Oct 12, 2010

FERC imposes new vapor rules on Weaver's Cove LNG

FERC has informed Weaver’s Cove Energy that the company must comply with new vapor-gas exclusion zone requirements before moving forward with construction of the planned LNG terminal.

In a letter issued from FERC to Weaver’s Cove attorney Bruce F. Kiely, the director of FERC’s office of energy projects informed the company that it must receive written authorization from FERC before constructing any facilities associated with the project. That authorization, the letter states, “will only be granted following a determination that the facilities are in compliance with the interpretations issued by” the Pipeline and Hazardous Materials Safety Administration of the U.S. Department of Transportation.

The PHMSA issued two interpretations in July concerning the flammable vapor-gas exclusion zone requirements, saying that the interpretations apply to any LNG facility that is not yet in existence or under construction.

Two city residents raised objections with the U.S. Department of Transportation and FERC earlier this year in regards to Weaver’s Cove’s use of an outdated dispersion called SOURCE5 to show that vapor gas would not leave the company’s Fall River site.

Residents John Keppel and Michael Miozza argued the SOURCE5 model used by Weaver’s Cove resulted in a vapor dispersion model that showed vapors would remain within the company’s property. Keppel said at the time the SOURCE5 model creates “artificially small vapor zones.”

They argued that under different models the vapor dispersion would travel beyond the company’s boundaries, over private residences and possibly to Route 79.

In response to those concerns, the U.S. DOT informed the pair in July that the SOURCE5 model can not be used to comply with the agency’s vapor gas dispersion exclusion zone requirements. A similar determination was made in regards to the proposed Downeast LNG proposal for Robbinston, Maine.

KOGAS's Strategic LNG deals in Australia, Indonesia

Korea Gas Corp (KOGAS) is planning to acquire stakes in Australian and Indonesian LNG projects to secure stable supplies, the state-run utility said in a report.


The world's largest LNG buyer said it was in talks to acquire a 15% stake in a coal seam gas project led by Australia's Santos Ltd and a 9.8% stake in Indonesia's Senoro Toili project run by Japan's Mitsubishi Corp.
The company did not provide a financial value for either of the potential deals, but sources with knowledge of the Australian deal said in August that KOGAS would invest more than US$1 Bn in the Santos's Gladstone LNG (GLNG) project.

"The US $1 Bn fundraising report lends credence to the first report that KOGAS will take a larger 15% of GLNG, rather than the 10 percent commonly reported previously," said Benjamin Wilson, an analyst with JP Morgan in a note.

"We think this news implies Kogas is confident it will achieve Korean government approval to contract/purchase soon," Wilson said.

Total paid US$597.4 MN for 15% of the coal seam gas-fed LNG project in Australia's north east state of Queensland in September.

Santos currently owns 45% of Gladstone, Petronas has 35% and Total holds 20%.

In addition to buying a stake in the GLNG project, KOGAS has also been expected to sign an offtake agreement for 2 million tonnes per annum of LNG from the project.

The state-run utility sold 24.6 MMT of LNG in 2009 and said in February that it was planning to spend about US$895.4 MN this year on overseas resource development to secure energy supplies for Asia's fourth-largest economy.