have a combustible gas-air
concentration, the cloud would not likely explode all at once, but the fire could
still cause considerable damage.41 An LNG vapor cloud fire would gradually
burn its way back to the LNG spill where the vapors originated and would
continue to burn as a pool fire.42 If an LNG tank failed due to a collision or
terror attack, experts believe the failure event itself would likely ignite the LNG
pool before a large vapor cloud could form.43 Consequently, they conclude that
large vapor cloud fires are less likely than instantaneous pool fires.
•
Flameless explosion. If LNG spills on water, it could theoretically heat up and
regasify almost instantly in a “flameless explosion” (also called a “rapid phase
37 Methane, the main component of LNG, burns in gas-to-air ratios between 5% and 15%.
38 Havens, J. “Ready to Blow?” Bulletin of the Atomic Scientists. July/Aug. 2003. p17.
39 Fay, J.A. “Spills and Fires from LNG and Oil Tankers in Boston Harbor.” Working
paper. MIT. Dept. of Mechanical Engineering. Cambridge, MA. March 26, 2003.
40 Havens. 2003. p17.
41 West, H.H. and Mannan, M.S. “LNG Safety Practices and Regulations.” Prepared for the
American Institute of Chemical Engineering Conference on Natural Gas Utilization and
LNG Transportation. Houston, TX. April, 2001. p2.
42 Quillen, D. ChevronTexaco Corp. “LNG Safety Myths and Legends.” Presentation to the
Natural Gas Technology Conference. Houston, TX. May 14-15, 2002. p18.
43 Havens. 2003. p17.
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transition”). While the effects of tanker-scale spills have not been studied
extensively, Shell Corporation experiments with smaller LNG spills in 1980 did
not cause flameless explosions. Based on a review of these experiments, a U.S.
national laboratory concluded that “transitions caused by mixing of LNG and
water are not violent.”44 Even if there were a flameless explosion of LNG,
experts believe the hazard zones around such an event “would not be as large
as either vapor cloud or pool fire hazard zones.”45
In addition to these catastrophic hazards, an LNG spill poses hazards on a
smaller scale. An LNG vapor cloud is not toxic, but could cause asphyxiation by
displacing breathable air.46 Such clouds rise in air as they warm, however,
diminishing the threat to people on the ground. Alternatively, extremely cold LNG
could injure people or damage equipment through direct contact.47 The extent of
such contact would likely be limited, however, as a major spill would likely result in
a more serious fire. The environmental damage associated with an LNG spill would
be confined to fire and freezing impacts near the spill since LNG dissipates
completely and leaves no residue (as crude oil does).48
Safety Record of LNG
The LNG tanker industry claims a record of relative safety over the last 45
years; since international LNG shipping began in 1959, tankers have carried 40,000
LNG cargoes without a serious accident at sea or in port.49 LNG tankers have
experienced groundings and collisions during this period, but none has resulted in a
major spill.50 The LNG marine safety record is partly due to the double-hulled design
of LNG tankers. This design makes them more robust and less prone to accidental
spills than single-hulled oil, fuel, and chemical tankers like the Exxon Valdez, which
caused a major Alaskan oil spill after grounding in 1989.51 LNG tankers also carry
radar, global positioning systems, automatic distress systems and beacons to signal
44 Siu, N. et al. Qualitative Risk Assessment for an LNG Refueling Station and Review of
Relevant Safety Issues. Idaho National Engineering Laboratory. INEEL/EXT-97-00827 rev2.
Idaho Falls, ID. Feb. 1998. p71.
45 Havens. 2003. p17.
46 Siu. 1998. p62.
47 Siu. 1998. p63.
48 Quillen. 2002. p28.
49 Verberg, G. “The Role of IGU in the Promotion of LNG.” Presentation to the Groupe
International des Importateurs de Gaz Natural Liquefie. Korea. Oct. 17, 2004.
50 CH-IV International. Safety History of International LNG Operations. TD-02109.
Millersville, MD. July, 2004. pp13-18.
51 Society of International Gas Tanker & Terminal Operators Ltd. (SIGTTO). “Safe Havens
for Disabled Gas Carriers.” Third Edition. London. Feb. 2003. pp1-2.
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if they are in trouble. Cargo safety systems include instruments that can shut
operations if they deviate from normal as well as gas and fire detection systems.52
The safety record of onshore LNG terminals is more mixed. There are
approximately 40 LNG terminals (and more than 150 other LNG storage facilities)
worldwide. Since 1944, there have been approximately 13 serious accidents at these
facilities directly related to LNG. Two of these accidents caused single fatalities of
facility workers — one in Algeria in 1977, and another at Cove Point, Maryland, in
1979. On January 19, 2004, a fire at the LNG processing facility in Skikda, Algeria
killed an estimated 27 workers and injured 74 others. The Skikda fire completely
destroyed a processing plant and damaged a marine berth, although it did not damage
a second processing plant or three large LNG storage tanks also located at the
terminal.53 The Skikda accident did not injure the rest of the 12,000 workers at the
complex, but it was considered the worst petrochemical plant fire in Algeria in over
40 years.54 According to press reports, the accident resulted from poor maintenance
rather than a facility design flaw.55 Another three accidents at worldwide LNG plants
since 1944 have also caused fatalities, but these were construction or maintenance
accidents in which LNG was not present.56
LNG Security Risks
LNG tankers and land-based facilities may be vulnerable to terrorism. Tankers
could be physically attacked to destroy their cargo—or commandeered for use as
weapons against coastal targets. Land-based LNG facilities could also be physically
attacked with explosives or through other means. Alternatively, computer control
systems could be “cyber-attacked,” or both physical and cyber attack could happen
at the same time. Some LNG facilities could also be indirectly disrupted by other
types of terror strikes, such as attacks on regional electricity grids or communications
networks, which could in turn affect dependent LNG control and safety systems.57
Since LNG is fuel for power plants, heating, military bases, and other uses, disruption
of LNG shipping or storage poses additional “downstream” risks, especially in more
LNG-dependent regions like New England.
LNG Tanker Vulnerability. LNG tankers cause the most concern among
security analysts because they are potentially more accessible than fixed terminal
facilities, because they may transit nearer to populated areas, and because LNG spills
from tankers could be more difficult to control. According to a December 2004
52 Petroplus International, N.V. “Energy for Wales: LNG Frequently Asked Questions.”
Internet home page. Amsterdam, Netherlands. Aug. 4, 2003.
53 Junnola, J. et al. Jan. 21, 2004. p6.
54 Hunter, C. “Algerian LNG Plant Explosion Sets Back Industry Development.” World
Markets Analysis. Jan. 21, 2004. p1.
55 Antosh, N. “Vast Site Devastated.” Houston Chronicle. Jan. 21, 2004. pB1.
56 CH-IV International. pp6-12.
57 Skolnik, S. “Local Sites Potential Targets for Cyberterror.” Seattle Post-Intelligencer.
Seattle, WA. Sept. 2, 2002.
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report by Sandia National Laboratories, an intentional LNG spill and resulting fire
could cause “major” injuries to people and “significant” damage to structures within
approximately 500 meters (0.3 mile) of the spill site, more moderate injuries and
structural damage up to 1,600 meters (1.0 mile) from the spill site, and lower impacts
out to 2,500 meters (1.5 miles).58
A 2002 Lloyd’s Register report specifically assessed the impacts of a hand-held
missile attack and a bomb attack from a small boat on tankers serving the Everett
LNG terminal. The study found that under certain circumstances “loss of
containment may occur through shock mechanisms caused by small amounts of
explosive.”59 The study concluded that “a deliberate attack on an LNG carrier can
result in a ... threat to both the ship, its crew and members of the public.”60 However,
the study also concluded that the fire hazard from an LNG tanker would be less than
that from a gasoline or liquefied petroleum gas (LPG) tanker, both of which are more
common on US waterways.61 Other LNG hazard studies have reached somewhat
different conclusions. Because such studies rely upon engineering models, however,
with distinct input assumptions and methodological limitations, their projections are
only approximate. Substantial uncertainty remains about how dangerous a real LNG
tanker attack could be.62
58 Sandia National Laboratories (SNL). Guidance on Risk Analysis and Safety Implications
of a Large Liquefied Natural Gas (LNG) Spill Over Water. SAND2004-6258. Albuquerque,
NM. Dec. 2004. p54.
59 Waryas, E. Lloyd’s Register America’s, Inc. “Major Disaster Planning: Understanding
and Managing Your Risk.” Presented to the Fourth National Harbor Safety Committee
Conference. Galveston, TX. March 4, 2002. p11
60 Waryas. March 4, 2002. p24.
61 Waryas. March 4, 2002. p12.
62 For further discussion of LNG hazard models, see CRS Report RL32205, Liquefied
Natural Gas (LNG) Terminals: Siting, Safety and Regulation, by Paul W. Parfomak.
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The Gaz Fountain Attack
Although there have been no terrorist attacks on LNG tankers, there is at least
one documented case of a gas tanker of similar construction being attacked in
wartime. During the Iran-Iraq War in the 1990s, the double-hulled LPG tanker
Gaz Fountain was fired upon by an Iranian aircraft using three air-to-ground,
armor-piercing Maverick missiles. Two of the missiles exploded on or above
the ship’s deck, causing relatively minor damage. The third missile penetrated
the deck and exploded above a butane storage tank, opening a 6 square-meter
(65 square-foot) hole in the roof of the tank. The escaping gas ignited,
establishing a large fire on deck above the missile entry hole. The fire aboard
the Gaz Fountain was successfully extinguished by a salvage ship, her
remaining cargo was successfully unloaded to another tanker, and she was
eventually repaired.63
The Gaz Fountain attack and salvage provides some evidence as to the
robustness of double-hulled gas tankers like those that carry LNG. But the
relatively benign outcome in the Gaz Fountain attack does not necessarily
demonstrate that attacks on LNG tankers would have similarly limited impacts.
The Gaz Fountain was fortunate that its storage tank was breached only at the
top. If missiles had been targeted at the hull of the ship rather than its deck,
one might have penetrated the side of a storage tank, causing a major spill on
water and an inextinguishable pool fire. Furthermore, if the gas involved had
been LNG rather than butane, the Gaz Fountain might have been subject to
cryogenic damage since LNG is transported at a much lower temperature than
butane (-260°F vs. +25°F). According to the Sandia report, such a combination
could lead to cascading failure of adjacent storage tanks and, presumably, an
even larger fire.64
Recent LNG Security Initiatives
Operators of LNG infrastructure had security programs in place prior to
September 11, 2001, but these programs mostly focused on personnel safety and
preventing vandalism. The terror attacks of September 11 focused attention on the
vulnerability of LNG infrastructure to different threats, such as systematic attacks on
LNG facilities by foreign terrorists. Consequently, both government and industry
have taken new initiatives to secure LNG infrastructure in response to new threats.
Several federal agencies oversee the security of LNG infrastructure. The Coast
Guard has lead responsibility for LNG shipping and marine terminal security. The
Department of Transportation’s Office of Pipeline Safety and the Department of
Homeland Security’s Transportation Security Administration have security authority
63 Carter, J.A. “Salvage of Cargo from the War-Damaged Gaz Fountain.” Proceedings of
the Gastech 85 LNG/LPG Conference. Nice, France. Nov. 12-15, 1985.
64 SNL. December 2004. p151.
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for peak-shaving plants within gas utilities, as well as some security authority for
LNG marine terminals. FERC has siting approval responsibility, with some security
oversight, for land-based LNG marine terminals and certain peak-shaving plants. In
addition to federal agencies, state and local authorities, like police and fire
departments, also help to secure LNG.
Coast Guard Maritime Security Activities
The Coast Guard is the lead federal agency for U.S. maritime security, including
port security. Among other duties, the Coast Guard tracks, boards, and inspects
commercial ships approaching U.S. waters. A senior Coast Guard officer in each
port oversees the security and safety of vessels, waterways, and many shore facilities
in his geographic area.65 The Coast Guard derives its security responsibilities under
the Ports and Waterways Safety Act of 1972 (P.L. 92-340) and the Maritime
Transportation Security Act of 2002 (P.L. 107-295). Maritime security regulations
mandated by P.L.107-295 are discussed below. Under P.L.107-295 the Coast Guard
and the Maritime Administration share siting approval authority for offshore LNG
terminals.
Shortly after September 11, 2001, the Coast Guard began to systematically
prioritize protection of ships and facilities, including those handling LNG, based on
vulnerability assessments and the potential consequences of security incidents. The
Coast Guard evaluated the overall susceptibility of marine targets, their use to
transport terrorists or terror materials, and their use as potential weapons. In
particular, the Coast Guard evaluated the vulnerability of tankers to “a boat loaded
with explosives” or “being commandeered and intentionally damaged.”66 While the
assessments focused on Coast Guard jurisdictional vessels and facilities, some
scenarios involved other vital port infrastructure like bridges, channels, and tunnels.67
The Coast Guard used these assessments in augmenting security of key maritime
assets and in developing the agency’s new maritime security standards.
The Coast Guard began increasing LNG tanker and port security immediately
after September 11, 2001. For example, the Coast Guard suspended LNG shipments
to Everett for several weeks after the terror attacks to conduct a security review and
revise security plans.68 The Coast Guard also worked with state, environmental and
police marine units to establish 24-hour patrols in Boston harbor.69 In July 2002, the
Coast Guard imposed a 1,000-yard security zone around the Kenai LNG
terminal–and subsequently imposed similar zones around other U.S. LNG
65 See CRS Report RL31733, Port and Maritime Security, for more information about
maritime and port security.
66 68FR126. July 1, 2003. p39244
67 68FR126. July 1, 2003. p39246
68 McElhenny, J. “Coast Guard Lifts Ban of Natural Gas Tankers in Boston Harbor.”
Associated Press. Oct. 16, 2001.
69 Crittenden, J. “Vigilance: Holiday Puts Spotlight on Harbor Security.” Boston Herald.
Boston, MA. June 30, 2002. p1.
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terminals.70 The Coast Guard also reassessed security at the Cove Point terminal
before allowing LNG shipments to resume there for the first time since 1980.71
The most heavily secured LNG shipments are those bound for the Everett
terminal because they pass through Boston harbor. The Coast Guard and local law
enforcement agencies have numerous security provisions in place for these
shipments, including:
•
Inspection of security and tanker loading at the port of origin in Trinidad.
•
Occasional on-board escort to Boston by Coast Guard “sea marshals.”
•
96-hour advanced notice of arrival of an LNG tanker.
•
Advance notification of local police, fire, and emergency agencies, as well
as the Federal Aviation Administration and the U.S. Navy.
•
Boarding of the LNG tanker for inspection prior to entering Boston harbor.
•
Harbor escort by armed patrol boats, cutters, or auxiliary vessels.
•
Enforcement of a security zone closed to other vessels two miles ahead and
one mile to each side of the LNG tanker.
•
Suspension of overflights by commercial aircraft at Logan airport.
•
Inspection of adjacent piers for bombs by police divers.
•
Posting of sharpshooters on nearby rooftops.
•
Additional security measures which cannot be disclosed publicly.72
According to the Coast Guard, many of these security provisions are in place for the
other U.S. LNG terminals as well, depending upon local assessments of security risk
and the unique characteristics of each marine area.73 Similar security measures
would also likely be put in place for new on-shore LNG terminals.
On October 22, 2003, the Coast Guard issued final rules to implement the new
security requirements mandated by P.L. 107-295. The rules are codified in Title 33
of the Code of Federal Regulations, Chapter 1, Subchapter H. Among other
provisions, the rules establish Coast Guard port officers as maritime security
coordinators and set requirements for maritime area security plans and committees.
The rules require certain owners or operators of marine assets to designate security
officers, perform security assessments, develop and implement security plans, and
comply with maritime security alert levels. The vessel rules apply to all LNG tankers
entering U.S. ports. Facility rules apply to all land-based U.S. LNG terminals or
proposed offshore LNG terminals. Finally, the rules require certain vessels,
including LNG tankers, to carry an automatic identification system.
70 “LNG Security in Boston to Be Permanent.” Platt’s Oilgram News. New York, NY. Aug.
1, 2002.
71 “Coast Guard, Mikulski Clear Plan to Reactivate Cove Point LNG Plant.” Platt’s Inside
FERC. Washington, DC. Jan. 6, 2003. p5.
72 Greenway, H.D.S. “Is it Safe?” The Boston Globe Magazine. July, 27, 2003; Lin, J. and
Fifield, A. “Risky Business?” The Philadelphia Enquirer. Feb. 20, 2005. p1.
73 U.S. Coast Guard, Port Security Directorate. Personal communication. Aug. 12, 2003.
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The marine security rules required that U.S. ships and facilities subject to the
rules be operating in compliance with approved plans by July 1, 2004. Foreign
vessels were required to have security plans by July 1, 2004 as well, although the
Coast Guard has been relying on countries of origin to approve the security plans of
foreign vessels. As of November, 2004, the Coast Guard had received “over 99
percent” of the vessel and facility security plans required under P.L. 107-295.74
Security plans specifically for the existing U.S. LNG terminals were completed on
schedule and the terminals' compliance with the plans was verified by Coast Guard
port security personnel through scheduled on-site examinations.75
The Coast Guard has also led the International Maritime Organization (IMO)
in developing maritime security standards outside U.S. jurisdiction.76 These
standards, the International Ship and Port Facility Security Code (ISPS Code) contain
detailed mandatory security requirements for governments, port authorities and
shipping companies, as well as recommended guidelines for meeting those
requirements. The ISPS Code is intended to provide a standardized, consistent
framework for governments to evaluate risk and to “offset changes in threat with
changes in vulnerability.”77 The Coast Guard considers the new ISPS Code “to
reflect the current industry, public and agency concerns.”78
Federal Pipeline Safety and Security Agencies
The Office of Pipeline Safety (OPS) within the Department of Transportation
has statutory authority to regulate the safety and security of LNG peak-shaving plants
under the Natural Gas Pipeline Safety Act of 1968 (P.L. 90-481). The OPS security
regulations for LNG peak-shaving facilities are found in 49 CFR 193, Liquefied
Natural Gas Facilities: Federal Safety Standards (Subpart J-Security). These
regulations govern security procedures, protective enclosures, communications,
monitoring, lighting, power sources, and warning signs. Federal LNG safety
regulations (33 CFR 127) and National Fire Protection Association standards for
LNG also include provisions addressing security, such as requirements for
monitoring facilities and preparing emergency response plans.79 According to the
OPS, the agency enforces the LNG security regulations in 49 CFR 193 as part of its
broader safety mission.80
74 Dep. Sec. James Loy, Dept. of Homeland Security. Remarks at the Maritime and Port
Security Summit . Washington, DC. Nov. 16, 2004.
75 Capt. David Scott, U.S. Coast Guard. Testimony before the Senate Committee on Energy
and Natural Resources, Subcommittee on Energy. Feb. 15, 2005.
76 68FR126. July 1, 2003. p39241.
77 International Maritime Organization (IMO). “IMO Adopts Comprehensive Maritime
Security Measures.” Press release. London. Dec. 17, 2002.
78 68FR126. July 1, 2003. p39241
79 National Fire Protection Association (NFPA). Standard for the Production, Storage, and
Handling of Liquefied Natural Gas (LNG). NFPA 59A. Quincy, MA.
80 Office of Pipeline Safety (OPS). Personal communication. Aug. 22, 2003.
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The Transportation Security Administration (TSA) is the lead federal authority
for the security of the interstate gas pipeline network under the Natural Gas Pipeline
Safety Act of 1968 (P.L. 90-481). This security authority was transferred to TSA
from the Transportation Department’s Office of Pipeline Safety (OPS) under the
Aviation and Transportation Security Act of 2001(P.L. 107-71). The TSA has also
asserted its security authority over land-based LNG facilities that are considered an
integral part of the interstate pipeline network.81 Prior to February 2005, the TSA
exercised its pipeline and LNG security oversight through the Pipelines Branch of its
Office of Maritime and Land Security. In this capacity, the TSA expected pipeline
and jurisdictional LNG facility operators to maintain security plans based on the
OPS/industry consensus security guidance circulated in 2002. In 2003 and 2004 TSA
visited the largest 25-30 pipeline operators, including some with LNG plants, to
review their security plans. Because all land-based LNG plants were not considered
“nationally critical,” however, TSA did not plan to inspect all plants.82 On February
7, 2005, TSA disbanded its Office of Maritime and Land Security, reassigning its
employees to other jobs within the agency.83 TSA has not publicly released specific
information about its pipeline and LNG security activities following this
reorganization.
Federal Energy Regulatory Commission (FERC) Oversight
The FERC is responsible for permitting new land-based LNG facilities, and for
ensuring the safe operation of these facilities through subsequent inspections.84 The
initial permitting process requires approval of safety and security provisions in
facility design, such as hazard detectors, security cameras, and vapor cloud exclusion
zones. Every two years, FERC staff inspect LNG facilities to monitor the condition
of the physical plant and inspect changes from the originally approved facility design
or operations.85 The FERC derives its LNG siting authority under the Natural Gas
Act of 1938 (15 USC 717). The agency has jurisdiction over all on-shore LNG
marine terminals and 15 peak-shaving plants involved in interstate gas trade.86
In response to public concern about LNG plant security since September 11,
2001, FERC has emphasized the importance of security at LNG facilities. According
to the commission, FERC staff played key roles at inter-agency technical conferences
regarding security at the Everett and Cove Point LNG terminals. As part of its
biennial inspection program, FERC also inspected 17 jurisdictional LNG sites in
2002 and 2003 “placing increased emphasis on plant security measures and
81 TSA. Personal communication. Aug. 18, 2003.
82 TSA. Personal communication. Jan. 12, 2004.
83 Dickey, B. “TSA Dismantles Maritime Unit, Reassigns Employees.” GovExec.com. Feb.
25, 2005.
84 U.S. Code of Federal Regulations. 18 CFR 157.
85 Foley, R. Federal Energy Regulatory Commission (FERC), Office of Energy Projects.
“Liquefied Natural Gas Imports.” Slide presentation. Jan. 2003. p17.
86 FERC. Personal communication. Aug. 13, 2003.
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improvements.”87 According FERC staff, the commission has added a security
chapter to its LNG site inspection manuals which consolidates previous requirements
and adds new ones.88
Federal Interagency Cooperation in LNG Security
The Coast Guard, TSA, and FERC all have potentially overlapping security
jurisdiction over certain facilities at onshore LNG terminals. For example, FERC’s
biennial LNG site visits explicitly include security inspections, and TSA oversees on-
site pipeline security–but the Coast Guard asserts lead security authority over the
entire terminal in its new maritime security regulations.89 Under current authority,
both the Coast Guard and TSA could both require their own facility security
assessments for pipelines and LNG storage at LNG marine terminals. Among oil
refiners, with marine terminals similar to those in LNG and also regulated by TSA
and the Coast Guard, confusion did emerge over which federal agency had
jurisdiction over certain security rules.90 LNG peak-shaving plant operators
reportedly expressed similar concerns about potentially overlapping OPS and TSA
security rules for their facilities.91
To avoid jurisdictional confusion, the Coast Guard, OPS and FERC have
entered into an interagency agreement to ensure that they
work in a coordinated manner to address issues regarding safety and security at
waterfront LNG facilities, including the terminal facilities and tanker operations,
to avoid duplication of effort, and to maximize the exchange of relevant
information related to the safety and security aspects of LNG facilities and the
related marine concerns.92
According to the agreement, the agencies will cooperate in the siting approval of new
LNG facilities, inspection and operational review of existing facilities, informal
communication, and dispute resolution.93
According to FERC, the agency's security review for new LNG terminal
applications is conducted in consultation with the US Coast Guard. Security
assessments of individual terminal proposals are conducted by Coast Guard field
87 Federal Energy Regulatory Commission (FERC). 2002 Annual Report and 2003 Annual
Report. Washington, DC. p21.
88 FERC. Personal communication. Aug. 13, 2003.
89 U.S. Coast Guard, Port Security Directorate. Personal communication. Aug. 12, 2003.
90 “Industry Trends.” Oil and Gas Journal. Aug. 11, 2003. p7.
91 Dominion Resources. Personal communication. Aug. 21, 2003.
92 Federal Energy Regulatory Commission (FERC). “Interagency Agreement Among the
Federal Energy Regulatory Commission United States Coast Guard and Research and
Special Programs Administration for the Safety and Security Review of Waterfront
Import/Export Liquefied Natural Gas Facilities.” Feb. 11, 2004. p1.
93 FERC. Feb. 11, 2004. pp2-4.
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units through security workshops involving federal, state and local law enforcement
officials as well as port stakeholders. FERC engineers provide technical assistance
on marine spill issues. FERC and the Coast Guard require LNG terminal applicants
to also submit a navigational suitability review under 33 CFR 127, and begin a
security assessment of their proposal in accordance with 33 CFR 105. According to
FERC, where site-specific security concerns have been raised, the agencies have
conducted non-public technical workshops with “all relevant stakeholders and
federal, state and local expert agencies” to resolve those security concerns.94
Industry Initiatives for Land-Based LNG Security
After the September 11 attacks, gas infrastructure operators, many with LNG
facilities, immediately increased security against the newly perceived terrorist threat.
The operators strengthened emergency plans; increased liaison with law enforcement;
increased monitoring of visitors and vehicles on utility property; increased employee
security awareness; and deployed more security guards.95 In cooperation with the
OPS, the Interstate Natural Gas Association of America (INGAA) formed a task
force to develop and oversee industry-wide security standards “for critical onshore
and offshore pipelines and related facilities, as well as liquefied natural gas (LNG)
facilities.”96 The task force also included representatives from the Department of
Energy (DOE), the American Gas Association (AGA), and non-member pipeline
operators. With the endorsement of the OPS, the INGAA task force issued security
guidelines for natural gas infrastructure, including LNG facilities, in September
2002.97 The task force also worked with federal agencies, including Homeland
Security, on a common government threat notification system.98
Key Policy Issues in LNG Security
Government and industry have taken significant steps to secure the nation’s
LNG infrastructure. But continued progress in implementing and sustaining LNG
infrastructure protection activities may face several challenges. As discussed in
detail in the following sections, members of Congress and federal officials are
concerned about the growing public costs of LNG security, the uncertainty of terrorist
threats against LNG, and the security implications of offshore terminal siting.
94 Robinson, M., Federal Energy Regulatory Commission (FERC). Testimony before the
Senate Committee on Energy and Natural Resources, Subcommittee on Energy. Feb. 15,
2005.
95 American Gas Association (AGA) Natural Gas Distribution Industry Critical
Infrastructure Security. 2002. and AGA. Natural Gas Infrastructure Security–Frequently
Asked Questions. April 30, 2003.
96 Haener, W.J., CMS Energy Corp. Testimony on behalf of the Interstate Natural Gas
Association of America (INGAA) before the House Transportation and Infrastructure
Subcommittee on Highways and Transit. Feb. 13, 2002. p4.
97 Interstate Natural Gas Association of America (INGAA) et al. Security Guidelines
Natural Gas Industry Transmission and Distribution. Washington, DC. Sept. 6, 2002.
98 Haener. Feb. 13, 2002. p4.
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Public Costs of LNG Marine Security
Some policymakers are concerned about the public cost and sustainability of
securing LNG shipments. Overall cost data for LNG security are unavailable, but
estimates have been made for Everett shipments. The Coast Guard Program Office
has estimated that it costs the Coast Guard approximately $40,000 to $50,000 to
“shepherd” an LNG tanker through a delivery to the Everett terminal, depending on
the duration of the delivery, the nature of the security escort, and other factors.99
State and local authorities also incur costs for overtime police, fire and security
personnel overseeing LNG tanker deliveries. The state of Massachusetts and the
cities of Boston and Chelsea estimated they spent a combined $37,500 to safeguard
the first LNG shipment to Everett after September 11, 2001.100 Based on these
figures, the public cost of security for an LNG tanker shipment to Everett is on the
order of $80,000, excluding costs incurred by the terminal owner.
Marine security costs at other LNG terminals could be lower than for Everett
because they are farther from dense populations and may face fewer vulnerabilities.
But these terminals expect more shipments. Altogether, the six active onshore U.S.
LNG terminals, including Everett, expect to have enough capacity for nearly 600
shipments per year by 2008. Further increasing LNG imports to meet 21% of total
U.S. gas supply by 2025 as projected by the EIA could require over 3,700 LNG
shipments to LNG terminals serving the United States. Assuming an average
security cost only half that for Everett, or $40,000 per shipment, annual costs to the
public for marine LNG security could exceed $24 million by 2008 and $148 million
by 2025.101
The potential increase in security costs from growing U.S. LNG imports, and
the potential diversion of Coast Guard and safety agency resources from other
activities have been a concern to policy makers.102 According to Coast Guard
officials, the service’s LNG security expenditures are not all incremental, since they
are part of the Coast Guard’s general mission to protect the nation’s waters and
coasts. Nonetheless, Coast Guard staff have acknowledged that resources dedicated
to securing maritime LNG might be otherwise deployed for boating safety, search
99 U.S. Coast Guard, Program Office. Personal communication. August 12, 2003. This
estimate is based on boat, staff and administrative costs for an assumed 20-hour mission.
100 McElhenny, J. “State Says LNG Tanker Security Cost $20,500.” Associated Press. Nov.
2, 2001. p1.
101 Note that security costs associated with LNG terminals in Canada, Mexico and the
Bahamas (built primarily to serve U.S. markets) would not be a direct U.S. responsibility,
although such costs might still be priced into LNG supplied from those terminals.
102 See, for example: Government Accountability Office (GAO). COAST GUARD: Station
Readiness Improving, but Resource Challenges and Management Concerns Remain.
GAO-05-161. Jan. 2005; U.S. Senator Jack Reed at the Senate Energy and Natural
Resources Committee, Subcommittee on Energy Hearing on Liquified Natural Gas. Feb 15,
2005.
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and rescue, drug interdiction, or other security missions.103 LNG security is funded
from the Coast Guard’s general maritime security budget, so it is not a line item in
the FY2006 DHS budget request. However, the Coast Guard’s FY2006 budget does
request an additional $11 million in funding over FY2005 levels for “Increased Port
Presence and LNG Transport Security,” specifically including “additional boat crews
and screening personnel at key LNG hubs.”104
State and local agencies are also seeking more funding to offset the costs of
LNG security. Otherwise, they believe that LNG security needs may force them to
divert limited local resources from other important public services.105
Acknowledging these concerns, FERC officials have recommended that new LNG
terminal operators pay the costs of any additional security or safety needed for their
facilities.106 The FERC has also recommended that LNG terminal operators provide
private security staff to supplement Coast Guard and local government security
forces.107 Nonetheless, because the accounting of these security costs is unclear, and
cost recovery may be partly tied to uncertain sources of federal funding, such as DHS
security grants, some local government officials continue to voice concern over LNG
security costs.108 Furthermore, some LNG companies have resisted suggestions that
they pay more for public security, reasoning that the millions of dollars in federal,
state, and local taxes they pay should cover public law enforcement and emergency
services.109 Others have expressed a willingness to pay for “excess” security only if
it exceeds the level of security agency service ordinarily commensurate with
corporate tax payments.110
The public costs of LNG security may decline as federally mandated security
systems and plans are implemented. New security technology, more specific threat
intelligence, and changing threat assessments may all help to lower LNG security
costs in the future. Nonetheless, the potential increase in security costs from growing
U.S. LNG shipments may warrant a review of these costs and associated recovery
mechanisms.
103 U.S. Coast Guard, Port Security Directorate. Personal communication. Aug. 12, 2003.
104 Dept. of Homeland Security (DHS). Budget-in-Brief, Fiscal Year 2006.
105 McElhenny, J. Nov. 2, 2001. p1.
106 Baldor, L.C. “Federal Agency, R.I. Officials Meet over LNG Terminal.” Associated
Press. March 17, 2005.
107 Federal Energy Regulatory Commission (FERC). “Response to Senator Jack Reed's
2/1/05 letter regarding the proposed Weaver's Cove LNG Project in Fall River, MA & the
proposed KeySpanLNG Facility Upgrade Project in Providence, RI under CP04-293 et al.”
March 3, 2005. p2.
108 U.S. Sen. Jack Reed. Remarks at the Senate Energy and Natural Resources Committee,
Energy Subcommittee hearing on Liquefied Natural Gas. Feb. 15, 2005.
109 McElhenny, J. Nov. 2, 2001. p1.
110 Dominion Resources, Corporate Security. Personal communication. Richmond, VA. Aug.
19, 2003.
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Uncertainty About LNG Threats
The likelihood of a terrorist attack on U.S. LNG infrastructure has been the
subject of debate since September 11, 2001. To date, no LNG tanker or land-based
LNG facility in the world has been attacked by terrorists. However, similar natural
gas and oil facilities have been favored terror targets internationally. For example,
since 2001, gas and oil pipelines have been attacked in at least half a dozen
countries.111 In June 2002, Moroccan authorities foiled an Al-Qaeda plot to attack
U.S. and British warships, and possibly commercial vessels, in the Straits of
Gibraltar.112 LNG tankers from Algeria en route to the United States pass through
the same waters. In October 2002, the French oil tanker Limburg was attacked off
the Yemeni coast by a bomb-laden fishing boat.113 In the United States, federal
warnings about Al Qaeda threats have repeatedly mentioned energy infrastructure.114
In June 2003, U.S. intelligence agencies warned about possible Al Qaeda attacks on
energy facilities in Texas.115 The Homeland Security Council included terrorist
attacks on “cargo ships” carrying “flammable liquids” among the fifteen hazards
scenarios it developed in 2004 as the basis for U.S. homeland security “national
preparedness standards.”116
In addition to warnings of a terrorist threat to energy facilities in general, federal
agencies have identified LNG infrastructure in particular as a potential terrorist
target. The Department of Homeland Security (DHS) specifically included LNG
assets among a list of potential terrorist targets in a security alert late in 2003.117 The
DHS also reported that “in early 2001 there was some suspicion of possible
associations between stowaways on Algerian flagged LNG tankers arriving in Boston
and persons connected with the so-called ‘Millennium Plot’” to bomb targets in the
United States. While these suspicions could not be proved, DHS stated that “the
risks associated with LNG shipments are real, and they can never be entirely
eliminated.”118 The 2004 report by Sandia National Laboratories concluded that
potential terrorist attacks on LNG tankers, could be considered “credible and
111 See CRS Report RL31990, Pipeline Security, for specific examples.
112 Sawer, P. “Terror Plot to Blow Up Navy Warships is Foiled.” The Evening Standard.
London. June 11, 2002. p4.
113 “Ships as Terrorist Targets.” American Shipper. November, 2002. p59.
114 Federal Bureau of Investigation (FBI). The Terrorist Threat Confronting the United
States. Statement of Dale L. Watson, Exec. Dir. for Counterterrorism and
Counterintelligence before the Senate Select Committee on Intelligence. Washington, DC.
Feb. 6, 2002.
115 Hedges, M. “Terrorists Possibly Targeting Texas.” Houston Chronicle. June 24, 2003.
116 Homeland Security Council. Planning Scenarios: Executive Summaries. July 2004. p 6-
1.
117 Office of Congressman Edward J. Markey. Personal communication. Jan. 5, 2004.
118 Turner, P.J., Assistant Secretary for Legislative Affairs, Department of Homeland
Security (DHS). Letter to U.S. Representative Edward Markey. April 15, 2004. p1.
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possible.”119 The Sandia report identified LNG tankers as vulnerable to ramming,
pre-placed explosives, insider takeover, hijacking, or external terrorist actions (such
as a Limburg-type, missile or airplane attack).120
Although they acknowledge the threat information put forth by federal agencies,
many experts believe that public concern about threats to LNG is overstated and
should not impede increased LNG imports.121 The head of one university research
consortium remarked, for example, “from all the information we have ... we don’t see
LNG as likely or credible terrorist targets.”122 Likewise, based in part on
consultations with the Federal Bureau of Investigation, NFPA’s LNG standards
committee has not seen a need to update the 59A standard for onshore LNG facilities
in light of the September 11, 2001 terror attacks.123 Industry representatives argue
that deliberately causing an LNG catastrophe to injure people might be possible,
perhaps, but would be extremely difficult. They cite the safety record of the LNG
industry and the Gaz Fountain incident to support this conclusion.
LNG proponents also believe that LNG facilities are relatively secure compared
to other hazardous chemical infrastructures which receives less public attention. In
a December 2004 report, the FERC stated that
for a new LNG terminal proposal ... the perceived threat of a terrorist attack may
be considered as highly probable to the local population. However, at the
national level, potential terrorist targets are plentiful.... Many of these pose a
similar or greater hazard to that of LNG.124
Based on data from the U.S. Office of Hazardous Materials Safety, 600 LNG tanker
shipments would account for less than 1% of total annual U.S. shipments of
hazardous marine cargo such as ammonia, crude oil, liquefied petroleum gases, and
other volatile chemicals.125 Considering these other potential terrorist targets, LNG
industry representatives argue that some LNG opponents greatly overestimate the
relative risk of an LNG attack.126
119 Sandia National Laboratories (SNL). Guidance on Risk Analysis and Safety Implications
of a Large Liquefied Natural Gas (LNG) Spill Over Water. SAND2004-6258. Albuquerque,
NM. Dec. 2004. pp49-50.
120 SNL. Dec. 2004. pp61-62.
121 McLuaghlin, J. “LNG is Nowhere Near as Dangerous as People Are Making it Out to
Be.” Lloyd's List. Feb. 8, 2005. p5.
122 Behr, P. “Higher Gas Price Sets Stage for LNG.” Washington Post. July 5, 2003. pD10.
123 National Fire Protection Assoc. (NFPA). Technical Committee on Liquefied Natural Gas.
Personal communication. Quincy, MA. Dec. 15, 2003.
124 Federal Energy Regulatory Commission (FERC). Vista del Dol LNG Terminal Project,
Draft Environmental Impact Statement. FERC/EIS-0176D. Dec. 2004. p4-162.
125 Office of Hazardous Materials Safety, Department of Transportation. Hazardous
Materials Shipments. Washington, DC. Oct. 1998. Table 2. p2.
126 Grant. R., President, Distrigas. Testimony before the Senate Committee on Energy and
(continued...)
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It may be impossible for federal and industry officials to ever prove that LNG
infrastructure will not be targeted by terrorists. As the FERC has remarked, “unlike
accidental causes, historical experience provides little guidance in estimating the
probability of a terrorist attack on an LNG vessel or onshore storage facility.”127
Because the probability of a terrorist attack on LNG cannot be known with certainty,
policy makers and community leaders must ultimately rely on their judgment to
decide whether LNG security measures for a specific facility will adequately protect
the public.
Security Implications of Offshore LNG Facilities
Some policy makers have proposed that new LNG import terminals should be
built only offshore to keep associated terrorism hazards away from populated areas.
Such a strategy may indeed reduce terrorism risks to ports and coastal communities,
but it may also increase the risks to the terminals themselves. Because offshore oil
and gas facilities are remote, isolated, and often lightly manned, some experts believe
they are more vulnerable to terror attacks than land-based facilities.128 Offshore oil
and gas facilities have not been frequent terror targets, but they have been attacked
in the past during wartime and in territorial disputes.129 Since September 11, 2001,
international concern about terrorist attacks on these platforms has grown.130 Some
experts believe terrorist attacks against offshore platforms have been on the rise
recently in countries with a history of terror activity like Nigeria, Colombia, and
Indonesia–although many of these attacks may be economically, rather than
politically, motivated.131 Disruption of any single offshore LNG terminal would not
likely have a great impact on U.S. natural gas supplies, but if several new offshore
terminals were attacked in the future, the effects on natural gas availability and prices
could have serious consequences for U.S. energy markets. On-shore versus offshore
siting alternatives should therefore be considered in the context of both local public
security and the security of national energy supplies.
Conclusions
The U.S. LNG industry is growing quickly. While rising LNG imports may
offer economic benefits, they also pose risks. LNG infrastructure is inherently
hazardous and it is potentially attractive to terrorists. Both lawmakers and the
126 (...continued)
Natural Resources, Subcommittee on Energy. Feb. 15, 2005.
127 FERC. FERC/EIS-0176D. Dec. 2004. p4-162.
128 Daughdrill, W. H., Ecology & Environment, Inc. Lancaster, NY. Personal
communication. Aug. 7, 2003.
129 George, D. “Piracy on Increase, Presents Threat to Offshore Structures, Vessels.”
Offshore. Oct. 1993. p25.
130 McKenzie, S. “Submarine Terror Fear for North Sea Oil Rigs.” Scottish Sunday Mail.
Aug. 10, 2003.
131 Adams, N. “Terrorism in the Offshore Oil Field.” Underwater. March/April 2003.
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general public are concerned about these risks, although the LNG industry has a long
history of relatively safe operations and has taken steps to secure its assets against
terrorist attack. No LNG tanker or land-based facility has been attacked by terrorists,
and federal, state and local governments have put in place security measures intended
to safeguard LNG against newly perceived terrorist threats. These measures are
evolving, but a variety of industry and agency representatives suggest that these
federal initiatives are reducing the vulnerability of U.S. LNG to terrorism.
The ongoing debate about LNG infrastructure security in the United States has
often been contentious. Local officials and community groups have challenged
numerous LNG infrastructure proposals on the grounds that they may represent an
unacceptable risk to the public. Heightened public scrutiny of LNG facilities has
made it difficult to site new LNG terminals near major gas markets and has increased
the cost and complexity of LNG terminal siting approval. Nonetheless, both industry
and government officials acknowledge that enough new LNG infrastructure will
likely be approved to meet long-term U.S. import requirements. Indeed, as of March
2005, federal agencies had approved the construction of six new U.S. import
terminals, three of them onshore. Numerous additional terminal proposals await
federal approval. Together with the expansion of the existing U.S. import terminals
and the construction of two recently approved LNG terminals in Canada and Mexico,
the approved U.S. facilities would provide enough added capacity to meet the bulk
of U.S. LNG demand for the next twenty years.
New U.S. LNG terminals may not be ideally located so as to minimize the cost
of natural gas, but building them in these locations may be better than not building
them at all.132 Furthermore, because their security has been subject to intense public
scrutiny, new LNG terminal and tanker operations may be safer than they might have
been without such scrutiny and their siting may be less likely to be challenged at a
later time when construction is already underway. The construction and subsequent
closure of the Shoreham nuclear power plant in the 1980's due to new public
opposition offers an example of the need to resolve safety and security concerns
before capital is invested. From a purely economic perspective, therefore, the added
costs associated with building more heavily protected LNG terminals potentially
farther from their primary markets may represent the U.S. public’s willingness to pay
for LNG security. Whether this implicit price of LNG security is reasonable is an
open question, but the continued interest of private companies to invest billions of
dollars in U.S. LNG terminals suggests that it will not prevent needed LNG
development.
As Congress continues its oversight of LNG, it may decide to examine the
public costs and resource requirements of LNG security, especially in light of
dramatically increasing LNG imports. In particular, Congress may consider whether
future LNG security requirements will be appropriately funded, whether these
requirements will be balanced against evolving risks, and whether the LNG industry
is carrying its fair share of the security burden. Congress may also act to improve its
understanding of LNG security risks. Costly “blanket” investments in LNG security
132 For further discussion, see CRS Report RL32386, Liquefied Natural Gas in U.S. Energy
Policy: Infrastructure and Market Issues, by Paul W. Parfomak.
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might be avoided if more refined terror threat information were available to focus
security spending on a narrower set of infrastructure vulnerabilities. Finally,
Congress may initiate action to better understand the security implications of new
LNG terminals offshore.
In addition to these specific issues, Congress might consider how the various
elements of U.S. LNG security activity fit together in the nation’s overall strategy to
protect critical infrastructure. Maintaining high levels of security around LNG
tankers, for example, may be of limited benefit if other hazardous marine cargoes are
less well-protected. U.S. LNG security also requires coordination among many
groups: international treaty organizations, federal agencies, state and local agencies,
trade associations and LNG infrastructure operators. Reviewing how these groups
work together to achieve common security goals could be an oversight challenge for
Congress.