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    FERC Chairman Writes Gov. Schwarzenegger: "Nation Must Balance Manageable Risks of LNG Imports w/ Potentially Severe Economic Effects of Natural Gas Price Volatility"; We Post His Letter

    (May 18, 2004) -- The chairman of the Federal Energy Regulatory Commission (FERC) has sent the Governors of all coastal states -- including CA Governor Arnold Schwarzenegger -- a recent report discussing consequences -- including human burns and property damage -- that could result from certain incidents involving releases from Liquefied Natural Gas carriers, stating in his transmittal letter that that "[t]he nation must balance the manageable risks of LNG imports with the potentially severe economic effects of natural gas price volatility." posts the letter by FERC chairman Patrick Henry Wood, III in pdf form on a link below.

    "The public can take comfort in the fact that LNG has been safely transporfted by ship for nearly half a century. LNG cargo ships have double hulls and other design safety features, and rigorous exclusionary zones are maintained as the vessels are brought into port. An LNG tanker safelydocks in Japan every 20 hours. LNG spills and fires are low-probability events. This report will help us all understand the consequences of such events more realistically," chairman Wood's letter says in text sent to 27 coastal state Governors.

    It continues, "With domestic production of natural gas flattening in the face of increasing demand, there has been growing financial interest in proposals to build terminals to receive LNG imports. Our economy and way of life depend on maintaining dependable natural gas supplies. The nation must balance the manageable risks of LNG imports with the potentially severe economic effects of natural gas price volatility. Federal Reserve Chairman Alan Greenspan has advocated increased imports of LNG, citing potential adverse economic impacts if we fail to diversify natural gas supplies."

    Chairman Wood's letter accompanied a recent 128-page report to FERC (Consequence Assessment Methods For Incidents Involving Releases From Liquefied Natural Gas Carriers by Houston-based ABSG Consulting) which indicates that breaching an LNG tanker's hull and cargo tanks could produce a pool fire, burning people and property up to 4,600 feet (nearly a mile) away, causing severe pain in 13 seconds, second-degree burns in 30 seconds, and third-degree burns within 50 seconds of exposure. A flammable vapor cloud could travel several thousand feet before dissipating into a stable condition.

    The report included numerous caveats and disclaimers, and acknowledged a lack of data showing exactly what might happen in an accident or act of sabotage involving an LNG tanker ship. It said that until models "are better developed and supported (experimentally and/or theoretically), a more conservative approach is recommended" (assuming the high end of consequential damage) and added that it made "no attempt to place value judgments on what risks people should or should not accept."

    During his 2003 campaign for Governor, candidate Schwarzenegger's web site called Liquefied Natural Gas (LNG) a proven technology that will create more natural gas capacity, citing proposed LNG projects in Baja California it said will facilitate imports from Bolivia, Alaska and other sources. As part of its section on "Solving California's Energy Crisis," said as Governor, Mr. Schwarzenegger will "explore building facilities for safely importing liquefied natural gas."

    As previously reported by, on January 14, 2004, Alabama Governor Bob Riley sent a letter to the Federal Energy Regulatory Commission (FERC) objecting to the issuance of permits related to a proposed onshore LNG facility in Mobile Bay -- by Exxon-Mobile "without an adequate independent, individualized, site specific safety study first being completed and considered."

    To view FERC Chairman Wood's May 14 letter to coastal state Governors, click FERC Chairman Wood's May 14, 2004 letter to CA Gov. Schwarzenegger.

    In Long Beach, a Mitsubishi subsidiary, Sound Energy Solutions (SES), has an application currently pending with FERC to build an 80+ million gallon LNG facility onshore within the Port of Long Beach. The firm maintains a web site at

    Related coverage:

  • Analysis/Perspective: Despite Disclaimers & Caveats, Sobering LNG Scenarios In Report To FERC

  • Caveats, Disclaimer & Dunno: Report To FERC re LNG Says Data Lacking In What Might Happen in Accident or Sabotage

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