Liquefied Natural Gas (LNG) Import Terminals: Siting, Safety and Regulation

Publication Date: April 2005

Publisher: Library of Congress. Congressional Research Service

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Research Area: Energy

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Abstract:

Liquefied natural gas (LNG) is a hazardous fuel frequently shipped in large tankers to U.S. ports from overseas. While LNG has historically made up a small part of U.S. natural gas supplies, rising gas prices, current price volatility, and the possibility of domestic shortages are sharply increasing LNG demand. To meet this demand, energy companies have proposed building dozens of new LNG import terminals throughout the coastal United States. But many of these terminals would be built onshore near populated areas, so local communities fear the terminals would expose them to unacceptable safety and security hazards. Potentially catastrophic pool fires or vapor cloud fires could arise from a serious accident or attack on LNG infrastructure. Faced with the widely perceived need for greater LNG imports, and persistent public concerns about LNG safety, Congress is examining the adequacy of safety provisions in federal LNG siting regulation.

The Federal Energy Regulatory Commission (FERC) grants federal approval for the siting of new onshore LNG facilities under the Natural Gas Act of 1938. This approval process incorporates minimum safety standards for LNG established by the Department of Transportation, which, in turn, incorporate siting standards set by the National Fire Protection Association (NFPA). Although LNG has had a record of relative safety for the last 40 years, and no LNG tanker or land-based facility has been attacked by terrorists, experts have questioned the adequacy of key LNG siting regulations related to safety zones, marine hazards, hazard modeling, and remote siting. Experts have also questioned the validity of LNG hazard studies used by federal regulatory agencies which suggest that LNG terminal risks, while significant, are not as serious as is popularly believed.

Congress may not see a compelling need to change current federal LNG siting requirements if it views the current regulations and processes as sufficient. Holders of this view would continue to rely on the judgment of LNG experts in federal agencies and standards committees to appropriately balance local public safety with national energy needs. On the other hand, Congress may conclude that some aspects of new LNG terminals do pose excessive public risks, or that there is still too much uncertainty about key risks to make final conclusions about public safety. In this case, Congress has several options to further address LNG terminal safety concerns. These options include 1) banning onshore LNG terminals, 2) redefining federal and local siting authority, 3) imposing more stringent federal LNG safety standards, 4) encouraging more LNG research, 5) curbing U.S. natural gas demand, and 6) developing alternatives to natural gas imports. Each of these policy alternatives has significant limitations, however, and may have undesirable consequences for national energy markets and other hazardous material infrastructure. Legislation addressing federal and state roles in terminal siting, H.R. 6 and H.R. 359, has been introduced in the 109th Congress, and LNG policies continue to be debated.

This report will be updated as events warrant.