John Loyd's Report on trip to Alaska trip

 

Revised December 2, 2003

Report of Fact Finding Visit to
Kenai Peninsula, Alaska to Assess the ConocoPhillips Nikiski
LNG Liquefaction Facility, Seeking Input from Interested Parties and Stakeholders

John F. Loyd

This report is available online at:  http://www.harpswell.info/

On Thursday and Friday, November 6 and 7, 2003 Walter Norton, Dana McIntire and I, accompanied by my daughter, Ann Loyd,[1] traveled to the Kenai Peninsula of Alaska, visiting various persons, experts and stakeholders who we believed would contribute information about, and who were affected by, the ConocoPhillips/Marathon Oil LNG liquefaction facility in Nikiski, Alaska.  Unfortunately, due to weather delays, our time in Alaska was cut short by about one half day – the result being that on Thursday we had to forgo meeting with stakeholders other than representatives of the Nikiski LNG facility. 

In addition to the persons named in this report, we received invaluable help from the Anchorage offices of the Wilderness Society,[2] National Wildlife Federation,[3] Cook Inlet Keeper,[4] Ann Loyd and Rosetta and John Alcantra.  We wish to express our sincere appreciation to those whom we interviewed and who took time from their daily routines to spend time with us.

City Of Kenai – Meeting With ConocoPhillips Personnel

Upon our arrival in the City of Kenai we met ConocoPhilips personnel, Peter Micciche, Fairwinds’ Harpswell stakeholder relations manager, Lindsey Clark, Operations Manager of the Nikiski LNG facility, Tiffany Wilson, Human Resources manager for ConocoPhillips in the Anchorage office, Dave Hanson and Jay McKee at Louie’s restaurant in Kenai.  We engaged in general discussion for about one and one half hours.  I spent most of my time there conversing with Lindsey Clark and Tiffany Wilson. We discussed the Nikiski facility’s safety record, under-sea pipeline concerns, on-site fire control, plant security and personnel training and staffing.  I hoped to come away with a general idea of the organizational structure and the chain of command for the Fairwinds project.

Fairwinds will be a stand alone entity – a separate corporation owned by ConocoPhillips and Trans Canada.  None of the persons we spoke with had any idea of the command and control relationship between the partner corporations and Fairwinds.  The model for Fairwinds is the Nikiski facility that is operated by an entity owned by ConocoPhillips and Marathon Oil and operated by ConocoPhillips.

Lindsey Wilson and Peter Micciche said that the planned organizational structure of the Fairwinds facility would be vertical and hierarchal, reflecting its existence as an autonomous entity.  For example, unlike the Nikiski facility, Fairwinds will have a resident human resources position in addition to a resident manager.  Although it is not yet certain, Fairwinds security may be provided by contract personnel, similar to that provided to the Nikiski facility.  

Nikiski, Alaska

After lunch we continued to Nikiski and the ConocoPhillips Nikiski LNG facility.  The Nikiski facility is located on the Kenai Spur Highway, in Nikiski, Alaska, approximately 10 miles from the center of the City of Kenai, Alaska.  The facility is situated between the highway on the east and Cook Inlet on the west.  Politically, Nikiski is much like a Maine Plantation in that it is not incorporated.  The land form of the area where the facility is located is a glacially created gravel bench bordering Cook Inlet that is a worn down geologic fiord.  The upland area of this portion of the Kenai Peninsula is a classic taiga plain, dominated by low scrub sub-alpine brush and pole-like black spruce.  The predominate topographic characteristic of the area is glaciated flat coastal plain.

            The LNG facility is located between an Agrium fertilizer plant on the south and a Tesoro refinery to the east, with a related tank terminal to the north.  Other businesses on and just off the Kenai Spur Highway tend to be oil and gas support businesses.  Although we were told that there are residential areas, inland, about one half of a mile from the LNG facility,[5] we did not visit these areas.  I believe that it is fair to characterize the area near the LNG facility as predominated by heavy industry.      

 

The population of Nikiski is approximately 2743 and the approximate number of families is 1045.  Nikiski occupies 28,100 square miles.  It appears that Nikiski has little or no history of note other than as an oil and gas center and service center for platform drilling in Cook Inlet.  In fact the development of Nikiski was induced by the discovery and development of nearby land and Cook Inlet based oil and gas fields.  There is no evidence of any architecturally significant structures in Nikiski.

ConocoPhillips Nikiski LNG Facility

            The LNG facility occupies an area of approximately 50 acres, with a footprint that is smaller than the total area.  The first thing one notices upon arriving at the facility is the overwhelming noise of the compressor turbines.  The compressor noise makes it impossible to carry on a conversation within 200 yards of the plant.  We were instructed that for “security reasons” we were prohibited from taking photos of the facility.  After a bit if negotiating we were told that with prior permission, on a photo by photo basis, we could take pictures.[6]

Lindsey Clark gave us a “Mr. Wizard” show in the ConocoPhillips office.  This was essentially the same demonstration put on by Fairwinds at the various open houses in Harpswell.  We were also given an overview of the liquefaction process and the fundamental differences between liquefaction and the regasification process that would be done at the Fairwinds facility in Harpswell.  Lindsey explained the properties and behavior of LNG under varying conditions and circumstances.  We did try to get Lindsey to give us a demo of LNG burning in something other that a 3/8” tube from a beaker of LNG.  We were particularly interested in the properties of an LNG fire in a large area such as within an earthen berm surrounding LNG storage tanks.

While we were at the Nikiski LNG facility the security personnel were finishing a training session and we had an opportunity to chat with the head of the detail and three or four of the security staff.  Those we met were all retired public safety officers (police, game wardens and military MP’s).  We were told that they and their background were representative of the Nikiski facility’s security staff.  The security staff at the Nikiski facility work a three month on/three month off schedule.  In fact, one of the officers we met commutes to Nikiski from Wayne, Maine by car every three months.  It appears that the security needs at a Harpswell facility will be about the same as those in Nikiski although it is likely that Harpswell will have less service ingress and egress since it will not need to resupply propane and ethylene glycol and will use much less insulation (pearlite) than the Nikiski facility.

Ann and I toured the facility with Peter Micciche.  I was most impressed by the transition from the view of the facility from the front gate and the photo view of the facility shown in promotional material to the actual scale of the facility and its components.  From the highway and parking lot in front of the office, the plant, which is located behind the office – between  the office and Cook Inlet – is rather unimpressive in terms of size.  As soon as we began our tour in a pickup truck and entered the area of plant operations the size and scale of the facility and structures were overwhelming. 

Many of the outsized facilities and structures are a function of the liquefaction process and would not be found in the proposed Fairwinds Harpswell facility, assuming that it always remains a regasification facility.  For example, the “cold boxes” (heat exchangers), cooling towers, turbine building housing six huge gas turbines, ethylene glycol and propane storage facilities, dehydrators and gas treatment structures would not be needed at Fairwinds. 

One cannot help but be struck by the size of the LNG storage tanks at Nikiski.  The size of the facility’s LNG storage tanks is very impressive, particularly when one considers the difference in size between the Nikiski tanks and those proposed to be constructed in Harpswell.  Each of the three LNG storage tanks at the Nikiski facility measures 80’ high by 120’ in diameter compared with the two tanks proposed by Fairwinds, each of which would measure 120’ in height by 240’ in diameter.  Each of the proposed Harpswell tanks would be over five times the size of each Nikiski tank.  The Nikiski tanks each hold approximately 225,000 barrels of LNG (approximately 950,000 cubic feet by volume) and the proposed Harpswell tanks would each have approximately 5,400,000 cubic feet of volume and hold well over 1 million barrels of LNG.  Each of the tanks proposed for Harpswell will have a footprint in excess of one acre (45,239 square feet) compared with the Nikiski tanks that each have a footprint of  11,309 square feet – about one quarter acre each.

The terminal wharf, from the shore to the actual terminal, is approximately 1,500’ long, or about 700’ longer than the proposed 800’ length for the proposed Harpswell terminal wharf.  There is a vehicle travel lane on the wharf that parallels the LNG piping that transports the LNG from the tanks to the tankers.  The Nikiski terminal does not have automated “breakaway” connections between the terminal and the LNG tankers whereas I understand that the plan for Harpswell is to install state of the art breakaway connections.  Peter Micciche indicated that although ice flows moving in the 8 to 9 knot tidal currents of Cook Inlet occasionally cause problems with tankers during loading there have been no significant spillage events.  He indicated that Fairwinds intends to employ segmented pipe to prevent loss of LNG in the event of a compromise in the terminal pipe or need for a quick embarkation by the tanker due to ice flows or any other emergency non emergency event requiring immediate departure of an LNG tanker.  During our discussion, Peter indicated that the 800’ length of the wharf proposed for Harpswell is not set in stone and that the final length of the terminal wharf will depend on the results of soundings done by side scan sonar. 

The noise from the compressor turbines at Nikiski is deafening.  These turbines produce over 116,000 hp compared with a proposed 6,000 hp electric generation facility for Fairwinds.  According to Peter, the Nikiski turbines employ 1969 technology and that the turbines proposed to be used in Harpswell will be based on newer technology.  They will be manufactured to new standards of performance and noise emissions that will allow Fairwinds to easily buffer the sound to below 42 Db at the fence in Harpswell. 

The footprint of the Harpswell facility that will be occupied by structures would be smaller than that of the Nikiski facility given that there would be no need for: cooling towers, cold boxes, gas treating facilities, massive turbines and compressors, dehydrators, propane and ethylene glycol storage.  From what we have been told, the Harpswell Fairwinds facility would have:  two 5,000,000 cubic feet storage tanks, each taking up over one acre (45,239 sq. ft.), a power generation facility (turbine building), a water storage tank, a desalination facility, a maintenance building, office building and perhaps other as yet unidentified structures.  Some of these buildings could be consolidated.

During our discussions, Peter Micciche said that Fairwinds will not discharge water into Middle Bay other than the byproducts of desalination, what he characterized as a minimal amount of effluent.  The system to gasify LNG in Harpswell will be a closed fresh water system using the water produced by the desalination plant.[7] 

Homer, Alaska

Thursday evening, after our tour of the Nikiski LNG facility, we drove south on the Kenai Peninsula to Homer, Alaska, at the mouth of Kachemak Bay near the opening of Cook Inlet.  In many ways Homer is like Harpswell – characterized by a mixture of residential and marine uses.  Homer is the site of the home- office of Bob Shavelson, the Executive Director of Cook Inlet Keeper.  Homer is also the home port for pilots of inbound and outbound tankers transiting Cook Inlet and accessing the Nikiski LNG terminal and the City of Anchorage.  While in Homer, which is essentially a residential area with a large marine presence as evidenced by a large marina, a halibut fishing fleet, commercial dock, and a terminal for the Alaska Marine Highway ferry and cruise ships, Walter Norton and Dana McIntire spoke with a number of residents who voiced their opinions that while an LNG facility may be acceptable in an industrial complex like Nikiski it has no place in a residential town like Homer.

Cook Inlet Keeper

On Friday morning we met with Bob Shavelson for over an hour.  Bob was circumspect in his discussion and comments for the first half hour or so.  He made clear that oil and gas and the oil and gas industry is hugely important in Alaska[8] and that by and large, at least in the Cook Inlet watershed,[9] the industry has a decent record.  Bob explained the tanker pilot system and responsibility for navigation of Cook Inlet. 

From Bob’s experience, the areas of concern that we should be watching are: minimization of tanker problems in narrow passages, tanker interaction with fishing vessels and gear, pipeline construction and integrity issues, fisheries issues unique to Maine and the lobster fishery, Clean Water Act and Clean Air Act issues and possible unacceptable environmental compromises.  Bob believes that in tight spots, on special tides and when cake ice flows are present, tankers should be tethered to attendant tugs.[10] 

As an organization, and for Bob as its Director, Cook Inlet Keeper is very focused on pipelines, especially undersea pipelines that collect oil and gas from drilling platforms in Cook Inlet and transport oil and gas to the Nikiski oil and gas dependent facilities, i.e., the ConocoPhillips LNG plant, the Agrium fertilizer plant and the Tesoro refinery.  It is a continuing concern to Cook Inlet Keeper that in Alaska, as in many states, no permits are required for pipelines and that transmission of the product is governed by the U. S. Department of Transportation’s “tiny”[11] Office of Pipeline Safety.  Cook Inlet Keeper employs an engineer (Lois N. Epstein, P.E.) who specializes in oil and gas pipelines as its Oil and Gas Industry Specialist.  Cook Inlet Keeper is particularly concerned about the somewhat spotty safety records of pipeline operators in an environment with little or no governmental oversight or regulation.

Bob Shavelson acknowledged that one of the primary concerns of Cook Inlet pipeline installations will not be present in Middle Bay, namely large tidal swings with corresponding fast tidal currents that can expose buried pipe and cause bottom sand and gravel to scour and compromise exposed pipe.  He believes that the pipeline construction process may cause significant siltation and other consequences to the bottom that could disrupt the lobster fishery.  Bob recommended that the Fairwinds’ lease require that the undersea location of the proposed pipeline be located with special regard for bottom conditions and features that are important to the local fishery and other ecological considerations.  This would require Fairwinds to do a bottom study and EIS to identify the least damaging path prior to submission of the primary and alternate pipeline routes to FERC.

Bob is also concerned about the effluent from desalination and the effects of localized increases in salinity on the local fishery.  He believes that care must be taken to insure that Fairwinds avoids the use of so called “mixing zones” that permit an industrial producer of effluent to meet the requirements of the Clean Water Act by using “dilution as the cure for pollution.”  Bob recommends that the Town ensure that a flow and flushing study is done to determine whether there will be any adverse consequences to lobster and other sea life from increased salinity.  He is also concerned about the release of chilled water into the Bay.[12]

Return to the Nikiski and Kenai Area

            We returned to the City of Kenai and Nikiski to meet with Lt. Mark McManus, Supervisor of the USCG Marine Safety Detachment, Kenai, Alaska, Captain James Allemann of the Nikiski Fire Department and Dr. Roland R. Maw, Executive Director of UCIDA.[13] 

Nikiski Fire and Rescue

Nikiski Fire Department maintains two fire and rescue stations, one to the north and one to the south of the LNG facility.  These stations serve an area larger than the state of Connecticut – covering the northwest portion of the Kenai Peninsula and across Cook Inlet, covering the northern part of the Alaska Peninsula.  The southern-most fire and rescue station that we visited is about one mile or so from the LNG facility.   

            We traveled back to Nikiski and the southernmost fire station to meet with Captain Jim Allemann.  Jim was very forthcoming.  He gave us a briefing on LNG fires and firefighting an LNG fire.  Of particular interest was his description of large quantities of LNG burning in open areas.  In Nikiski, the Fire Department has ignited up to 5,000 gallons of LNG in a large pit to demonstrate its properties, including initial vaporization (“off-gassing”) while the ground is much warmer than the LNG; the progressive slow down in off-gassing as the ground cools through “auto refrigeration;”[14] the warming effects on LNG from a stream of water with corresponding increase in burn rate and flame height[15] and the subsequent quieting of the fire as water is withdrawn. 

The Captain and most of the department had been trained at and by Texas A&M.  When he was training at Texas A&M, Jim was able to participate in dealing with fires of up to 50,000 gallons of LNG.  This was a discussion that we had been waiting for – to hear and talk about large volumes of burning LNG.  Jim indicated that once auto refrigeration had cooled the earth, even a large, one acre, fire would quiet down to what he called the equivalent of a huge gas range burner.  There are no explosions or even “whoomps” upon ignition and the fire settles to a high range top setting with one huge burner.

We had a “worst case” discussion with the Captain.  Jim’s example of a worst case scenario is a catastrophic breach of an LNG tank within a large diked area with a moderate cross wind and a remote downwind ignition source resulting in the delayed ignition of an expanded and moving vapor cloud.  He believes that this combination of factors or others like them could lead to a truly catastrophic event with implications at a distance from the facility.  Jim believes that in such a situation there is little that his Department, or any department, could do other than wait for the vapors to burn and become too dilute to support fire. 

Jim believes that a redundant automatic high expansion foaming system on site[16] is a necessity to guard against a “worst case” catastrophic event.  His department does not employ high expansion foam, nor does the Nikiski LNG facility.  Jim thinks that such an automatic foam system is absolutely essential at any LNG facility and that it should be coupled with a high expansion foam unit at the appropriate fire departments.

The Captain seemed somewhat skeptical that an LNG pool could effectively be pumped back into the non-breached tank without a foaming agent and the assurance that there was capacity on site to store the spilled LNG.

City of Kenai – Unsuccessful Attempt to meet with Lt. McManus, USCG

            Lt. McManus had been out of the office all morning and was on the water all afternoon on Friday, November 7th.  We finally gave up trying to meet with him.  Ultimately we decided that since much of the regulation of LNG tanker security is left to the discretion of the local Captain of the Port, we were better off speaking with the Portland, Maine Port Captain than trying to run down Lt. McManus.

Soldotna, Alaska – UCIDA           

We met with Dr. Roland R. Maw, Executive Director of the United Cook Inlet Drift Association  (UCIDA) at his office in Soldotna.  UCIDA is essentially a lobbying organization and bargaining unit for driftnet fishermen who fish Cook Inlet.  UCIDA has 580 members and acts on their behalf in dealing with allocation issues before the Alaska Board of Fisheries.  Dr. Maw is a wildlife biologist who recently retired as a professor at University of Alaska.  He is and has been a commercial fisherman, fishing Cook Inlet, since his childhood and has been UCIDA’s Executive Director since 2001.

There two principal fishing techniques used in Cook Inlet, both involving nets, set netting[17] and drift netting.[18]  UCIDA deals with and represents drift netters only.  With one broad exception, UCIDA does not see many negative interactions between tankers and drift netters.  The exception is that unlike the SeaLand vessels and other tankers that ply Cook Inlet, the LNG tankers do not announce position, course, speed and turns on multiple VHF channels with the result being that often the drift netters are put in a position of having to risk their nets to an oncoming LNG tanker or retrieve all or part of their nets to avoid the tankers.[19]  Otherwise, because they do not employ fixed gear, drift netters seem to have few confrontations and little gear loss to LNG tankers. 

From what we could determine, neither set netters nor drift netters have any significant complaints about the Nikiski LNG facility.

Dr. Maw confirmed that he and other drift netters will literally bounce their boats or nets along the sides of tankers and LNG vessels at the LNG and refinery terminals.  UCIDA was able to negotiate an understanding with the local USCG Marine Safety Officer that allows member boats that have registered with the USCG to work within the 1,000 foot exclusion zone.   This is an interesting tale that bears repeating for the benefit of Harpswell fishermen.  After September 11, 2001 the relationship between the USCG Port Captain and drift netters (UCITA) deteriorated as the result of the creation of the 1,000 yard stand-off zone around all LNG tankers transiting Cook Inlet and those at the LNG terminal in April 2002.[20]  The exclusion zone seriously reduced the area available to drift netters in the Inlet and totally excluded some of the best fishing along the foreshore from East Foreland Pont north of  LNG terminal to well below the Agrium terminal.  UCIDA argued and fought for a unified registration system that would allow local drift netters to be identified by the Coast Guard and LNG tanker crews so that boats that had registered could fish within the exclusion zone.  The Coast Guard Port Captain rejected a registration system, refused to consider any modification of the exclusion zone and threatened to arrest and jail fishermen and vessels that tested the 1,000 yard standoff zone.  Finally UCITA announced that its members, not being terrorists and being persons and boats known to the Coast Guard in any case, would fish within the 1,000 yard standoff zone and challenged the Captain of the Port to consider the necessity of arresting and jailing the hundreds of affected fishermen and to impound a similar number of boats.  Ultimately, the Port Captain agreed to implement a registration system that would allow registered vessels within the exclusion zone.  Dr. Maw reported that there have been few problems since.  The registration system has worked well.  As reported earlier, we were unable to speak with Lt. McManus to get his view of the situation and the registration.  It is evident that Harpswell fishermen who fish Middle Bay must arrange to meet with the Portland, Maine Port Captain to find out in advance what the Coast Guard’s intentions are with respect to standoff zones and any other regulation that may interfere with the ability of the fishermen to fish Middle Bay out to Halfway Rock.

Dr. Maw also explained another reason why there are so few confrontations between LNG tankers and fishermen, that being that the fishing season is strictly controlled and often may not be longer than one or two months each year.  Such short seasons combined with the fact that the LNG tankers are in transit in Cook Inlet twice every ten days,[21] on average, equate to less opportunity for interaction between drift netters and LNG tanker.  Generally an LNG tanker will come into Cook Inlet, spend a full day at the terminal and then steam out of the Inlet.  Ten or so days later another tanker will have a similar trip and stay.

Dr. Maw readily expressed his opinion based on his experience that he did not believe there was any realistic or reasonable way for fixed gear fishermen such as the lobstermen, who fish a comparatively long season of six months or longer, to avoid regular heavy gear loss from tankers and tugs.  He did not think that a fixed gear fishery was compatible with tanker and tug traffic in an area such as Middle Bay.  He gave thought to various technical enhancements and fishing techniques that might ease gear loss but, in the end, he did not believe that they would result in acceptable levels of gear loss and tolerable interference with the fishermen.

Dr. Maw related one catastrophic gear loss situation of note.  A few years ago a tanker, the Glacier Bay,  released a large quantity of oil into Cook Inlet fouling the nets of about 500 drift netters.  The owner/operator of the tanker replaced the fouled nets until there were no more nets available in Alaska or in the lower 48.  About 200 of 500 boats had to stop fishing and were unable to finish the season.  I do not mean to suggest that an LNG spill would have the same consequences on fishing gear, but it does raise the question of whether there is the possibility that compounded gear loss in Middle Bay would, in the aggregate, be similar in size to a mass loss that would be beyond the ability of the Town and Fairwinds to adequately compensate for.

Dr. Maw recommends that the Lease or other operative document require (regardless whether the Portland Port Captain requires) incoming and outgoing LNG tankers to regularly announce position, course, speed and anticipated turns as often as is necessary to allow fishing vessels time to react safely.  In Cook Inlet inbound SeaLand vessels begin announcing this information 30 miles outside Kachemak Bay and then announce every 15 miles or so.

Cook Inlet Keeper – Lois N. Epstein, P.E.

            We met Lois Epstein at Cooper Landing.  Lois is the Senior Engineer and Oil and Gas Industry Specialist for Cook Inlet Keeper.  She has authored a study of pipeline incidents within the Cook Inlet watershed [ See Lurking Below: Oil and Gas Pipeline Problems in the Cook Inlet Watershed, http://www.inletkeeper.org/pipelines.htm ].

            Lois kindly interrupted her vacation to spend over one and one half hours with us at a roadhouse at Cooper Landing, Alaska.  She is primarily concerned with pipelines and pipeline safety.  The bad news she gave us is that in most instances few if any permits are required for the location and construction of pipelines.  Moreover, on an ongoing basis there are few if any federal and state regulations requiring even minimal inspection and maintenance of pipelines.  The few regulations that apply to natural gas pipelines are enforced by the Department of Transportation’s “tiny” Office of Pipeline Safety (OPS), which she believes is ineffectual for the most part.  It is important to note that FERC does not deal with pipeline issues other than location and monitoring condemnation proceedings (and transport pricing).  The way this works is that federal regulations regarding pipeline construction have been promulgated and it is up to the contractor/operator to comply with these regulations.  Failure to have adhered to these regulations is generally caught by OPS only in the event of a failure – when the gas is already out of the pipe, so to speak.[22]

            Lois informed us that the EPA does not require a risk management plan for an LNG plant.[23]  For this reason the Fairwinds lease should require Fairwinds to develop a risk management plan according to EPA standards.

            Lois thinks that Harpswell residents and the Selectmen should carefully review reports of pipeline incidents and issues around the globe, even those that do not involve LNG.  A good source of this information is: www.safebellingham.org and the listserve at that site.  Other sources of information:  information about pipeline volume data is available at the Energy Information Administration office of Department of Energy (DOE) [http://www.eia.doe.gov ]; and, National Transportation Safety Board (NTSB) incident reports [http://www.ntsb.gov/Surface/pipeline/pipeline.htm].  OPS accident data is available at http://ops.dot.gov/stats.htm

Remote siting of LNG facilities has been a hot topic recently.  After our visit, Lois sent me a copy of an article about U.S. Rep. Ed Markey, D-Massachusetts who wrote the house version of the legislation that sets the minimum standards for LNG facilities.  Rep Markey stated:  "When Congress passed my LNG safety bill back in 1979, it directed the Department of Transportation to prescribe standards for the siting of new LNG facilities that were supposed to consider the need to encourage remote siting. I am not satisfied that DOT has been doing enough to comply with this congressional intent," Markey told the Mobile Register.[24]

            Peter Micciche had informed us that the natural gas being sent by pipeline to Cousins Island would be at approximately 900 psi, a pressure that Mr. Micciche stated was “not high – in the low range” or words to that effect.  Peter had gone on to say that the pipeline pressure might increase as the volume of product to be moved was increased.[25]  Lois thought that 900 psi was really on the high side of “the low range” of pipeline pressure in the sense that pressures of that magnitude begin to be high pressure.[26]

            Lois recommends that the Fairwinds lease require constant and regular state of the art inspection of valves, joints and welds as well as the interior and exterior of the pipeline.  She also recommended that the Town consult an oil and gas economist with questions about lease term and return on investment for Fairwinds.

Pamela A. Miller – Oil and Gas Industry Specialist

            In Anchorage we met Pamela A. Miller, a private consultant and oil and gas industry specialist.  Pam’s overriding concern was that the Town of Harpswell, through the Fairwinds lease, ensure that the Fairwinds facility will never be more than or other than that which we are led to believe it will be.  Pam reported that it is very common in the oil and gas industry for a facility to use a lease or similar instrument as a means of obtaining initial advantage and then, at a later time, to unilaterally expand the use or scope of the work, facilities and business carried on at a site.[27]  Pam related us the general circumstances in a lease situation on the north slope, stating: “I don't think you can emphasize enough that the proposed project is not a routine kind of facility.  The lack of environmental and agency expertise regarding its impacts should give you [Harpswell] more reasons why the environmental permitting should be done first.  Remember, the big battle over the TransAlaska Pipeline had to do with the right-of-way lease by the federal government.”

Ms. Miller emphasized that the Fairwinds lease is the only point of leverage that the Town has, or will ever have, regarding any aspect of the facility – with federal preemption and the permitting process, the lease will probably be the only opportunity to exercise any control over the project.  Her observation is that industry often starts with a general proposal  and then dribbles in the project details over time with the result being that we will not have the full information upon which to base the decision.  She suggested that prior to the vote, the Town receive the full project proposal and that the permit application be made prior to making a lease commitment.  Pam stresses the importance of conditioning any modification of the Fairwinds lease on Town Meeting or Town-wide vote rather than empower the Selectmen to make changes to the lease over time.  She observed that while the project proponent may promise what the project may or may not involve regarding activities or infrastructure (such as closed water processing system, etc.), Fairwinds should be willing to agree to conditions if indeed what they are saying is the full picture.  In Pam’s opinion, the oil and gas industry track record shows that proponents of projects of this magnitude have frequently dodged an issue or proposed condition by saying that they need the “flexibility,” “to keep their options open,” or that the condition would make the project “uneconomic” even though no factual economic information is presented.

Pam advises that many of the existing LNG facilities elsewhere in the world and many new proposals within the U.S. are for offshore LNG facilities, not onshore, due to concerns over conflicts between industrial facilities and the affected communities.  Furthermore, the National Energy bill (which may have been enacted by the time this report is published [28] may alter existing permitting and environmental review requirements in ways that cannot be fully known at this time because consideration of the legislation is not done, nor are implementing regulations done, (for example weakening of Coastal Zone Management Act, Clean Air Act, Clean Water Act etc.).  Furthermore, a section of the Conference Committee bill released November 15, 2003 covers LNG facilities and although it is unclear whether this would have much effect on Harpswell and the Fairwinds project, it does deal with construction of onshore terminals and terminals in State waters for the purpose of importing LNG into the US.[29]

Pam recommends that the lease limit the footprint of the facility within the 64 acre ± area occupied by the facility and that no expansion or change of use be permitted without the consent of the Town, by Town Meeting vote.  The lease should prohibit conversion of the facility to a liquefaction plant and prohibit the use of chilling agents such as ethylene glycol and propane.   The lease should limit the vessel size and maximum number of trips per unit of time.  The Selectmen should consider limiting and controlling all elements of use and occupation by Fairwinds that are critical to the fishing industry, the health and safety of Harpswell residents, the local and regional environment, as well as what is necessary to protect and preserve the social and cultural interests of the community. 

Pam expressed her concern that the lawyers representing the Town may have such a strong connection with the oil and gas industry and/or ConocoPhillips or Transcanada that they may not be able to adequately separate themselves from the industry during negotiations.  She recommends that Harpswell try to determine their representation history.

Pam made the following additional recommendations:

  • Require the use of tethered tugs to accompany all LNG tankers inside Halfway Rock.
  • Assuming that tides will permit, set specific times of day when LNG tankers will be permitted to transit Middle Bay.
  • Insure that the lease prohibits access to the Fairwinds site during the construction phase except by water.
  • Nail down the number of buildings permitted within the facility.
  • Require a worst case action plan that goes beyond the berm, assuming a breach of the berm, moderate to high winds, remote ignition sources, etc.  To date Fairwinds has indicated that any worst case action plan for the Harpswell site will be for that portion of the facility within area of the berm.
  • Prohibit discharge of ballast, waste and effluent and warming or chilling water into Middle Bay.
  • Prohibit fueling of vessels at the terminal other than with LNG.
  • Prohibit use of the sale or transmission of LNG to any facility located on Harpswell neck other than for residential uses.
  • Require the installation of mains and laterals for residential delivery of gas for domestic residential and light business (non industrial) use.  Or if the facility is wholesale only, then require that it construct a stub main to route 123 so that an independent utility can buy gas and distribute it to local residents.  There is no reason why Fairwinds cannot subsidize the installation of mains and laterals on Harpswell neck as a form of limited compensation to those residents most affected by the facility.
  • Require that all tankers making deliveries to the Harpswell terminal site be state of the art vessels that are replaced at reasonable intervals.  Discuss this with marine experts.  Note that Marathon and ConocoPhillips replace their vessels regularly.

Impressions, Observations, Questions and Conclusions

It is interesting and enlightening to compare Alaska with Maine and Nikiski with Harpswell.  Alaska and Maine are both rich in natural resources and natural beauty.  The original economies of both states were based in large part upon the exploitation of available natural resources.  While both states share and exploit many of the same resources, Alaska’s exploitation, with the greatest economic importance by far, has been extractive – mining, oil and gas.  Maine’s most important form of exploitation of natural resources has tended toward harvesting – timber, fish and water powered manufacturing.  Alaskan history is inexorably tied to extractive industry and, by and large, the people of Alaska are proud of their connection to mining and oil and gas as well as the accommodations they have made to those industries throughout their history.

Nikiski’s very existence was created by and is dependent upon oil and gas exploitation.  There is no similar comparison with Harpswell.  Harpswell’s existence is due to a geographic and social intersection – it exists because of its geographic location and juxtaposition with the Atlantic and available fisheries and its compatibility with its settlers.

The residents of Nikiski, Alaska did not have to make any compromises or accept any risks, known or unknown, when it welcomed heavy oil and gas based industry – the industry created Nikiski.  The residents of Nikiski did not have to put any segment of their population or local economy at risk to accommodate the LNG facility and to the limited extent there are risk the risks, in effect, arrived before the area was populated.  Those who live and fish in close proximity to the local oil and gas industrial plants willingly accept them and the conditions they create.

Nikiski, Alaska has few, if any, similarities to Harpswell.  It has no history other than as an industrial oil and gas center and its apparent population density is a mere fraction of Harpswell’s.  Nikiski may be the perfect site for an LNG facility compared with Harpswell with its denser population, its rich local history, its history of fishing and maritime occupations and its many historic and architecturally significant structures. From my discussions with Alaskans over the past 5 years I have found that Alaskans seem to be less concerned with the visual or aesthetic image of their towns and communities.

Unlike Nikiski, Harpswell must invite LNG and Fairwinds to join the town.  Harpswell must compromise its very existence and accept uncountable risks to welcome LNG, a resource that is not natural to Maine, let alone Harpswell.  Can or should we in Harpswell have the same comfort level with LNG as those in Nikiski?  Are we willing to accept unquantifiable risks and consequences created by a local LNG facility and the attendant pipeline?

My overall impression of Nikiski and the ConocoPhillips facility is that they are complementary and that the local community regards the facility highly.  It appears that there have been no accidents or incidents of note at the LNG facility.  The LNG facility, along with the Agrium and the Tesoro oil and gas refinery, are cash cows for the community.  By and large, the fishermen are comfortable with the facility, LNG tanker passage and interaction – there have been few incidents resulting in gear loss. Roland Maw, speaking for UCIDA, thinks that although there is little gear loss there are frequent interactions between fishermen and LNG tankers that could easily be avoided if the LNG tankers would use the same course, speed and turning announcements that the SeaLand container ships routinely make.  For Kenai fishermen, the bottom line is that the fishing season is short and their gear is mobile – therefore they have few problems with the tanker traffic.  Kenai drift netters are also fortunate that the Port Captain agreed to a vessel registration program that minimizes disruption caused by the 1,000 yard standoff zone.

Generally speaking the residents of the Kenai Peninsula are very complimentary about ConocoPhillips and the Nikiski LNG facility – this is true even among persons who may have some negative comments about the Nikiski LNG facility and/or the LNG tanker traffic. Environmental issues aside, I believe that this is partly because the oil and gas companies doing business in Alaska are perceived to be good citizens – they readily contribute money and personnel to state and local organizations and partly because the overall safety record of the oil and gas industry, by Alaska standards, is perceived to be good.  I also think that Alaskans, by and large, are much more forgiving of lower level oil and gas related environmental problems than persons living in states without a large oil and gas presence.  Alaskans have a long standing close relationship with oil and gas and have developed a comfort level that could be achieved only through such a close relationship.

            There are many Harpswell residents who are not persuaded that LNG and the Fairwinds project pose unacceptable safety risks.  Many of these same people believe that the chances of a terrorist attack in Harpswell, Maine are remote in the extreme and that the plant and pipeline pose acceptable risks to fishermen, the lobster fishery and the Middle Bay environment.  For those who share these beliefs I offer the following observations and conclusions:

By any definition or description, the Nikiski ConocoPhillips LNG liquefaction facility is heavy industry.  There is little doubt that the proposed Fairwinds regasification facility is also heavy industry.  In contrast to Nikiski, Alaska or Everett, Massachusetts, Harpswell is a residential community with fishing being the equivalent of “at home” businesses.  The physical scale of the proposed Fairwinds facility, the ConocoPhillips investment, and the volume of product being handled by the proposed facility are all huge – too large for a residential community.  In my opinion, the Fairwinds plant belongs in either a heavy industry area or an area that has few, if any, residential characteristics, i.e., Everett or Nikiski.

Harpswell must decide whether heavy industry is compatible with a residential community.  It is evident from viewing industrial areas in Alaska as well as in cities throughout the lower 48 that industrial sites adjacent to residential areas expand, overtake and replace the adjacent residential areas as price and real estate values crash.  The reality is that as soon as the Fairwinds construction begins the only people who will be willing to live next door will be those involved with construction.  Later, once the facility is in operation, the only persons willing to live in close proximity to the facility will be persons employed by Fairwinds.  Eventually, the residential zoning will be changed to allow some business uses as a reflection of the economic reality at play and those adjacent depressed properties will be sold to businesses and ventures that support the adjacent heavy industry.  In this way, the industrial area will be ever so slowly expand into the nearby residential areas.

Another consideration is that by any definition, Harpswell is not a “remote site” as anticipated by the 1979 LNG Safety bill,  Worse yet, is that, according to Rep. Markey, the U.S. Department of Transportation has not been complying with congressional intent of 1979 LNG Safety bill to encourage remote siting of LNG facilities.  In other words, Harpswell cannot rely on federal regulators to protect its interests in site selection.

If one assumes that each Harpswell resident should make thoughtful cost benefit analysis of the Fairwinds proposal before making a decision to vote for or against the Fairwinds lease, we should be mindful that only the benefit is known to us. i.e., a revenue stream to the Town.  We do not have any credible way of ascertaining and evaluating the cost (risks and consequences) of the Fairwinds proposal. At this stage, even the experts are unable to give us any certainty about the health, safety, fishing and environmental risks posed by the Fairwinds proposal.  Simply put, we do not know to a certainty what risks, or the magnitude of known risks, we will have to accept in exchange for the money offered by Fairwinds.  We are being asked to make a bet where what’s at stake and the odds are incalculable.

While we can readily calculate the value to the Town of the Fairwinds revenue stream, assuming the Maine legislature does not muscle in on the cash flow, we can only guess at the consequences of the Fairwinds facility on the environmental, cultural, social and fishing interests of the Town.

Harpswell voters should consider the following:

1.      First and foremost,  Fairwinds should contractually covenant to waive federal preemption, thereby agreeing to submit the project to review by the Harpswell Planning Board and the Maine Department of Environmental Protection and to abide by all conditions of approval imposed by those bodies.

2.      One of the most important considerations for Harpswell voters is that we have learned from the experts with whom we spoke that Harpswell cannot rely on the horribly flawed patchwork of federal laws, regulations, review and oversight to ensure that the Fairwinds project: is safe and compatible Harpswell; meets reasonable environmental standards; has done what is necessary to protect the Middle Bay fisheries and fishermen; will make and keep the under-sea or overland pipeline safe on an ongoing basis, etc.  Moreover, with federal preemption in play, Harpswell cannot rely on State of Maine and local review and permitting to safeguard the Town’s interests.   The experts we spoke with stressed time and time again that Harpswell voters must rely on our own review and analysis to protect their interests and those of the Town.  As voters, we must do our own review prior to the Town-wide vote or Harpswell will have missed the only opportunity it has to ensure that the project meets ordinary and necessary standards. 

3.      Fishermen and those with marine interests should meet with the Portland Captain of the Port to find out what his position is likely to be with regard to:

a.       Required use of tugs – tethered or attendant.

b.      Required hailing and position announcements by incoming and outgoing tankers.

c.       Working vessel registration for fishing vessels other working vessels (e.g., Coastal Barge and Mooring, Chris Heinig, etc.).

4.      Review lease (if available) and MOO and convince the Selectmen to add conditions and restrictions as necessary to protect Harpswell residents, the fishing industry, etc.  See Pamela Miller’s, Lois Epstein’s, Captain James Allemann’s, Bob Shavelson’s and Roland Maw’s recommendations, above.

5.      Determine what the support requirements of the facility will be and from what distance these services will be provided.  Will they be located within Harpswell or not.  If they are to be located within Harpswell where will they be situated?  Will they be located near the facility, perhaps along Harpswell Neck Road?

6.      Will it be an absolute requirement that construction labor and materials will not be permitted to access the site from Route 123?  Determine how Fairwinds intends to enforce this requirement.

7.      What controls will the Town have over operational standards of the Fairwinds facility.  Will the Town be able to hold Fairwinds to a performance yardstick.

8.      Are there provisions in the lease requiring that Clean Air Act and Clean Water Act standards met at all times without the use of so called mixing zones.

9.      Will an evacuation plan be developed prior to the vote?  Will the Town submit draft evacuation and emergency response plan to an expert for review? Will it be adequate?

10.  Will the development by Fairwinds of a worst case scenario response and prevention plan for the area of Harpswell that could be affected by a worst case incident (outside the Fairwinds’ berm) be a requirement of the lease.

11.  Is the proposed screening of the tanks realistic?  Get an accurate measure of tank height by helium balloon on a calm day and determine with an inclinometer the appropriate heights of screening at 123 and at various places on the recreation portion of the retained land necessary to effectively screen the tanks.

12.  Will the lease require cut-off lighting and sodium vapor lamps to eliminate side spill and reduce light pollution?

13.  How certain is the Town that the costs of decommissioning the facility are covered to an absolute certainty.

 


 

[1] Ann is a staff member of the Anchorage, Alaska office of the National Wildlife Federation and the Director of AWEN, The Alaska Women’s Environmental Network.

[5] These residential areas are partially confirmed by viewing a Mapquest road map of Nikiski, http://www.mapquest.com

[6] In the end I did not take any photos since I did not think there was a way that a snapshot could accurately capture the scale of the facility and its structures.  Walter Norton did take one photo of the ConocoPhillips LNG tanks and two shots of the Agrium fertilizer plant from the highway.

[7] Fluctuations in salinity or abnormal concentrations of salinity in the water column have the potential to pose serious problems for the lobster fishery and marine life and should be studied thoroughly. [See comments by Lois Epstein] 

[8] My observation is that the oil and gas industry in Alaska in general and in northwest Kenai in particular has a presence that is larger, more politically powerful and more economically important than the paper industry and its attendant land ownership was in Maine during its heyday. The political power of the oil and gas industry is palpable and all Alaskans benefit from the “oil dividend” – an annual payment to each Alaska resident, regardless of age, that in some years exceeds $1,800 each. 

[9] This may not be the case elsewhere in Alaska, such as the North Slope where the record is more spotty.  See discussions with Pamela Miller. 

[10] In Maine this creates the potential for conflict between what is best for safe navigation and control of the LNG tankers and what is likely to wreak havoc with stationary fishing gear, floats and warp.

[11] Lois N. Epstein characterizes this office as “tiny” Relative to it mission, it immense task and its apparent inability to do its job in a meaningful way. 

[12] We have been told by Fairwinds that the regasification process will use a closed system and that no chilled water will be discharged. 

[13] We had hoped to meet with Bobby Correia a fisherman in Kasilof, Alaska; Gary Fandrei, Executive Director of Cook Inlet Aquaculture Association; and, Billy Harris, retired Nikiski Fire Chief, Chair of the Local Emergency Planning Committee and former president of the Nikiski Chamber of Commerce, but due to a combination of tight scheduling on our part and conflicting availability we were not able speak with them. 

[14] Auto refrigeration is the rapid super-cooling of the ground and other areas in contact with LNG.  As the warmer ground is super-cooled the off-gassing is reduced to a minimal amount.  If the LNG is burning the flame height dampens to a fairly low level above the LNG pool. 

[15] As a consequence of the warming effects of a water stream, generally, LNG fires are either allowed to burn or are very effectively fought with a material called high expansion foam when and where available. 

[16] This would be a system similar in concept to the systems found in self-serve gasoline stations in that it would automatically deploy foam upon sensing external LNG, a breach or fire. 

[17] Set netting is done close to shore.  Each set net can extend up to thirty-seven fathoms in depth. A set net site must leave 600 feet between nets, but nets may be extended anywhere from one half mile to one  mile into the Inlet depending upon location.  This is a fixed gear fishery. 

[18] The drift net fishery takes place out in Cook Inlet but is restricted to certain areas.  A boat is always attached to the drift net so the gear is mobile.  Drift net boats can extend a gill net up to one hundred fifty fathoms behind the vessel and have the advantage of being able to travel to the schools of fish. 

[19] A drift net boat might have no more than 30 – 45 minutes of advance visual warning of an LNG tanker traveling at 22 knots.  The drift net boats take up to 1 ½ to 2 hours to haul their nets which means that they often do not have time to deal with their catch and nets in time to avoid an LNG tanker.     In contrast, SeaLand vessels and oil tankers will give periodic position reports over multiple channels, giving drift netters up to 3 or more hours to anticipate and avoid a confrontation.  

[20] 33 CFR Part 165 [COTP Western Alaska-02-007] RIN 2115-AA97 

[21] There are two LNG tankers using the Nikiski LNG terminal.  Generally, each tanker makes a round trip every 18 days (one tanker every 9 days) with one day between the incoming and outgoing trips being spent at the terminal.

[22] To illustrate how under-regulated this industry is, no permits are required for ongoing pipeline operations. Additionally, current pipeline regulations have the following serious deficiencies: there are no periodic internal inspection requirements for natural gas pipelines (federal regulations are under development for “high consequence areas”); there are no periodic internal testing requirements for large portions of oil and natural gas pipelines, no leak detection system performance standards for oil pipelines, no release shut-off valve siting and performance standards for oil and natural gas pipelines, and no failsafe requirements to prevent overpressurization, nor preventative requirements following overpressurization; there are numerous exemptions from the regulations for particular pipeline types (e.g., rural gathering lines); and there is no ongoing reporting directly to the public about pipeline operations (e.g., frequency and type of pipeline tests).  Moreover, while doing minimal enforcement itself, the Office of Pipeline Safety has not referred any cases to the Department of Justice for enforcement in years.  From “Myths and Misleading Statements About Oil and Natural Gas Pipelines,” by Lois N. Epstein, P. E., http://www.safebellingham.org/background.htm  

[23] Federal Register notice of January 6, 1998, pp. 639-45. 

[25] It stands to reason that the pressure will increase as the volume of gas being moved through the Fairwinds facility and the pipeline doubles, as planned.  The only way to increase the volume in the pipe will be to increase the pressure to move more gas more quickly. 

[26] I have been told by an independent pipeline engineer that the Sable Island pipeline in Maine moves natural gas at approximately 1,400 psi.   

[27] See “Broken Promises, the Reality of Big Oil in America’s Arctic” prepared for The Wilderness Society by Pamela A. Miller, 2003. 

[28] The National Energy bill was reported out of Conference Committee on  November 17, 2003.   

[29] See Title III, Oil and Gas, p. 36-37, Sec. 320.—The bill is available on the Senate Energy Committee web site: http://energy.senate.gov/index2.cfm.  This writer has not reviewed any of the Bill or the Conference Committee report.