Ceilidh

Michael Zey
futurist3000@aol.com

Print Media Edition:      Eastern edition
New York, N.Y.
May 14, 2004

--------------------------------------------------------------------------------

Authors:                  John J. Fialka and Russell Gold

Pagination:               A.1

ISSN:                     00999660


Abstract:

The night after the meeting, Green Futures sponsored a meeting at a local
church hall where one of its members, Alfred Lima, told the audience that
an LNG tanker carried the explosive equivalent of "55 Hiroshimas." "My
family overlooks that facility," said a woman rushing out the door during
his presentation. "They could all be wiped out!"

Dr. [James A. Fay], who still teaches an occasional course at MIT, admits
that some of the conclusions being reached by his disciples are exaggerated.
"I think the Hiroshima comparison is unfair," he says, but he continues
to assert that the heavily guarded LNG tankers are vulnerable to terrorist
bomb boats as they move through the harbor. "It's easy to do. All you need
is a 35-foot motorboat. You fill it up with two tons of ammonium nitrate,
and you're in business."

While it will be over the horizon and free from "not in my backyard" claims,
eight California-based environmental groups complain that the facility
will kill marine life by sucking up as much as 176 million gallons of seawater
a day. Richard Lammons, ChevronTexaco's vice president in charge of Port
Pelican, also worries about the U.S. Maritime Administration, which regulates
offshore terminals. The company is studying restrictions the agency has
imposed on its pending license to operate the terminal. "The first time
you throw something new out," he notes, "there's a lot of pushback."
Copyright (c) 2004, Dow Jones & Company Inc. Reproduced with permission
of copyright owner. Further reproduction or distribution is prohibited
without permission.

Full Text:

FALL RIVER, Mass. -- Gordon Shearer looked up at the nine stern faces of
the Fall River city council as he made his pitch. His company, Weaver's
Cove Energy, wanted to bring this city a badly needed, cleaner-burning
energy source: liquefied natural gas, or LNG.

His plan would turn an abandoned waterfront oil-tank farm into a terminal
for receiving shipments of LNG, which is made by cooling natural gas to
minus 260 degrees Fahrenheit. Weaver's Cove would become the largest taxpayer
in this gritty industrial city, pouring $3 million a year into its coffers.
And the terminal would guarantee the city fuel when it became scarce during
New England's punishing winters.

But on March 9, the council rejected Mr. Shearer's proposal, 7 to 2, and
the next day Mayor Edward M. Lambert Jr. invited Weaver's Cove to find
a location elsewhere. "We hope the company will recognize what they're
up against," the mayor says.

Around the U.S. and in parts of Mexico, many coastal towns are rejecting
similar plans that offer substantial economic benefits. In most cases the
logic is simple: Residents fear the LNG tankers could become the target
of terrorist attacks. In February, the state government in Mexico's Baja
California bowed to pressure from local politicians and residents and appropriated
land that Marathon Oil Corp. planned to use to build a terminal. The next
month, residents of Harpswell, Maine, voted down a proposal for a terminal.
A few days later, Calpine Corp. abandoned plans for a terminal in Eureka,
Calif., after residents jammed a municipal auditorium to testify against
it. Earlier this year, public fears were heightened by an explosion at
an LNG liquefaction plant in Algeria that killed 27 people.

The vocal opposition to LNG terminals comes as the fuel grows ever more
crucial to the U.S. Demand is rising for natural gas in this country --
but most North American supplies are flat or in decline, leading to soaring
prices and the growing risk of heating-fuel shortages and blackouts. Ninety-six
percent of the world's natural-gas supplies are located in places that
are geographically remote, such as West Africa or Qatar. To get that natural
gas to other markets, it is first cooled to reduce its volume. The cost
of cooling and shipping LNG has plummeted in recent years, allowing companies
to deliver it halfway around the world at competitive prices.

At the city-council meeting, Mr. Shearer, president of Weaver's Cove, and
other company officials presented the industry's standard response to public
concerns. Ships carrying LNG have made more than 33,000 voyages over 40
years without a significant spill. The Japanese receive 10 LNG shipments
a week in Tokyo Bay.

New England -- increasingly dependent on gas for heat and electricity --
has received shipments of LNG by truck for decades. One storage tank has
operated quietly for years in Fall River, nestled in a residential neighborhood.
Government tests, so far, tend to back up industry claims that LNG risks
are relatively small and that tankers carrying propane or gasoline pose
relatively greater hazards.

Weaver's Cove hasn't given up on Fall River, hoping that the town's stance
may be overruled by the Federal Energy Regulatory Commission, which has
final say on placing terminals. Its decision on Fall River is expected
later this year.

J. Mark Robinson, FERC's director of energy projects, says the ruling will
hinge on a full analysis of the safety issues. "It is not a matter of simply
counting up the number of people on one side and the other side," he says.

The agency, which approved four LNG terminals in the 1970s, has yet to
make a call on any of the several dozen new ones proposed for urban areas.
Its decisions can be contested before the U.S. Court of Appeals.

Weaver's Cove, a subsidiary of Poten & Partners, a New York-based energy-consulting
and tanker-brokerage firm, has invested between $10 million and $20 million
in the Fall River proposal. It must line up another $2.5 billion in financing
for the terminal, specially built tankers and gas-liquefaction plant capacity.

The company bought an option to acquire the Fall River site just three
days after the Sept. 11 attacks on New York and Washington. It assumed
that it could sell the project with an aggressive public- relations campaign,
including meetings with officials and door-to-door contacts with thousands
of residents living within a mile of the proposed terminal.

What Weaver's Cove came up against, probably more than any other single
factor, was James A. Fay, a wiry, argumentative semiretired professor from
the Massachusetts Institute of Technology. The 80-year- old, who lives
in Weston, Mass., has spent much of his career pointing out what he considers
to be the dangers of the nation's four operating LNG terminals. The oldest
of them is in Everett, Mass., which is, like Weston, a Boston suburb.

Since 1970, Dr. Fay has warned about the danger that a collision might
punch a hole in the hull of an LNG tanker, spilling part of its flammable
cargo into Boston Harbor. His comments attracted relatively little attention.
But after Sept. 11, Dr. Fay, a mechanical engineer, posited a more frightening
scenario: a boat, manned by terrorists, detonating explosives against the
hull of an LNG tanker. With this new approach, Dr. Fay has risen to guru
status here among environmentalists and others opposed to LNG.

The main opposition group, Green Futures, has published a series of brochures
based on Dr. Fay's findings that show how an attack against a tanker and
the proposed terminal might trigger an enormous LNG spill.

Upon contact with the relatively warm water, the liquid would begin vaporizing
back into a gas, and under some circumstances a spark could cause part
of the gas to ignite. Green Futures argues that the resulting fire would
incinerate as much as five square miles of Fall River and another four
square miles of Somerset, Mass., just across the Taunton River from the
terminal site. Buildings would catch fire, and humans exposed to the heat
radiation could suffer severe skin burns, the group warns.

On the night of the city-council debate, Tim Bennett, president of Green
Futures, followed Mr. Shearer's arguments by reminding the council of Dr.
Fay's scenarios: "Our world changed on Sept. 11. We all lived without fear.
Now we have a fear."

The hush that fell over the packed hearing room deepened as Lloyd Durfee,
81, a veteran of the Battle of the Bulge, made his way to the podium with
a cane. "I have known fear as a member of the 78th Infantry Division,"
declared Mr. Durfee, whose house overlooks the terminal site from Somerset,
"but it's nothing like the fear I feel right now."

The night after the meeting, Green Futures sponsored a meeting at a local
church hall where one of its members, Alfred Lima, told the audience that
an LNG tanker carried the explosive equivalent of "55 Hiroshimas." "My
family overlooks that facility," said a woman rushing out the door during
his presentation. "They could all be wiped out!"

Mr. Shearer and other LNG industry officials have accused Dr. Fay of fear-mongering
and gross exaggeration. "Some of the things Fay talks about are physically
impossible," asserts Francis J. Katulak, who operates the LNG terminal
in Everett for Distrigas of Massachusetts LLC, a subsidiary of Suez SA,
a French company.

Mr. Katulak, a chemical engineer, says that Dr. Fay's calculations assume
that the entire cargo of a 900-foot LNG tanker spills into the water. But
"it would take a huge amount of explosives" to achieve that, he says, since
the tankers contain five separate compartments and have two hulls separated
by 8 feet of protective materials.

Mr. Robinson, the FERC official, says LNG won't explode and won't burn
in its liquid state. In a spill, the product can be ignited, but only after
it vaporizes and combines with a mixture of air ranging from 5% to 15%.
Mixtures outside that range are either too lean or too rich to burn and
most of the gas, being lighter than air, quickly dissipates.

The resulting fire will be of "very short duration," according to Mr. Robinson,
who describes it as a "lazy flame" that burns less than five minutes. So
far, he says, government tests have been conducted on relatively small
spills, but further studies are under way.

Dr. Fay, who still teaches an occasional course at MIT, admits that some
of the conclusions being reached by his disciples are exaggerated. "I think
the Hiroshima comparison is unfair," he says, but he continues to assert
that the heavily guarded LNG tankers are vulnerable to terrorist bomb boats
as they move through the harbor. "It's easy to do. All you need is a 35-foot
motorboat. You fill it up with two tons of ammonium nitrate, and you're
in business."

At the end of January, Dr. Fay spoke at a public meeting in Fall River
-- just as outside events were demonstrating the peril and potential of
LNG. The meeting came four days after the LNG liquefaction plant in Algeria
blew up, capturing the headlines and lending tension to the proceedings.
But a preliminary investigation found the accident was started by a leaking
pipe in a steam boiler. Import terminals in the U.S. are designed to warm
the LNG and wouldn't require that kind of boiler.

Meanwhile, as Dr. Fay's audience was learning about a theoretical LNG crisis,
the rest of New England was recovering from a very real one. Between Jan.
14 and 16, greater Boston suffered the coldest weather in over a century.
According to FERC, the region came perilously close to rolling blackouts.

As one FERC official later put it, "the system squeaked by," but Hull,
a small town on a peninsula that marks the entrance to Boston Harbor, didn't
make it. Fighting a wind-chill factor of minus 30 degrees, residents sucked
more gas out of the pipeline than KeySpan Corp. could put into it without
violating pressure limits. To protect other customers, the company shut
off gas to 384 homes. KeySpan put some customers in hotels, set up an emergency
center in a local school, and lined up 15 local plumbers to contain the
water damage from frozen pipes.

During the cold snap, 30% of New England's gas came from LNG, estimates
Thomas M. Kiley, president of the Northeast Gas Association, which represents
distributors in New England. Boston's main power plant, a facility run
entirely on LNG, kept the lights on.

"We use more LNG than any other part of the country," explains Mr. Kiley,
adding that the region will need even more of the product: Pipelines bringing
natural gas into New England are running near their capacity, and two proposed
new pipelines face "not in my backyard" opposition in New York state. Without
some new way of getting supplies in, he says, soaring demand will lead
to still higher prices.

In Harpswell, Boston and here, local officials say they're aware of the
supply problem. But they argue that any new LNG terminals should be built
in the ocean, well away from land. "We think that [offshore] solution makes
more sense than to locate these things in densely populated areas," says
Mayor Lambert, who wants to dedicate more of Fall River's waterfront to
cruise ships and tourism.

Mr. Shearer claims an offshore terminal would be far more expensive to
build and run than a shore-based facility like Weaver's Cove. "Out there,
there will be many days when you can't offload safely because of high seas,"
says Mr. Katulak, who runs the Boston Harbor terminal. The resulting supply
stoppages, he noted, will be worst during periods of peak gas demand, such
as the storm that froze Hull in January.

Other companies think offshore terminals can be built at a competitive
price and withstand the vagaries of weather. A few days after giving up
on its proposed terminal in Harpswell, ConocoPhillips announced plans to
build an offshore terminal south of Mobile, Ala. ChevronTexaco Corp. wants
to build "Port Pelican," a terminal on a massive platform to be anchored
in the Gulf of Mexico. It will be 1,000 feet long and 250 feet wide and
cost significantly more to build than even larger onshore terminals.

The facility would have enormous arms designed to suck the LNG out of the
aircraft-carrier-size LNG tankers as they bob alongside. Borrowing from
designs used in South Korean and Japanese facilities, the plant would turn
LNG back into a gas by warming it with seawater. The gas would then be
funneled to the mainland with an existing 30- year-old pipeline. The line
was built to serve an offshore gas field that, like most U.S. fields, is
currently in decline.

While it will be over the horizon and free from "not in my backyard" claims,
eight California-based environmental groups complain that the facility
will kill marine life by sucking up as much as 176 million gallons of seawater
a day. Richard Lammons, ChevronTexaco's vice president in charge of Port
Pelican, also worries about the U.S. Maritime Administration, which regulates
offshore terminals. The company is studying restrictions the agency has
imposed on its pending license to operate the terminal. "The first time
you throw something new out," he notes, "there's a lot of pushback."

Reproduced with permission of the copyright owner.
Further reproduction or distribution is prohibited without permission