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Published on Wednesday, December 12, 2007 by The New York Times

Wary of Protests, Exxon Plans Natural Gas Terminal in the Atlantic

by Jad Mouawad

Exxon Mobil said Tuesday that it would like to build a $1 billion floating terminal for liquefied natural gas about 20 miles off the coast of New Jersey, a move meant to deflect safety and environmental concerns about proximity to populated areas.

The company plans to anchor a boatlike structure in the Atlantic Ocean to process natural gas imported by cargo ships from faraway suppliers in the Middle East, Europe and Africa.

The terminal, if approved, would connect through an underwater pipeline to an existing network that feeds New York and New Jersey, two of the top consumer markets in North America.

Exxon's project is the latest of several dozen gas terminals that have been proposed in recent years in the United States. Energy specialists say more natural gas supplies will be needed to meet the growth in consumption and to make up for an expected drop in imports from Canada.

In many cases, energy companies have faced stiff opposition in finding sites for large new terminals. This has become one of the thorniest energy issues, especially since the attacks of Sept. 11, 2001, raised security concerns about cargo ships carrying liquefied gas near big cities.

Still, companies are slowly moving forward with their plans. Since 2002, federal and state authorities have approved 18 new liquefied gas terminals around the country, including 4 offshore, though most analysts do not expect all of them to be built.

While most of the projects are planned along the Gulf Coast, the northeastern corner of the country is attracting attention because of its reliance on natural gas and its large populations. Two terminals to be built off Massachusetts gained approval last year. For Exxon, going so far offshore is an effort to duck the vociferous opposition that has dogged projects on both coasts. Its project, called BlueOcean Energy, would be able to supply 1.2 billion cubic feet of natural gas a day, about 2 percent of the nation's gas consumption - and enough to meet the needs of five million residential customers.

Exxon's project is the third offshore terminal proposed for the greater New York region in recent years.

One proposal, to build a gas terminal in the middle of Long Island Sound, has aroused concern since its announcement in 2004 because of the impact it might have on fishing and boating; it is strongly opposed by shore communities and politicians.

That opposition could intensify in coming months as the project, which is known as Broadwater and is a joint venture by Royal Dutch Shell and TransCanada, is expected to receive notice about federal and state permits.

Another company, the Atlantic Sea Island Group, plans to build a terminal for liquefied natural gas on an artificial island about 14 miles south of Long Island, a project called Safe Harbor Energy.

Opponents of natural gas terminals have cited the potential for leaks, fires, explosions or terrorist bombings. The industry has generally argued that the terminals are secure and accidents are rare, but it has also started looking for ways to build them as far as possible from population centers.

Exxon said its plant anchored off New Jersey, about 30 miles south of Long Island, would not be visible from shore and would stay clear of shipping lanes and recreational areas.

"We have tried to learn from our past experiences and that of the industry in general," said Ron P. Billings, Exxon's vice president for global liquefied natural gas.

The company said it would soon start the lengthy process of seeking regulatory approval from state and federal agencies, as well as the Coast Guard. Because of the complex regulatory procedure, the plant is not expected to begin processing until the middle of the next decade.

Natural gas shipped by tanker from abroad in a supercold liquid form accounts for about 3 percent of domestic consumption, but the government estimates that share could rise to 17 percent by 2030. At terminals like those proposed near New York, liquefied natural gas is processed into the gas form, which is used to heat homes, power electric plants and fuel many industrial activities. Natural gas accounts for about a quarter of the nation's energy supplies.

Imports of liquefied natural gas are expected to jump 35 percent this year compared with last. But the growth is likely to slow next year because of delays with new terminals, according to the federal Energy Information Administration.

"So far no one has been able to crack the nut of getting infrastructure sited in the Northeast, and that's why you have all these proposals to go offshore and avoid heavily populated areas," said Mariano Gurfinkel, a project manager at the Center for Energy Economics at the University of Texas.

Exxon's new project would receive two cargo ships a week. The gas would be carried by underwater pipeline that would come ashore at Raritan Bay in New Jersey.

© 2007 The New York Times

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