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Shell Broadwater Gas Plant Plan’s Defeat Could Prove Costly To Consumers

The Hartford Courant (Connecticut): Gas Plant Plan’s Defeat Could Prove Costly To Consumers

By MARK PETERS | Courant Staff Writer
April 13, 2008

State political leaders celebrated when a proposal to build a huge liquefied natural gas terminal in Long Island Sound suffered a stinging defeat last week.

Whether consumers weary of high energy prices might agree depends on whether New Jersey, Massachusetts and Maine allow alternatives that can take the place of Broadwater Energy’s plan for the Sound.

Gov. M. Jodi Rell said Broadwater’s rejection was a victory for the environment. As for the natural gas it would have provided — that will come from projects already being planned elsewhere, she said.

“There are projects underway or already on the drawing boards that will more than meet that future demand without ever needing the disaster-in-the-making that is Broadwater,” Rell said after New York announced its decision on the Long Island Sound project Thursday.

But Broadwater’s developers warned that without their project in place, households and businesses in Connecticut can expect electricity and natural gas prices to climb. Demand for natural gas, especially by power plants, continues to grow and the region has a limited number of pipelines to get gas into the state.

The other liquefied natural gas terminals proposed, in locations in Delaware and New Brunswick, Canada, will do little for Connecticut, Broadwater officials said, and that’s assuming they win approval.

“The alternatives that the opposition points to don’t exist, haven’t been reviewed or aren’t designed to serve Connecticut or New York,” said John Hritcko Jr., a senior vice president for Broadwater, a consortium of Shell Oil and the TransCanada Pipeline.

Connecticut’s elected leaders pressured New York to reject the Broadwater LNG project, which was proposed for New York waters off Long Island. It had won support from the Federal Energy Regulatory Commission earlier this year, but New York Gov. David Paterson formally rejected it.

The two multinational energy companies first proposed Broadwater in 2004 as a way to meet rising demand for natural gas, particularly from power plants switching to the fuel because of its cleaner emissions. The 1,200-foot-long terminal would be moored in the Sound about 10.5 miles from Branford, taking daily delivery from LNG tanker ships from around the world.

The terminal would bring more gas into Connecticut and New York, now served by limited pipeline capacity that causes natural gas prices in the Northeast to be higher than in other parts of the country. The high price of natural gas also increases the cost of electricity, since natural gas-powered plants tend to dictate all electricity prices in the region’s deregulated market.

Increasing the gas supply and bringing new competition to the Connecticut/New York market would help bring down prices, Hritcko said.

Estimates circulated by Broadwater say the project, which would provide 30 percent of the region’s daily demand for natural gas, would reduce costs for electricity and natural gas in the Connecticut and the metro New York region by $680 million per year, delivering $300 per year in savings to a median household.

“Demand is strong, and supplies are tough to bring to market,” said Addison Armstrong, director of market research for Stamford-based Tradition Energy.

Connecticut officials don’t dispute a need for increased supplies of natural gas — they just think the necessary pipeline and storage facilities should be located where the potential for environmental damage is less.

There are terminal and pipeline projects being considered all along the Northeast coast to supplement supplies piped from the Gulf of Mexico and western Canada.

Broadwater officials contend that those projects are designed to meet the needs of other states, not Connecticut.

Attorney General Richard Blumenthal, a fierce opponent of Broadwater, supports plans to improve Connecticut’s pipeline capacity and other LNG projects, such as the Northeast Gateway terminal off Gloucester, Mass., and sees potential in Exxon-Mobil’s BlueOcean Energy terminal proposed for 20 miles off the New Jersey shore.

“We just have to build a couple of them,” Blumenthal said, referring to LNG terminals.

He and other state leaders as well as environmental groups have labeled Broadwater as an attempt to industrialize Long Island Sound. They argue that the Sound is more susceptible to environmental damage than the open ocean off New Jersey or Massachusetts and needs to be treated differently. They also raised security concerns about the Broadwater plan because the terminal would be relatively close to shore in both New York and Connecticut.

A spokesman for Rell declined to comment Friday. In a statement after the New York decision, the governor highlighted projects outside Long Island Sound as better answers to the rising demand for natural gas.

Broadwater still has avenues for appeal, both to the U.S. secretary of commerce and in court.

Energy industry officials question whether the projects in other states that Connecticut is counting on will face a fate similar to Broadwater’s.

“If everyone takes the attitude that the other will answer the energy need, then we’ll be paralyzed,” said Paul Afonso, executive director of the New England Energy Alliance, a group of suppliers and trade groups.

Contact Mark Peters at [email protected].

Copyright © 2008, The Hartford Courant,0,4739494.story

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