LNG Testimony

7/27/2019 LNG Testimony

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Liquefied Natural Gas(LNG) InformationAnswering questions about a proposed

LNG facility at Sparrows Point, MD


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What is Liquefied NaturalGas? LNG is natural gas that has been super

cooled to minus 260 degrees F becoming

liquid for easier storage and shipping

LNG is a clear, odorless, colorless, non-

corrosive and non-toxic liquid

LNG takes up 1/600th of the spacesimplifying storage and transportation


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Where is LNG Produced andExported?The U.S. receives most of its LNG from

Trinidad and Tobago Currently 12 countries export LNG

The largest LNG exporters are in the Middle

East and Asia

Russia and Norway will begin exporting LNG

in 2007


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Do Other Countries ImportLNG? Fourteen countries currently import LNG

Japan is the largest importer of LNG with 29 LNGterminals

China and Britain* have plans to import LNG

*Great Britain imported LNG briefly in the early 1960s and now plans to re-establish thatmarket


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Location Company

Lake Charles, LA Southern Union

Elba Island, GA El Paso

Everett, MA Tractabel

Cove Point, MD Dominion

U.S. Marine Mainland LNG

Import Terminals


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What Does an LNG TerminalLook Like?

LNG tanks

Docks


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How is LNG Transported bySea? Specially-designed double-hulled tankers

The double-hull provides increased

structural safety

The liquefying process allows for efficient

transport in bulk about 3.0 billion cubic feet

of gas per tankerInsulation allows the ships to act like

thermos bottles to keep the LNG cold


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Typical LNG TankerHolding tanks


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How is LNG Stored atMarine Terminals? LNG is transferred from arriving tankers tosecure storage tanks on land

Storage tanks are double-walled a tankwithin a tank for safety

Outer walls of tanks are made of carbonsteel and prestressed concrete

Safety walls are built around the tanks tocontain full content spill


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Cove Point LNG TerminalLNG tanks


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Cross-section of a Modern LNGTank


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Off-Loading at Cove Point


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Is LNG Stored at OtherLocations? LNG storage has become commonplaceacross the U.S.

Today, 96 LNG liquefaction, storage, andregasification plants operate in 29 states

LNG tanker trucks, governed by U.S.Department of Transportation regulations, usemany highways


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LNG Storage in the U.S.


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Where Are U.S. Natural Gas ProcessingPlants Located?


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Why is my Natural Gas Bill SoHigh? Natural gas is now used to produce a greatdeal of electricity, in addition to traditionaluses in home heating and industrial

Many natural gas production fields in the U.S.and Canada produce less and less gas eachyear

Less domestic natural gas supply and greaterdemand mean higher prices unless newsources, such as LNG, can be delivered


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Natural Gas Consumption isProjected to Increase OutstrippingDomestic Production


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Why do Importers Say There isa Benefit in Importing LNG? It is becoming more difficult for producers to

find natural gas in the U.S. or obtain it from

Canada and MexicoOther countries have substantial natural gas

but are located too far away to construct

pipelines to the U.S.

Natural gas is a relatively clean fuel for home

heating, industrial processing and electricity

production


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Canadian and Mexican NaturalGas Exports to U.S. are Slowing


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What are the Chief EconomicReasons for Increasing LNGImports? More LNG increases natural gas supplies to

meet U.S. demand New import facilities increases delivery

capacity

Expanded delivery capacity should helplower (and stabilize) heating and electricity

costs


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Does Maryland & the Mid-AtlanticArea Need Additional Natural GasCapacity?

Mid-Atlantic


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Who Regulates LNG Safety? The FERC (Federal Energy RegulatoryCommission) is responsible for permitting new

LNG onshore import and export terminals The U.S. DOT (Department of Transportation)

prescribes LNG and pipeline safety standards

The U.S. Coast Guard is responsible for the

safety of the LNG tankers


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Why is LNG Considered Safeto Import and Use? LNG has been safely delivered across theocean for over 40 years

33,000 LNG carrier voyages have occurred,

covering more than 60 million miles, withoutmajor accidents

For example, a LNG tanker enters TokyoBay every 20 hours with no spills

The LNG industry maintains extremely highstandards for safe and efficient operation

The LNG industry continuously improves itsoperational standards


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Why is LNG Considered to beSafe?In its liquid state, LNG is not explosive

When LNG is heated and becomes a gas,

the gas is not explosive if it is unconf ined

Natural gas is only flammable within a narrow

range of concentration in the air (5% to 15%)


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Which Studies Speak to theSafety of LNG?According to the December 2004 report issued bySandia National Laboratory:

Risks from accidental LNG spills, such as from

collisions and groundings, are small and manageablewithin current safety policies and practices

Risks from intentional events, such as terrorist acts,can be significantly reduced with modern engineering,

enhanced security, planning, accident prevention,and on-going training

Sandia National Laboratory primarily serves the U.S. Departmentof Energy


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LNG-related Accidents:Causes and Resulting SafetyUpgrades Cleveland, Ohio, 1944

Cause: Inadequate war-time material used

Upgrade: High quality stainless steel and modernconstruction techniques now used

Cove Point, Maryland, 1979 Cause: Human error and inadequate electronicmonitoring

Upgrade: Lessons learned led to changes inmonitoring and practices that are now usedindustry wide

Algeria, 2004 and 1977Cause: Human error and a bad valve (1977)

Cause: Improper boiler repair (2004)

Upgrade: improved operating procedures


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LNG-related Accidents:Lesson Learned LNG accidents are rare

In spite of an excellent record, the industryhas not ignored those rare incidents The result is better containment, materials, procedures,

monitoring and training

The extremely low accident rate is the resultof effective, industry-wide safety efforts


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Types of Potential LNG AccidentsExample 1: LNG Explosion Explosions could occur if a sufficient amount of

natural gas vapors release into a conf inedareaand encounter an ignition source ofsufficient strength

Just like motor gasoline, propane, or evenelectricity, human error can cause problems

Experience with LNG shows that this is highlyunl ikelybecause of on-going industry effortsto improve monitoring and training


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Types of Potential LNG AccidentsExample 2: LNG Pool FireAs a result of an accident at sea, LNG couldseep out of the breached tank and form a poolon the surface of the water

As the pool forms, some of the liquid will turninto LNG vapors

If an ignition source is present, vapors couldignite, resulting in the ignition of the LNG poolon the surface of the water

Experience shows that this scenario isunl ikelybecause where severe collisions haveoccurred, no vessel tanks leaked


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Possible Effects of a LNGPool-fire Within up to 4,220 feet of an LNG-relatedfirepeople and major commercial/industrialareas could be seriously affected

According to the Sandia Report, if the LNGis ignited, the impact of the fire shouldgenerally be low beyond 2,460 feet for smallaccidental spills and beyond 4,250 feet forlarge spills

The proposed Sparrows Point facility wouldbe approximately 7000 feet from thesurrounding public areas


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Effects and Types of InjuriesResulting from an LNG Pool-fire? Radiant heat is the main hazard

Up to 2,460 feet from the fire, the predominant

injuries would be third degree burns

Beyond approximately 2,460 feet victims wouldsuffer lesser degree burns

Beyond approximately 4,250 feet there would belittle or no injury or property damage


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Is a Terrorist Attack Likely? The U.S. will continue to face the risk of

domestic terrorist attacks The energy industry continues to take

extensive steps to protect criticalinfrastructure

LNG components are built to much higherstandards than many other energy facilitiesand are much harder to penetrate anddamage

Creating the events necessary to cause asignificant LNG incident is unlikely

No one can say a determined perpetratorwould not try


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Recapping the Benefits ofLNG The potential to slow the increase, or reduce,natural gas prices in the Mid-Atlantic regionand Baltimore

Added assurance that there will be adequate

natural gas for Maryland homes and industry

Meet the growing demand for the use ofnatural gas to generate electricity in Maryland


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Are There Other Benefits ofLNG? Safety relative to other forms of energysuch as stored motor gasoline

Safety relative to other chemicals regularly

shipped through the bay such as chlorine

Reduced asthma and other air quality

problems related to coal and oil fuels

High quality, technical jobs and expertise

in the local community


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Preventing and Managing Spills LNG tanks and tankers are built to extremely

high standards.

Storage tank are built with extensivemonitoring and alarm systems plus other safety

installations required by the state fire marshal Company safety procedures are promulgated,

checked continuously and personnel aretrained regularly

U.S. Coast Guard escorts minimize externalthreats


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Final Words on LNG Safety

The industrys operating history demonstratesthat incidents at an LNG facility are extremely

unlikely

The proposed facility would be constructed and

managed to minimize any harm to the public

The LNG industry has a strong economic

incentive to maintain and operate a safe

facilities The proposed facility would be located a safe

distance from neighborhoods and businesses

LNG Testimony

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