Statement of Norris McDonaldPresidentAfrican American Environmentalist Association On The SPARROWS POINT PROJECT Submitted To The Federal Energy Regulatory CommissionCooperating Agencies:U.S. Coast GuardU.S. Department of Homeland Security NOTICE OF INTENT TO PREPARE ANENVIRONMENTAL IMPACT STATEMENT Docket No. PF06-22-000 North Point/Edgemere Volunteer Fire Company Sparrows Point, Maryland Monday, June 5, 2006 Introduction My name is Norris McDonald and I am the founder and president of the African American Environmentalist Association (AAEA). This written statement is being submitted to the Federal Energy Regulatory Commission (FERC) to provide our views on environmental issues related to the Sparrows Point Project (SPP), a proposed liquefied natural gas (LNG) import facility and gas pipeline. The African American Environmentalist Association supports LNG terminals because of the need for additional natural gas for electricity generation. However, we will withhold a position on this project until the relevant issues are included in an environmental impact statement (EIS). AAEA was founded in 1985 and is a national, nonprofit organization dedicated to protecting the environment, promoting the efficient use of natural resources, enhancing human, animal and plant ecologies and increasing African American participation in the environmental movement. AAEA’s national headquarters is in the Washington, DC Metropolitan Area. We have chapters nationwide and members worldwide. The Sparrows Point Project will consist of an onshore LNG import and storage terminal and an 87-mile natural gas pipeline. Environmental Issues Environmental Justice Turner’s Station is a community located near the proposed LNG facility. This will probably be an environmental justice issue for the proposed facility because it is predominantly black. The communities north of the facility are farther away and predominantly white. Environmental justice applies even if residents of a community ‘perceive’ that a proposed facility poses a threat. Professional, mainstream (white) environmental organizations will make sure that any environmental justice consideration is leveraged to the maximum extent as a tool to prevent this project from being approved. This concern, however, rarely if ever translates to any of them living in one of these communities regardless of its actual or potential pollution level. AAEA will withhold judgment on the environmental justice merits of this case until we have scoped and polled the Turner’s Station community on their feelings and position on this project. Moreover, the EIS should provide the history of the Dundalk/Sparrows Point area. Bethlehem Steel operated a steel facility at this location for years. The emissions from its smokestacks were orange while providing jobs for many Baltimore residents for decades. The waterfront on both sides of the Patapsco River is heavily industrialized, as is much of Baltimore. It is an old industrial city and vulnerable populations have been exposed to its pollution for its entire history. An environmental justice issue that is not normally addressed in these types of proceedings is the lack of minority participation in energy infrastructure projects. There should clearly be a consensus on the historical reasons for this exclusion. This same history can also explain the lack of amenities in black communities. Blacks do not own the oil, gas, coal, electricity, gas pipelines, electricity transmission lines, refineries, tankers, oil fields, outer continental shelf drilling platforms, power plants, or oil, gas and utility companies that distribute energy in the United States. In fact, blacks do not own one import tanker. Blacks, who make up 13% of the American population, also do not exert influence from the demand side of energy use. Blacks do not own, distribute nor use energy to their advantage. Blacks must utilize energy policy to become owners and suppliers of energy. What is AES’ corporate responsibility regarding the historical exclusion of blacks from participating in the development of America’s energy infrastructure? Should FERC consider the historical exclusion of blacks from participating in energy infrastructure development in its environmental justice analysis? We believe that AES and FERC should give this issue serious consideration. We also believe that state and local regulators should give this issue serious consideration in the approval process. AAEA has given much thought and research to the issue of black exclusion from participating in energy infrastructure projects and community development. Here are recommendations we think the local community, AES and FERC should consider:1. AES should purchase the homes or pay homeowners and businesses near the exclusion zone a reasonable fee in exchange for support for the project.2. AES should pay for any increase in homeowners and business owners’ insurance premiums near the facility for those choosing the fee.3. AES should provide 51 percent minority ownership in the Mid-Atlantic Express, LLC, the proposed owner of the 87-mile pipeline. Mid-Atlantic Express, LLC is a regulated project company formed by The AES Corporation to own and operate the Mid-Atlantic Express Pipeline. Minorities own virtually no energy infrastructure in the United States.4. AES should build a state-of-the-art recreation and computer facility similar to the Fed Ex Field facility in Turner’s Station.Adopting and implementing these recommendations would truly represent environmental justice. We strongly suggest that such a path is good business and could go far in preventing delays, uncertainty and litigation for this project. Washington Gas is having trouble obtaining a permit to build a peak shaver LNG storage facility in Prince George’s County because of resistance from the local community and the County Council. We are trying to convince them that a compromise similar to the one described above would go far in obtaining the zoning variance they seek to build their facility. We believe our recommendations can save time and litigation expenses for these types of projects. Finally, we believe the approving agencies and state legislators in Maryland and Baltimore would look favorably on the company and the project if they agreed to implement these recommendations.Dredging Dredging has a controversial history in Maryland, particularly on the Patapsco River. Maryland probably lost bids for supertanker business because of problems with deepening shipping channels. The Woodrow Wilson Bridge project was threatened by dredge disposal issues It took a private land owner in Virginia to solve the Woodrow Wilson Bridge mud disposal problem. It probably helped that the Woodrow Wilson Bridge mud was ruled to have no serious contamination. Considering that the Sparrows Point mud is adjacent to a facility that manufactured steel for decades means the sediment is probably contaminated. We look forward to analyses included in the EIS on the sediment at the site. Regardless, contaminated sediment is not a deal breaker. It will just complicate acquiring an appropriate disposal site. Air Pollution We do not believe the AES Sparrows Point Project will be a new source of significant air pollution. The EIS will surely cover whether the facility has to obtain a Clean Air Act permit. Although methane is a potent greenhouse gas, the contained engineering of the project should prevent significant emissions. Of course, Baltimore is categorized as ‘severe’ in terms of Clean Air Act nonattainment, so AES should have some concern about penalties that could be issued to the State of Maryland that might prevent it from getting a permit to build this facility. The passage of the Healthy Air Act by the Maryland Legislature, and signed by Governor Ehrlich on April 6, 2006, is an indicator that significant pressure will be placed on the state’s coal-fired electricity generation plants to clean up emissions or close. The Healthy Air Act (HB189 / SB 154) requires that emissions of four main pollutants 1) mercury, 2) carbon, 3) nitrogen, and 4) sulfur be reduced at the seven dirtiest coal-burning plants in Maryland. Nitrogen oxide will be capped at 20,216 tons a year by 2009. Sulfur dioxide levels will be limited to 48,618 tons a year by 2010. And mercury emissions are to be reduced 80 percent by 2010. The Healthy Air Act requires carbon dioxide reductions by having Maryland join a multistate program called the Regional Greenhouse Gas Initiative (RGGI). RGGI sets goals for states to reduce carbon dioxide. Companies will be able to sell or trade their carbon dioxide allowances. Maryland is an “observer” of RGGI, participating in policy discussions, but not agreeing to make reductions. The law allows the state to withdraw from the regional consortium after January 1, 2009 if reliability and cost issues become a problem. Of course, this opt-out provision will not prevent the pressure on coal plants to significantly reduce emissions. Ultimately, utilties will turn to natural gas as a convenient substitute. Thus the need for additional gas via LNG imports. Water Pollution The AES SPP will not pose a threat to drinking water and does not appear to pose a wastewater or stormwater effluent problem. The ethylene glycol used to a heat transfer medium should not pose a serious threat to the river. An accidental release of the liquid would gasify, evaporate into the atmosphere or burn off and would not pose a threat to the river. Brownfields Although it is not being characterized as a Brownfields project, we believe that such a characterization would be appropriate and the project should pursue any benefits that might be available from such a characterization. The EIS should also examine whether the area is in an Enterprise or Empowerment Zone. Toxics Clearly, portions of this former Bethlehem Steel site are highly contaminated. Hopefully, the EIS will fully examine the level of contaminants at the site, report the results and describe any possible problems it might cause for this proposed project. The initial description of the project suggests that the dredge spoil might be deposited on the site. The EIS should provide a full description of such a plan with diagrams for such deposition and containment.Energy Issues Competition is heating up in the Maryland LNG market. Washington Gas and Dominion Resources have been jousting over gas issues related to the Cove Point site. We suspect there is more to it than the quality of the gas that caused the leaks in Prince George’s County. The proposed Sparrows Point Project adds another competitive component to the local and regional gas markets. The reality of electricity generation in America today is that natural gas power plants are the only facilities that can be approved for construction in today’s ‘Not-In-My-Backyard’ (NIMBY) climate. Although coal provides fifty percent of electricity generation and nuclear provides another twenty percent, public opposition is significantly limiting the use of these fuels. Natural gas provides about twenty-one percent of the fuels used to generate electricity in the U.S. but it is the cleanest burning fossil fuel. For this reason, it is the fossil fuel of choice for utilities, environmental groups, regulators and the general public. Unfortunately, Maryland and the Mid-Atlantic region do not have sufficient local supply and domestic and Canadian supplies are in high demand all over the country. Limited supplies and increasing demand are leading to price volatility. The solution is to import LNG from nations with abundant supplies of natural gas. If capacity is not increased by importing more gas, building larger pipelines and exploring for additional sources of natural gas, America will continue to demand gas, put pressure on the supply side and continue to drive up the price of natural gas. The EIS should examine the implications of this Maryland facility sending the gas out of state to existing pipelines in Pennsylvania. In its vaporized state, natural gas is voluminous and therefore the rate of energy transferred moves rather slowly through high-pressurized pipelines, especially when compared to oil. To get LNG, natural gas is cooled to a temperature of minus 260 degrees Fahrenheit until it becomes liquid and occupies 1/600 of its gaseous volume. Large tankers are then used to ship the LNG to major markets. A typical liquefying plant costs about $1 billion, tankers are priced at $250 million a piece and a terminal to store the LNG and to “regasify” runs between $300 million and $500 million. AES is proposing to make a very large energy infrastructure investment in Maryland. Domestic LNG Facilities There are approximately 113 LNG facilities in the U.S. Currently, there are only four import terminals and one export terminal, which is located in Alaska. Two percent of the natural gas used by homes and businesses comes from liquefied natural gas. The gas is chilled to 260 below zero to be stored and transported in insulated tankers and then reheated into gaseous form at terminals such as Cove Point before being piped to customers.Liquefied Natural Gas (LNG) is increasing market share because of increased use of natural gas at electric utility plants. Today, LNG makes up about 2 percent of all gas consumed in this country but if the projects now under consideration become real, then LNG imports could supply 15 percent of the nation’s gas demand by 2025, according to the U.S. Energy Information Administration.Right now, only four LNG receiving terminals exist in the United States and are located in 1) Georgia, 2) Louisiana, 3) Maryland and 4) Massachusetts. One of the largest facilities, owned by Dominion Resources, is located about 40 miles from Washington, DC, Cove Point terminal on the Chesapeake Bay in southern Maryland. Tankers deliver the frozen LNG from the dock through two 31-inch diameter pipes to storage domes a mile from shore. Imports of liquefied natural gas are expected to increase. In addition to Cove Point, Maryland, the nation’s other three liquefied natural gas facilities – at Elba Island, Ga., Lake Charles, La. and Everett, Mass. – also have proposed expanding and new terminals are being proposed on both coasts. If the Sparrows Point facility is approved, it will put Maryland in the forefront of LNG importation in the United States. There are at least 60 planned, approved and proposed North American LNG terminalsThe increase in gas prices has opened the door to LNG. Gas inventories needed for the winter are still way below normal. The gas has to come from somewhere other than the terrestrial Lower 48 because domestic supplies cannot keep up with demand. San Diego’s Sempra Energy is building a $700 million LNG terminal in Louisiana and has applied for permission to build a terminal in northern Baja California, Mexico. ChevronTexaco’s is planning an LNG facility in the Gulf of Mexico, 36 miles from shore, which will import 1.5 billion cubic feet per day of natural gas by 2007. ChevronTexaco’s proposed Pelican LNG terminal in the Gulf would be the delivery destination for a huge gas production and LNG processing plant planned for Angola. (EIA, Sempra, ChevronTexaco)AES has LNG import facilities in the Dominican Republic and Bahamas (0.83 Bcfd). AES builds and owns electricity generating power plants worldwide.Texas LNG Facility Approved. The Federal Energy Regulatory Commission (FERC) approved a $500 million liquefied natural gas (LNG) complex in 2004 owned by a three-company consortium that will be located in Quintana Island, Texas. Freeport LNG Investments, Cheniere LNG and Contango Oil and Gas will build the facility 70 miles south of Houston, Texas, which will have the capability to unload 200 ships a year of LNG. The Freeport LNG venture will be partially financed by ConocoPhillip oil company in exchange for a portion of the gas. Dow Chemical will also receive a large portion of the gas. (FERC)Sempra, parent of Southern California Gas and San Diego Gas & electric, also faces a need for natural gas to supply three power plants being built in Bakersfield, Phoenix and Mexicali, Mexico. (Sempra)A single tanker carries enough LNG to supply the daily energy needs of more than 10 million homes. LNG, chilled to minus 260 degrees Fahrenheit, expands 600 times when warmed to its normal vapor state. Chicago Bridge & Iron Company is the world’s largest builder of the cryogenic tanks that hold LNG in its liquid state. Fluor Corporation of Aliso Viejo, and the Houston based Brown & Root, a division of Halliburton, Inc build liquefaction and regasification facilities.The first LNG plant built in the U.S. was built in Alaska in 1969 and is still operating.Foreign LNG Facilities & SuppliersThere are approximately 240 LNG facilities worldwide. In 2002, 12 exporting countries shipped approximately 5.4 Tcf of natural gas to 12 importing countries.Natural gas resources are plentiful all over the world. In addition to the U.S., there are huge reserves in Indonesia, the Persian Gulf states of Qatar and Oman, as well as in Russia and several West African countries. In ascending order, the countries controlling the largest reserves of natural gas are the United Arab Emirates, Qatar, Saudi Arabia, Iran and Russia.ExxonMobil Corp, the world’s largest energy company, is building a $12 billion LNG system in Qatar. It will deliver 2 billion cubic feel a day of natural gas to the U.S. starting in 2008. This unprecedented project will supply 2% of total U.S. natural gas. Norway’s biggest oil and gas company, Statoil ASA, has signed a letter of intent with Dominion to provide gas for the additional storage at the Cove Point terminal.An Australian Company is proposing an LNG port off the coast of California. BHP Billiton, an Australia-based company submitted a license application in 2004 to construct a $500-million floating deep-water liquefied natural gas port terminal off the Ventura County coast. The Cabrillo Deepwater Port, which would act as a receiving point for shipments of California-bound natural gas, would be the first such floating terminal on the West Coast. Stored liquefied natural gas would be converted to vapor through a heat exchange system and transported by an undersea pipeline to existing onshore natural gas facilities. The project would be built about 20 miles off the coast of Oxnard. BHP has stated that the terminal would also be placed outside shipping lanes and marine mammal migratory routes, as well as away from the Point Mugu Navy base and the Channel Islands National Marine Sanctuary.Shipbuilders LNG Tanker Contract. According to officials in Qatar, Hyundai Heavy Industries, Daewoo Shipbuilding and Marine and Samsung Heavy Industries Company have won a $3.2 billion contract to build eight of the world’s largest tankers for shipping liquefied natural gas, with an option for eight more. The Overseas Shipbuilding Group, a tanker owner listed in the U.S., and Pronav Ship Management (no website) of Germany ordered the ships. (Bloomberg News) BP & Sempra Energy LNG Contract. In 2004, BP, Europe’s biggest oil company, and partners in Indonesia’s Tangguh LNG project announced they will start to deliver as much as 3.7 million metric tons of the fuel to Sempra Energy in Mexico in 2008, Indonesia’s oil and gas regulator said. BP and San Diego-based Sempra have signed a 20-year sales contract. The LNG will be delivered to Sempra’s planned terminal near Ensenada in Baja California. There, the LNG will be returned to gas form for use in power plants. Conclusion LNG is an excellent fossil fuel for electricity generation in the absence of nuclear power and clean coal generation. We need a mix of energy sources to produce electricity. Maryland cannot continue to oppose new generation and new transmission lines and expect economic growth to continue without disruptions. In today’s environmental climate, natural gas will be one of the primary fuels used for electricity generation. To the extent that plants are built to utilize this fossil fuel, it needs to be available in quantities sufficient to meet local demand. We cannot NMBY anytime and anywhere and expect to have electricity all the time and everywhere. ATTACHMENT 1 Existing, Proposed and Potential LNG Terminals CONSTRUCTED Everett, MA : 1.035 Bcfd (SUEZ/Tractebel-DOMAC)Cove Point, MD : 1.0 Bcfd (Dominion -Cove Point LNG)Elba Island, GA : 1.2 Bcfd (El Paso -Southern LNG)Lake Charles, LA : 1.5 Bcfd (Southern Union -Trunkline LNG)Gulf of Mexico:0.5 Bcfd (Gulf Gateway Energy Bridge -ExcelerateEnergy) APPROVED BY FERC Lake Charles, LA:0.6 Bcfd (Southern Union -Trunkline LNG)Hackberry, LA : 1.5 Bcfd (Cameron LNG -Sempra Energy)Bahamas : 0.84 Bcfd (AES Ocean Express)*Bahamas : 0.83 Bcfd (Calypso Tractebel)*Freeport, TX : 1.5 Bcfd (Cheniere/Freeport LNG Dev.)Sabine, LA : 2.6 Bcfd (Cheniere LNG)Corpus Christi, TX: 2.6 Bcfd (Cheniere LNG)Corpus Christi, TX : 1.0 Bcfd (Vista Del Sol -ExxonMobil)Fall River, MA :0.8 Bcfd (Weaver’s Cove Energy/Hess LNG)Sabine, TX : 1.0 Bcfd (Golden Pass -ExxonMobil)Corpus Christi, TX: 1.0 Bcfd (Ingleside Energy -Occidental Energy Ventures) APPROVED BY MARAD/COAST GUARD Port Pelican:1.6 Bcfd (Chevron Texaco)Louisiana Offshore : 1.0 Bcfd (Gulf Landing -Shell) CANADIAN APPROVED TERMINALS St. John, NB : 1.0 Bcfd (Canaport-Irving Oil)Point Tupper, NS 1.0 Bcf/d (Bear Head LNG -Anadarko) MEXICAN APPROVED TERMINALS Altamira, Tamulipas: 0.7 Bcfd (Shell/Total/Mitsui)Baja California, MX : 1.0 Bcfd (Energy Costa Azul-Sempra)Baja California -Offshore :1.4 Bcfd (Chevron Texaco) PROPOSED TO FERC Long Beach, CA :0.7 Bcfd, (Mitsubishi/ConocoPhillips-Sound Energy Solutions)Logan Township, NJ : 1.2 Bcfd (Crown Landing LNG -BP)Bahamas : 0.5 Bcfd, (Seafarer -El Paso/FPL )Port Arthur, TX:1.5 Bcfd (Sempra)Cove Point, MD : 0.8 Bcfd (Dominion)LI Sound, NY: 1.0 Bcfd (Broadwater Energy -TransCanada/Shell)Pascagoula, MS:1.0 Bcfd (Gulf LNG Energy LLC)Bradwood, OR:1.0 Bcfd (Northern Star LNG -Northern Star Natural Gas LLC)Pascagoula, MS:1.3 Bcfd (CasotteLanding-ChevronTexaco)Cameron, LA: 3.3 Bcfd (Creole Trail LNG -Cheniere LNG)Port Lavaca, TX: 1.0 Bcfd (Calhoun LNG -Gulf Coast LNG Partners)Freeport, TX: 2.5 Bcfd (Cheniere/Freeport LNG Dev. -Expansion)Sabine, LA: 1.4 Bcfd (Cheniere LNG -Expansion)Hackberry, LA : 1.15 Bcfd (Cameron LNG -Sempra Energy-Expansion)Pleasant Point, ME : 0.5 Bcfd (QuoddyBay, LLC)Robbinston, ME: 0.5 Bcfd (DowneastLNG -Kestrel Energy)Elba Island, GA:0.9 Bcfd (El Paso -Southern LNG)Baltimore, MD: 1.5 Bcfd (AES Sparrows Point –AES Corp.)Coos Bay, OR: 1.0 Bcfd (Jordan Cove Energy Project) PROPOSED TO MARAD/COAST GUARD OffshoreCalifornia : 1.5 Bcfd (CabrilloPort -BHP Billiton)39. Offshore California :0.5 Bcfd, (Clearwater Port LLC -NorthernstarNG LLC)Offshore Louisiana : 1.0 Bcfd (Main Pass McMoRanExp.)Gulf of Mexico:1.0 Bcfd (Compass Port -ConocoPhillips)Gulf of Mexico: 1.5 Bcfd (Beacon Port Clean Energy Terminal-ConocoPhillips)Offshore Boston:0.4 Bcfd (Neptune LNG -Tractebel)Offshore Boston:0.8 Bcfd (Northeast Gateway -ExcelerateEnergy)Gulf of Mexico:1.4 Bcfd (Bienville Offshore Energy Terminal -TORP)Offshore Florida: ? Bcfd (SUEZ Calypso -SUEZ LNG) POTENTIAL U.S. SITES IDENTIFIED BY PROJECT SPONSORS OffshoreCalifornia:0.75 Bcfd, (Chevron Texaco)Offshore California:0.75 Bcfd (OceanWay-Woodside Natural Gas)St. Helens, OR:0.7 Bcfd (Port Westward LNG LLC)Galveston, TX:1.2 Bcfd (Pelican Island -BP)Philadelphia, PA:0.6 Bcfd (Freedom Energy Center -PGW)Astoria, OR: 1.0 Bcfd (SkipanonLNG -Calpine)Boston, MA:0.8 Bcfd (AES Battery Rock LLC-AES Corp.)Calais, ME:? Bcfd (BP Consulting LLC)Offshore New York:2.0 Bcfd (Safe Harbor Energy -ASIC, LLC)Offshore California: 0.6 Bcfd (Pacific Gateway -ExcelerateEnergy)Offshore California: ? Bcfd (Esperanza Energy -Tidelands) POTENTIAL CANADIAN SITES IDENTIFIED BY PROJECT SPONSORS Quebec City, QC : 0.5 Bcfd (Project Rabaska-Enbridge/GazMet/Gazde France)Rivière-du-Loup, QC:0.5 Bcfd (CacounaEnergy -TransCanada/PetroCanada)Kitimat, BC:0.61 Bcfd (Galveston LNG)Prince Rupert, BC:0.30 Bcfd (WestPacTerminals)Goldboro, NS1.0 Bcfd (KelticPetrochemicals)ÉnergieGrande-AnseQC: 1.0 Bcfd POTENTIAL MEXICAN SITES IDENTIFIED BY PROJECT SPONSORS LázaroCárdenas, MX : 0.5 Bcfd(Tractebel/Repsol)Puerto Libertad, MX: 1.3 Bcfd(Sonora Pacific LNG)Offshore Gulf, MX: 1.0 Bcfd(Dorado -Tidelands)Manz anillo, MX: 0.5 BcfdTopolobampo, MX: 0.5 BcfdBaja California, MX : 1.5 Bcfd (Energy Costa Azul-Sempra -Expansion)