LNG port slated for NY coast. Will gas come or will it go? Shale gas exports/imports stir energy policy debate

The second wave of the shale gas debate:Where does it go? 

The controversy over fracking began with the process of extracting gas from shale. Now it involves where the bounty goes and how it gets there.

First, about where it goes: In response to a glut from an onshore drilling boom, President Obama has voiced support for plans to boost sales by exporting liquefied natural gas (LNG) to countries in Asia and other places where supply is low and prices are high. It’s a strategy opposed by anti-fracking groups because global markets  = more demand = more fracking. Export plans have also drawn resistance from the manufacturing sector and petro-chemical industry, which use natural gas both as fuel and feedstock to create products. As reported by DCBureau.org, Dow Chemical CEO Andrew Liveris argues that it’s far better for America to use its newfound shale gas supply to stimulate domestic jobs and production than it is to  export it wholesale to foreign manufacturing rivals. “America’s natural gas bounty is more than a simple commodity,” he testified at a Senate committee hearing in February. “It’s a once-in-a-generation opportunity for America to export advanced products, not just BTUs.” His position is supported by a report commissioned by the U.S. Department of Energy that shows exporting gas would drive up prices and drive down wages. Yet drawbacks would be more than offset from gains to economic stakeholders in the natural gas extraction and exporting industries, the report concludes.

Now, about how it gets there: Companies are seeking federal approval to convert natural gas import terminals on the Gulf and Pacific coasts to export terminals. Since the Obama administration approved LNG export terminals in Louisiana and Texas, more than two-dozen applicants have lined up with licensing requests.

Whether you are for this or against this, it’s easy to understand the economics. Companies developing low cost domestic shale are finding higher returns in foreign markets, while U.S. manufacturers are better served by keeping an abundance of cheap energy to themselves. But it’s not all that simple. While companies are racing to capitalize on overseas demand, one company is pushing ahead with plans to build a terminal to IMPORT gas to communities in New York and New Jersey, next to one of the world’s largest shale plays. Liberty Natural Gas is proposing the Port Ambrose project, 19 miles off the Long Island, in relatively close regional proximity to the Marcellus play, which extends under northeastern and mid-Atlantic states.

Why?

I put the question to Teri Viswanath, an analyst with BNP Paribas who follows global natural gas markets. Despite a glut in domestic markets, Viswanath said, there are still sizable pockets in parts of New England and New York City where demand is outpacing supply.  With neighboring Pennsylvania now a major producer, it isn’t related to a lack of gas. It’s due to lack of infrastructure. Unlike reserves in Texas and other established oil and gas states, the Marcellus Shale is in large part a “greenfield” development, Viswanath said, meaning it extends over areas that lack established infrastructure.

The aggressive build-out of that infrastructure continues throughout the northeast, including upgrades and add-ons to established pipelines to the south, and both new and expanded pipelines through Pennsylvania and upstate New York to New York City, New Jersey and New England. Even so, pipeline expansion is limited by logistic and social hurdles that will continue to prevent it from bridging the demand-gap in certain east coast markets – what Viswanath called “transportation-constrained” markets.

Pipeline gaps evolved partly due to a “supply push rather than a demand pull.” The supply push characterized natural gas development in the northeast. In other words, as operators explored and developed relatively small hit-and-miss conventional plays in the northeast, they built gas infrastructure along the path of least resistance – often along existing rights of ways. Before unconventional gas development changed the dynamic of energy consumption, natural gas markets were regional and prices fluctuated along with supplies. (Storage projects partly compensate for this by giving producers a place to warehouse gas when demand was low and sell it when demand spiked.) The build-out may have been different if it was driven by demand  – i.e. shaped by a critical mass of consumers and planners seeking access to a large and reliable supply.

Developments in the shale gas era are changing the equation, and they include public policy encouraging demand in the advent of the boom. New York City Mayor Michael Bloomberg is pushing incentives to displace fuel oil with natural gas (and other fuels) through the city’s Clean Heat program; and Connecticut Governor Dannel Malloy is pitching a program to encourage 300,000 households to switch to natural gas through the Connecticut Comprehensive Energy Strategy.

According to Liberty’s website, the company plans to import gas produced without the controversial process of hydraulic fracturing. It will come from “conventional” wells that are “likely in the Caribbean.”  In reality, according to Viswanath, the gas could come from many areas, including shale gas from the Gulf states. That leaves room to wonder how it is economically more feasible to produce shale gas in Texas or Louisiana, liquefy it, and ship it thousands of miles from the Gulf Coast to New Jersey and New York, than to pipe it a few hundred miles from Pennsylvania.

Not everybody buys assurances that the Port Ambrose project is all about importing. A collection of anti-fracking groups, including Catskill Citizens for Safe Energy, Surfrider, and Clean Ocean Action are rallying opposition based partly on this assessment www.marcellusprotest.org posted on Marcellusprotest.org:

Ambrose LNG Port is a gateway to natural gas exports. In liquid form, LNG can be shipped around the world and sold to the highest bidder. While the project is currently described as an import terminal to receive natural gas from Trinidad and Tobago, it is widely believed that since the permit request filed under the Deepwater Port Act automatically covers both import and export, Port Ambrose, once constructed, will be used for export instead.

The question of import or export aside, The Port Ambrose project is generating plenty of controversy in coastal communities in New York and New Jersey still dealing with rebuilding from Hurricane Sandy. Some officials and residents fear the project is being railroaded without due evaluation, consideration, or public input, and some are flatly opposed to it proceeding under any circumstances. A previous version of the project was vetoed by New Jersey Governor Chris Christie.

The new project has been revised and resubmitted, with the cooperation of the federal government. Officials from the Coast Guard and the Maritime Administration recently accepted the Environmental Impact Statement, a complicated document that is a fundamental aspect for approval. The very fact that the proposal is still on the table after being defeated once shows the motivation for companies, reading what they see as encouraging signs from the federal government, to ride the crest of the shale gas wave into the LNG business.

Activists attack fracking plan with DEC’s own red tape 200K comments on final day puts pressure on NY agency

With one deadline past and another imminent, staffers at New York’s Department of Environmental Conservation attempting to resolve New York’s fracking conundrum find themselves in a familiar position: under pressure.

On the final day for public comment on draft regulations for development of shale gas reserves under upstate New York, members of a well-organized anti-fracking campaign delivered more than 200,000 written comments. Activists carted boxes into the agency’s headquarters in Albany hours before the 5 p.m. deadline. DEC staffers now have 50 days to process and respond to this latest deluge of criticism before they can finalize a plan.

Sean Lennon and Yoko Ono join response at DEC headquarters

Following the direction of New York Governor Andrew Cuomo and DEC Commissioner Joseph Martens, officials have been attempting to complete policy for shale gas development in New York. The focus is on high volume hydraulic fracturing, known commonly as fracking – a process to shatter subterranean mantels of bedrock with pressurized chemical solution to release oil and gas. Advances in fracking technology are enabling exploitation of reserves that were previously inaccessible, and also raising concerns about social and environmental impacts from a new era of mineral extraction on a scale previously unseen. Until New York’s policy is complete, permits to develop the Utica and Marcellus shales extending under upstate New York are on hold.

As of Monday, the DEC had received 1,373 comments, said Emily DeSantis, a spokeswoman for the agency. Today’s special delivery capped off a week of protests that served as a political show of force by both grass roots and institutional fracking opponents, lead by activists well versed in the procedural, political, and scientific aspects of the hotly debated issue. On Monday, Climate Change headliner Bill McKibben spoke on the hazards of fossil fuel extraction and consumption and global warming in front of a sold-out crowd in The Egg, a 1,500-seat performing arts venue in Rockefeller Plaza. On Wednesday, more than 1,500 chanting protesters with signs and banners crammed a quarter-mile stretch of the plaza’s underground concourse, which connects the state Capitol and Legislative Office Building to the convention center where governor Cuomo delivered his State of the State address. The demonstration included an appearance and performance by 93-year-old folk legend Pete Seeger.

Today, the comments were delivered to the DEC with a delegation that included Sandra Steingraber, a biologist, activist and author who has been tutoring followers on the technical aspects of the regulations and encouraging them to respond, and Yoko Ono and Sean Lennon, who are among celebrities who have served as figureheads for the movement.

Sean Lennon at DEC headquarters

While there is bound to be a percentage of comments that are redundant or irrelevant, the agency will still have to read them, sort them, and respond appropriately by Feb. 27. That means that staffers will have to read and sort some 4,000 comments a day. That’s 400 an hour, more than six a minute, or one every 10 seconds. That's assuming 70-hour workweeks with no breaks to answer the phone, eat, or go to the bathroom. Of course, one person will not be processing all the requests. But it’s a daunting challenge even for a qualified team of officials, and it raises the questions of what kind of resources the DEC will be able to summon to meet the deadline. Within this mass of paperworks will be comments that require extra thoughtful analysis and perhaps, if taken in good faith, warrant change to the draft document. In addition to the boxes of comments, the agency will have to respond to “some very detailed technical comments” from environmental groups, including the National Resource Defense Council, Earthjustice, Riverkeeper, Catskill Mountainkeeper, and Sierra Club being submitted this afternoon, said Deborah Goldberg, an attorney with Earth Justice.

“Failure to comply with these requirements is grounds for legal challenge,” Goldberg said.

The sheer volume of responses will pose a significant logistical problem for the agency, which has to respond to all of them before finalizing regulations. The agency issued the draft regulations on Nov. 29 to qualify for a 90-day extension to keep the rule making process from expiring. By law, the agency also had to allow a 30-day period -- from Dec. 12 until today -- for public comment. If the regulations are not finalized by Feb. 27, the agency will have to restart the rule making process and reopen it for public comment.

The regulations, however, are just one piece of New York’s monumental and unprecedented policy overhaul to try to come to terms with shale gas development. The regulations represent the battle of today. A larger and more critical piece, and surely to become the battle of tomorrow, is a review of environmental and health impacts on which the regulations are based. That review, called the Supplemental Generic Environmental Impact Statement (SGEIS), has been in draft form since 2008 and there is no deadline for its completion. In theory, the state could begin issuing permits for shale development after the final version of the SGEIS is released, even if the regulations are not finalized.

That also would provoke an all out effort, including law suits, by the coalition of groups leading the anti-fracking campaign who have faulted the process every step of the way. A salient complaint is that the regulations were issued prior to the final SGEIS on which they were based, forcing the public to evaluate regulations without access to the SGEIS and relevant health and environmental considerations.

In response to a request from leaders of environmental groups, and in anticipation of law suits, Martens announced last fall that the state was hiring outside consultants to review the work of the DEC to ensure that it had sufficiently accounted for public health impacts of fracking. Like the final SGEIS, the scope and results of that review have not been made public.

Even as the regulations are being developed, Cuomo’s administration has indicated through prepared statements that it is undecided on whether it will allow shale gas development. It is a subject that Cuomo rarely addresses publically. He did not mention it in this week’s State of the State address, even though fracking represents the biggest environmental policy fight in the state’s recent history.

Update: John Campbell, Gannett’s Albany reporter, reported today that if DEC officials intend to finalize the regulations by Feb. 27, administrative law requires them to release the final SGEIS (which includes a summary of the health assessment) at least 10 days prior. A mid-February release of the SGEIS would be a clear sign that the agency intends to push forward against the resistance with its plan to open New York of shale gas development. That would be a victory for those who have been supporting development for economic reasons. If the agency lets that window pass, it would signal the opposite.

If push comes to shove, anti-frackers pledge not to budge

If fracking comes to New York, opposition groups are pledging to take the fight beyond traditional political channels and employ tactics used in the 1960s Civil Right’s movement. This would include passive “civil disobedience” such as human block-aides and sit-ins, to call attention to their cause and show their resolve to fight for it.

There is bitterness and vitriol on both sides of the debate over the risks and merits of high volume hydraulic fracturing – a controversial method of extracting gas from rock that has enabled a new era of on-shore drilling. Proponents see on shore drilling as a positive step to increase domestic energy supplies and national independence while phasing out coal. Critics see it as a reckless and unregulated corporate land grab that comes at the risk of the environment and public health. And there is plenty of visible protesting, street theater, and campaigning that illustrate the deepening entrenchment of positions over shale gas in New York state. Too much, in fact, for one journalist to cover, much less assign relevance to.

So why am I writing about a particular series of events that took place in upstate New York yesterday? Signers – 5,000 to date -- of the “Pledge of Resistance” represent a commitment that seems to extend beyond an ill-defined crowd that can be written off as reactionaries, hellions, ideologues, and band-wagon riders. Alliances within the group cut across demographics, with heavy representation from baby-boomers, some with a history in the Civil Rights movement that defined 1960s-era activism. As with pro-drilling groups, anti-fracking campaigners are represented by credentialed leadership including politicians, academics, and professionals with family and jobs. And they appear ready to push their comfort zone.

Three protesters were arrested earlier this month for blocking the entrance to an Inergy LLC facility near Watkins Glen, New York. Inergy plans to build a $40 million storage and transfer station for natural gas and liquid petroleum in underground salt caverns on the western side of Seneca Lake. The project is part of a build-out of infrastructure that would increase New York’s role in shale gas development. Those arrested included Gary Judson, a 72-year-old retired Methodist Minister.

The pledge of resistance is purportedly signed by people willing to go down that same path. They include political figures such as Binghamton Matt Ryan, and non-political figures such as Sue Rapp, a psychotherapist with a private practice in Vestal, New York. Rapp, a first-time demonstration speaker, considers herself an “accidental activist,” compelled to protest because of the prospects of shale gas development in her hometown, which sits over a lucrative part of the Marcellus Shale

Protestor Susan Walker is charged with trespass Watkins Glenn
PHOTO WILLIAM HOUSTON/ SHALE SHOCK MEDIA

A principal in the upstate New York movement is biologist and author Sandra Steingraber, distinguished scholar in residence at Ithaca College, and a mother of two children, ages 13 and 11. At rallies yesterday in Horseheads, Binghamton, and the Onondaga Nation, Steingraber promised more resistance to come. “I will be in the streets with you, and if the day comes that I will be a better parent in jail than out of jail, then I will be that parent,” she told a crowd of cheering followers at a rally in Otsiningo Park. “We stand ready to fill the streets in peaceful non-violent protests.”

A threat, of course, is different from action. And if push comes to shove, it remains to be seen whether the signatories will live up to their commitment in show-stopping numbers, or whether the effort will become an underwhelming side show in the ongoing national debate.

And so the story continues.

Protestors chain selves to fence to impeded NY gas project Is Watkins Glen harbinger of civil disobedience strategy?

Two anti fracking protesters – reportedly senior citizens – have chained themselves to a fence at an Inergy facility near Watkins Glen, New York to impede a gas storage project under development there. Sandra Steingraber, founder of New Yorkers Against Fracking, said the protest began as an independent act by residents frustrated with Inergy’s conversion of salt mines along the lake into gas storage facilities without public input. As of late this morning, several dozen protestors have gathered in support.

Steingraber, an author and scholar in residence at Ithaca College, leads a coalition of anti-fracking groups in New York which has become a central part of a national anti-fracking movement. Late last month, Steingraber was among a delegation of activists who delivered a “pledge of resistance” signed by 3,000 activists to the office of New York Gov. Andrew Cuomo as part of a campaign to keep gas development out of New York state.

While protesters have enthusiastically gathered for rallies in Albany, they have yet to begin an organized campaign of civil disobedience implied in their “pledge of resistance.” The Watkins Glen protest is worth keeping an eye on because it marks the first high-profile test of this approach against the gas industry in New York.

Protestor Susan Walker is charged with trespass Watkins Glenn
PHOTO WILLIAM HOUSTON/ SHALE SHOCK MEDIA

Update 6 p.m. The protest ended peacefully when Schuyler County Sheriff William Yessman arrived with state police, according to witnesses. When the protesters refused to leave after a brief warning period, the police cut their handcuffs from the fence and walked them to squad cars. The protesters were identified as Jeremy Alderson, 63, and Gary Judson, 72. A third protester, Susan Walker, 53, was not chained to the fence but also arrested for refusing to leave. All three were issued trespassing violations and released with a warning that the penalties would become harsher with repeat offenses.

Protestor Gary Judson arrested
PHOTO WILLIAM HOUSTON/ SHALE SHOCK MEDIA

The protest was aimed at plans by Inergy LLC to build a $40 million storage and transfer station for natural gas and liquid petroleum in underground salt caverns on the western side of Seneca Lake. The project is part of a build-out of infrastructure that would increase New York’s role in shale gas development. Proponents see on shore drilling – enabled by high volume hydraulic fracturing -- as a positive step to increase domestic energy supplies and national independence. Critics see it as a reckless and unregulated corporate land grab that comes at the risk of the environment and public health.

The Inergy projecg is under review by the New York State Department of Environmental Conservation.