Need For The Project

Need For The Project

Supply According to the EIA s AEO 2005, natural gas consumption in the U.S. is currently about 23 trillion cubic feet (tcf ) per year and is expected to increase to about 31 tcf per year by 2025. Traditional natural gas supplies from the Gulf Coast and western Canada will meet only 75% of this increase in demand, necessitating the acquisition of additional supplies from Alaska and from other parts of the world in the form of liquefied natural gas (LNG). In order to offset the imbalance between domestic supply and consumer demand, LNG imports to the U.S. are projected to increase from 0.4 tcf in 2003 to more than 6.4 tcf by 2025. The U.S., and in particular the New York and Connecticut region, face a critical period in meeting the energy needs of consumers over the next 10 to 15 years. The New York and Connecticut region does not have its own indigenous supply of natural gas, and as a result depends on supplies that must travel through thousands of miles of pipelines from producing regions in the Gulf of Mexico and Canada. During peak periods of demand, such as cold winter or hot summer days, the lack of local supply and the extensive natural gas pipeline network already operating at capacity results in high and volatile natural gas prices. Put more simply the region faces an increasing imbalance between supply and demand. The need to address these issues of increasing price levels and volatility has been noted recently in the New York Independent System Operators recent publication Power Trends 2005: The nation in general, and the Northeast in particular, must fashion an effective fuel diversity strategy for dealing with the increasing use and dwindling domestic reserves of natural gas. The lack of local supply and gas pipelines that are operating at capacity results in high and volatile natural gas prices. Connecticut New York City SOURCE: Energy Information Administration 3

Broadwater Consumers would benefit in a number of ways from a new LNG import facility. First, local LNG supplies would diversify natural gas supplies that originate in Western Canada and the Gulf Coast. Currently, Western Canada and the Gulf Coast supply 85% of the gas consumed in the area. Second, a Broadwater facility would reduce the need for future natural gas pipeline expansions that have proven difficult to build into the New York and New England markets. Lack of ability to expand regional pipeline capacity has been one of the key underlying causes of volatile prices in the region. And third, Broadwater would help stop the trend of escalating energy prices by adding a volume of natural gas that would be the equivalent of 25% of the average daily natural gas consumption in the region. This additional volume would actually reduce overall energy prices from where they would otherwise be and yield cost savings to all consumers. Broadwater would help stop the trend of escalating energy prices by adding a volume of natural gas that would be the equivalent of 25% of the average daily natural gas consumption in the region. 4

FERC APPLICATION OVERVIEW Broadwater Energy, a joint venture between TransCanada PipeLines (TCPL USA LNG, Inc.), and Shell US Gas & Power LLC, is filing an application with the Federal Energy Regulatory Commission (FERC) seeking all of the necessary authorizations to construct and operate a marine liquefied natural gas (LNG) terminal and connecting pipeline for the importation, storage, regasification and transportation of natural gas. Broadwater began the National Environmental Policy Act (NEPA) pre-file process in November 2004. Since that time, Broadwater has met with hundreds of individuals, organizations, agencies and governments on Long Island, in Connecticut and New York City. Input from these meetings, and from substantial technical studies and research is captured in the following Resource Reports to be filed as part of the application to the FERC. Resource Report 1 General Project Description Resource Report 2 Water Use and Quality Resource Report 3 Fish, Vegetation and Wildlife Resource Report 4 Cultural Resources Resource Report 5 Socioeconomics Resource Report 6 Geological Resources Resource Report 7 Soils Resource Report 8 Land Use, Recreation and Aesthetics Resource Report 9 Air and Noise Quality Resource Report 10 Alternatives Resource Report 11 Safety and Reliability Resource Report 12 PCB Contamination (not applicable to Broadwater) Resource Report 13 Engineering and Design Material The Resource Reports are available to view and download from the FERC website at www.elibrary.ferc.gov. After Broadwater submits its application, the FERC will conduct an independent review of the project. During the course of this review, the FERC will release a draft Environmental Impact Statement (EIS) for public comment. Those comments will be incorporated into the final EIS. FERC will consider the findings of the final EIS and any subsequent comments in its decision on whether to approve the project. The U.S. Coast Guard will also play a major role in this review process. Concurrent with the FERC review process, the project will apply for additional state and federal permits and approvals required to site, construct and operate the project. These processes will consider many issues including the consistency of the Broadwater project with state coastal zone policies, air and water impacts, and impacts on marine habitat. Responsible agencies include the U.S. Coast Guard, U.S. Army Corps of Engineers, U.S. Fish and Wildlife Service, New York Department of Environmental Conservation, New York Department of State, and New York Office of Parks, Recreation, and Historic Preservation. 6

Regulatory Timeline 2003 2004 2005 2006 2007 2008 2009 2010 Public Announcement Submit Application Permit Approval First Delivery Feasibility Studies (22 months) Public Consultation Regulartory Review and Permit (30-35 months) FSRU Design & Construction (30 months) Pipeline Construction (6 months) FSRU Tow/Install (6 months) Stakeholder engagement continues throughout the life of the project. Project Overview The proposed Broadwater LNG terminal will be located in the Long Island Sound, approximately 9 miles from the shore of Long Island in New York State waters. It will be designed to receive, store and regasify LNG at an average throughput of 1.0 billion cubic feet per day (bcfd) and will be capable of delivering a peak throughput of 1.25 bcfd. The average throughput is enough to meet approximately 25% of Long Island, New York City and southern Connecticut s daily demand. At peak send-out, this is enough natural gas to generate 5800 Megawatts of electricity, which is equivalent to 50% of the gas-fired electric generation in New York City, Long Island and southern Connecticut. Broadwater s proposed FSRU siting area and pipeline route. 7

The proposed LNG terminal will consist of a Floating Storage and Regasification Unit (FSRU) that is approximately 1,215 feet long, 200 feet wide and rises approximately 80 feet above the water line to the trunk deck. The FSRU s draft is approximately 40 feet and will float in water that is about 90 feet deep. Artist s rendition of FSRU (port side) and mooring. The FSRU will be built to conform to applicable regulations and standards, including International Maritime Organization standards. A third-party ship classification society such as the American Bureau of Shipping (ABS) will verify and certify the final design and construction. Primary FSRU components, which are discussed in greater detail in the Resource Reports, include: Yoke Mooring System LNG Storage and Vaporization Facilities LNG Receiving Facilities Power Generation Ballasting System Crew Accommodations and Command and Control Facilities Safety Systems 8

The FSRU will be designed with a net storage capacity of approximately 350,000 cubic meters (m 3 ) of LNG (equivalent to 8 billion cubic feet of natural gas). The LNG will be delivered to the FSRU in LNG carriers two to three times per week. A typical LNG carrier can deliver about 140,000 m 3 of LNG. The size of the LNG carriers is consistent with that of other commercial ships that regularly transit the Sound. Artist s rendition of the Broadwater FSRU with a docked LNG carrier. 9

The FSRU will be held in place using a yoke mooring system (YMS) that is attached to a stationary tower structure secured to the seafloor by four legs. This stationary tower serves the dual purposes of: (1) securing the FSRU so that it can pivot around the tower in response to the prevailing wind, current and wave conditions around the tower and (2) providing the support structure for connecting the FSRU to the send-out pipeline. The total open space area under the tower structure will be approximately 13,180 square feet. Underwater view of the FSRU and mooring system. Broadwater will warm the LNG back into a gas and deliver the regasified LNG to the existing Iroquois pipeline that serves both Connecticut and New York. Broadwater and the Iroquois pipeline will be linked together with a 30-inch-diameter natural gas pipeline installed beneath the seafloor and extending from the mooring system to a subsea interconnection with the Iroquois Gas Transmission System (Iroquois pipeline), approximately 22 miles west of the proposed FSRU site. 10

ALTERNATIVES ANALYSIS Broadwater evaluated potential alternatives to its proposed LNG terminal in Long Island Sound to determine whether there are viable, environmentally preferable alternatives that could deliver an adequate amount of safe, reliable energy to supply the New York and Connecticut region. Renewable Energy and Conservation Shell and TransCanada are both actively involved in the development of renewable sources of energy and have spent over a billion dollars in the past five years on development of these technologies. Even so, renewable energy systems cannot be expected to meet the anticipated energy needs of the region. Conservation and renewable energy initiatives will not eliminate the need for Broadwater. Projections continue to indicate that the demand for energy, and specifically natural gas, will outpace cost-effective programs designed to stimulate energy conservation. Conservation and renewable energy initiatives will not eliminate the need for Broadwater. Additional Pipeline Infrastructure The New York and Connecticut region receives natural gas from pipelines that extend over 1,000 miles from the existing natural gas producing regions in North America. For the most part, these pipelines are full and operate at capacity during peak winter conditions. The supply of natural gas from the producing regions is not projected to keep pace with the increase in demand for natural gas. Broadwater considered the feasibility of using or expanding existing natural gas pipelines to provide an additional supply of natural gas to the region. However, expansions of existing pipeline infrastructure would only access diminishing continental supplies, and not provide the additional 1 bcfd of new, reliable, long-term, and competitively priced natural gas that Broadwater would supply. Expanding the pipeline network without new gas supply would be like putting another straw into a bottle; you simply draw more liquid at a faster rate from the bottle. Broadwater would bring a new supply of natural gas to the region. It would be analogous to filling the bottle. Other Proposed LNG Terminals Other LNG terminals have been proposed within the U.S. but none would serve the New York and Connecticut markets directly. These facilities are designed to serve other markets and cannot meet the current and projected demands of the New York/Connecticut market. Even if one or more of these other facilities were permitted, the lack of excess pipeline capacity, particularly during winter demand, would prevent a significant quantity of natural gas from reaching New York and Connecticut. The construction of many miles of incremental pipeline infrastructure necessary to transport the natural gas from these other proposed LNG facilities to the New York/Connecticut region would result in significantly greater environmental impact when compared to Broadwater. 12

Onshore or Offshore As part of its evaluation of alternatives, Broadwater examined the feasibility of constructing an onshore LNG terminal. Broadwater considered a number of potential sites in New York and Connecticut, including Block Island and Plum Island, to deliver natural gas to the New York/Connecticut market. In selecting an offshore location, Broadwater will avoid disturbing sensitive near shore and shoreline environments. By connecting with the already existing Iroquois pipeline system, Broadwater will also avoid the need to build additional pipeline infrastructure such as compressor stations or additional pipelines that would cross the shoreline environments. Offshore Alternatives In addition to the Long Island Sound, Broadwater considered potential locations within the Atlantic Ocean and Block Island Sound. Both locations presented two significant issues: reliability of the gas supply and gas pipeline construction impacts. Weather and marine related conditions in Block Island Sound and the Atlantic Ocean would result in significant periods when LNG carriers would be unable to unload cargo. This downtime would compromise supply reliability. Furthermore, sites in the Block Island Sound and Atlantic Ocean area would require a significantly longer pipeline, compressor stations, beach crossings and onshore disruptions. After evaluating potential locations throughout Long Island Sound, Broadwater determined that from an environmental and safety standpoint, a more centralized site in the Sound is preferred because it maximizes the distance from shore, and therefore lessens impact on In selecting an offshore location, Broadwater will avoid disturbing sensitive near shore and shoreline environments. populated areas and current offshore uses of the Sound. Additionally, siting in the central Sound does not interfere with the increased recreational and commercial activities that are more prevalent in the western portion and shoreline areas within the Sound. 13

SAFETY AND SECURITY Safety, security and reliability are top priorities for Broadwater. The FSRU will have stringent security measures, technologies, and procedures that will meet or exceed international and federal requirements. The FSRU s remote location near the center of the Sound provides an added degree of safety beyond the stringent standards associated with onshore LNG facilities. LNG tankers will be able to approach the facility through established shipping routes, which are currently traveled annually by some 2,000 commercial vessels, including oil tankers. Broadwater is also important from a national energy security perspective, because it represents a step toward the geographic diversification of America s energy infrastructure. Currently, almost all the natural gas consumed by the New York City, Long Island and Connecticut region comes from the Gulf of Mexico and Canada. Being situated at the end of a long pipeline distribution system, this region is dependent on those pipeline systems and the extensive oil and gas production infrastructure serving these pipelines. Disruption of these systems, as in the case of the recent hurricanes in the Gulf of Mexico, negatively impacts this region s energy prices and supply. The Broadwater FSRU is unlikely to be an attractive terrorist target, based on the best available understanding of terrorist targeting priorities. Terrorist organizations seek to attack targets in major population centers, causing highly visible damage and disruption, and large numbers of casualties. Examples of these types of targets include the hotels in Amman, Jordan; the London underground and bus system; and the Madrid rail system, all of which were recently targeted by terrorists. The Broadwater FSRU, located far offshore with a small crew, does not fit this profile. Broadwater, its team of security advisors, and the relevant regulatory agencies will continue to work together to ensure that the facility is safe and secure, and to minimize any risks to the public. The Broadwater FSRU is being designed with highly-developed security and safety technology and its crew will be trained to high standards. Liquefied Natural Gas: A Strong Safety Record LNG is a colorless, odorless, and non-toxic liquid. It is transported and stored at atmospheric pressure at a very low temperature and is not compressed. If LNG is spilled on water, it floats on top of the water and vaporizes quickly there is no slick as there would be with oil. Natural gas is flammable, but does not explode if ignited in the open. Thus, if LNG is spilled on water and the resulting gas is ignited, a fast-burning pool fire can occur, leaving no residue and burning out extremely quickly, compared to other hydrocarbons. The marine transport of LNG has a strong safety and security record of approximately 80,000 carrier voyages over 40 years, covering over 100 million miles without major accidents or security incidents. Today, more than 150 LNG carriers safely transport more than 108 million tons of LNG annually to ports around the world. The LNG shipping safety record is attributable to continuously improving technology, comprehensive safety procedures, training, maintenance and effective government regulation. 16

Few accidents have occurred in the history of the marine transportation of LNG, and none of these accidents resulted in the failure of a cargo tank and a major release of LNG or a fatality directly attributable to LNG. Significant accidents have occurred at LNG onshore facilities, most notably at Cleveland, Ohio in 1944, which was the result of incompatible steel used for cryogenic service, and at a liquefaction plant in Skikda, Algeria in 2004. As a result of modern metallurgy and equipment, and highly-developed monitoring and safety technology and procedures, these types of incidents would not occur at the Broadwater facility. The Broadwater FSRU is being engineered specifically to survive the strong wind and wave conditions associated with storms or hurricanes. The weather conditions in this part of the Northeastern U.S. are relatively benign compared to the locations where other floating production and storage facilities typically operate or where LNG carriers transit. However, the Broadwater design criteria for the FSRU s mooring system exceeds the more typical 100-year storm event to include storm scenarios well in excess of those experienced in the history of the region. Hazard Distances and Consequences The offshore location of the proposed Broadwater facility provides the public with an additional layer of safety, in the very unlikely event of an accident or intentional incident, beyond the exacting standards applied to onshore LNG facilities. This conclusion is supported by a 2004 U.S. Department of Energy-sponsored study performed by Sandia National Laboratories. The Sandia Report provides a state-of-the-art analysis of the risks and consequences of an LNG spill over water. The Sandia Report found that risks from accidental LNG spills are small and manageable and that risks from intentional events, such as terrorist attacks, can be significantly reduced with appropriate security, planning, prevention and mitigation. The report concludes that the most significant risks from an LNG spill would exist within 1,500 feet of the event. In a worst case scenario, which the report stresses is highly unlikely, the maximum danger distance of an unignited vapor cloud is approximately 2.25 miles. The risk of such an event occurring under the Report s assumption of perfect atmospheric conditions is extremely low. Because the Broadwater facility will be located nine miles from the nearest shore, even this highly unlikely scenario does not present a threat to the general public. Local, State, and Federal Law Enforcement Under current laws, the U.S. Coast Guard will have the primary regulatory responsibility for the security of the FSRU. The U.S. Coast Guard is already involved in reviewing the results of Broadwater s ongoing analysis and modeling and has the power to implement a maritime safety and security zone around the FSRU and transiting LNG Carriers if it deems such zones necessary. The U.S. Coast Guard can also mandate various security and safety measures, and provide or support resources to protect the facility and the LNG carriers that supply it. Incoming LNG carriers, all of which must be certified according to international standards, are routinely inspected by the U.S. Coast Guard and are required to hold a valid U.S. Coast Guard issued Certificate of Compliance before operating in US waters. As part of Homeland Security requirements, the U.S. Coast Guard will determine the level of security screening required for each vessel arrival according to established internal procedures and the current Security Threat status. Careful vetting and background checks will be conducted on all FSRU employees, along with stringent training requirements in basic operations, as well as security, safety and emergency response. Broadwater is committed to working closely with local, state and federal law enforcement agencies to keep them informed and prepared, and cooperate on emergency planning. 17

Safety and Security Operating Standards Broadwater will have very stringent safety and security operating standards and protocols. Some of these standards and protocols are not yet finalized, as the U.S. Coast Guard will determine a number of requirements and recommendations related to security and safety. The Broadwater team will work with the U.S. Coast Guard, state and local public safety officials, as well as other security and safety experts, to employ the most appropriate and robust security and safety measures for the FSRU. A number of determinations have already been made, including: Dedicated tugboats with fire-fighting capabilities will support the FSRU. Broadwater will likely be responsible for providing its own emergency response capabilities, including fire, first aid and security resources. It is Broadwater s intention that only one LNG carrier associated with Broadwater s operations be allowed in the Sound at a time. The crew will be trained to high standards on security and safety, and will be regularly drilled in emergency response. The FSRU crew will continuously monitor all safety and security aspects of the operation, utilizing sophisticated systems. Broadwater will work with local, State and Federal law enforcement and emergency response agencies to ensure that a strong, coordinated emergency management plan exists. Engineering/Technology Although the Broadwater terminal may be among the first FSRUs in operation, each of the technologies and components involved are tried, tested, and reliable. Floating offshore facilities similar to the FSRU have been employed around the world for more than 25 years and have a proven track record of safe operation, with some operating continuously in severe weather conditions. The FSRU will incorporate many of the same safety features as an LNG carrier, particularly with regard to the double hull and containment systems, which will be constructed according to the same standards as an oceangoing vessel. The FSRU will be moored in place using a proven soft yoke mooring system that allows the FSRU to weathervane, or rotate, around the mooring tower base. This type of mooring system is used in some of the most severe-weather areas of marine operations. The FSRU s processing equipment utilizes the same types of vaporization and other equipment currently in use at onshore terminals. The LNG would be stored in a double-hulled containment system. The FSRU design will incorporate highly-developed, robust security and safety systems, including intruder detection, hazard detection, fire suppression and emergency shutdown. 18

ENVIRONMENTAL IMPACTS AND BENEFITS Broadwater recognizes that the project is proposed in an area of aesthetic, environmental and economic value. Broadwater can be designed, constructed and operated in a way that is consistent with these values and achieves energy reliability and security while advancing the region s environmental and economic goals. Air Broadwater will use advanced technology to ensure the FSRU attains the lowest achievable emissions rate in compliance with federal and state requirements. Natural gas is a clean-burning fossil fuel. By delivering a substantial new supply of natural gas, Broadwater will make a significant contribution in helping the region repower the older oil- and coal-power generation facilities Broadwater represents a significant step toward helping the region repower the older oil- and coal-power generation facilities with natural gas. Repowering with natural gas will considerably reduce SOx, NOx and particulate emissions into the atmosphere. Water One of Broadwater s key objectives is to avoid or minimize any potential impacts to the water quality of Long Island Sound. With careful preparation, planning and choice of technologies, impacts during construction of the pipeline are expected to be minor, localized and short term, and are related primarily to the temporary resuspension of bottom sediments in conjunction with the excavation of the pipeline trench. Impacts associated with the operations will be primarily associated with the routine intake and discharge of water from the FSRU. Any water discharge from the FSRU must meet all applicable federal and state discharge standards. Any discharge not capable of meeting the applicable standards will be held on board the FSRU and shipped to shore for disposal at an approved facility. Marine Environment and Fishing Impacts during construction are expected to be minor, localized and short-term, resulting from the installation of the pipeline and mooring. Impacts are related primarily to the temporary resuspension of bottom sediments in conjunction with the excavation of the pipeline trench and the temporary disruption to marine users during pipeline installation. The FSRU has been sited to minimize impact to the fishing community. In fact, after consultation with local fishing interests, Broadwater moved the proposed FSRU site to the west of the initial location to further minimize impacts on commercial fishing activities. Positive impacts will result from the diversification of habitat within the Sound, with the FSRU creating shaded habitat and additional structure in the central portion of the Sound in an area that is relatively homogenous in terms of habitat availability. 20

To avoid the most sensitive time for biological activity in the Sound, construction of the pipeline and mooring tower will be conducted during the winter months. Broadwater will maintain an open dialogue with fishermen throughout the lifetime of the project to avoid or minimize impacts. Noise Noise is not expected to be a problem either during construction or while in operation. Broadwater s construction noise will be consistent with existing noise levels that result from normal operations currently in the Sound. The noise generated by routine activities on the FSRU will be negligible, as will that of the LNG carriers. Visual The proposed FSRU has been sited near the center of the Sound at its widest point, in part, to maximize the distance from any coastal vantage point and minimize potential visual impact on coastal resources. The LNG terminal will be approximately nine miles from the nearest coastal vantage point. Broadwater has undertaken an extensive Visual Resource Assessment (VRA) that evaluates the potential visibility of the proposed project and objectively determines the difference in the visual characteristics of the water-based setting with and without the project in place. The process follows basic techniques of the New York State Department of Environmental Conservation Program Policy Assessing and Mitigating Visual Impacts in order to identify and mitigate impacts. Findings from the VRA show that the vast majority of views of the proposed FSRU will be limited to immediate shoreline locations. In most locations, views of the FSRU are reduced or eliminated by dense coastal vegetation, topography and onshore structures. While the color scheme of the FSRU and mooring has not been determined, there are options available. For example, shades of gray can be used to minimize contrast between the LNG terminal and the washed out distant blue gray colors of the background as well as the foreground waters of the Sound. These factors combine to minimize visual distinction and perceived importance of the project within the context of the regional landscape and waterscape. 21

CT COAST: 20 + miles (visible) - FSRU 9.2 miles CT COAST: 21 + miles (visible) - View from Long Island Photo simulation view of FSRU and Connecticut from Wading River Beach shoreline, Wading River, NY LI COAST: 20 + miles (visible) - FSRU 10.0 miles LI COAST: 19+ miles (visible) - LI COAST: 20 + miles (visible) - View from Connecticut Photo simulation view of FSRU and Long Island coastline from East Haven, CT shoreline 22

Pipeline construction Broadwater will install 22 miles of interconnecting pipeline from the FSRU location to the existing Iroquois system, avoiding any onshore and nearshore impacts. Broadwater s preferred pipeline installation method, subject to approval by regulatory authorities, will include the use of a slow-speed, low-energy subsea plow to lower the pipe beneath the seabed at a minimum depth of 5 feet for the first 2 miles and a minimum of 3 feet for the remainder. This method would prevent significant introduction of sediment into the water column, and avoid impact to the ecosystem outside the pipeline corridor. Unlike jetting or dredging activities, subsea plowing releases only minimal amounts of sediment into the water column. Sediment disruption attributed to anchor placements and cable sweep will also be minor, localized and short-term. Broadwater will use midline buoys to further minimize the impact from cable sweep. Broadwater proposes to use a conventional 8-point mooring lay barge, with eight anchor placements every mile along the pipeline route. The trench created by the subsea plow will be allowed to backfill naturally though sediment deposition, which is expected to occur over an approximate 36-month period. Natural backfill minimizes the need for another pass of the installation vessel and additional sediment disturbance associated with mechanical backfill techniques. It is possible, but not probable, that an alternative method may be required in the Stratford Shoal area, due to the presence of hard materials. If subsea plowing cannot be used within this area, Broadwater will dredge a trench. If this method were used, the dredged material would be captured and placed on a hopper barge rather than being cast to the side of the trench. This technique will ensure that dredged soils are disposed of in an approved dredge disposal area. After pipeline installation, the trench would be backfilled with imported clean material. LNG Carrier Traffic Broadwater expects to receive two to three deliveries of LNG cargo a week. This would result in a potential increase of some 150 vessels per year into the Sound. This is consistent with the current uses of the Sound, where there are currently over 700 large vessels, as well as 1,500 smaller commercial vessels that traverse the Sound each year. Social Investment Program Our goal is to ensure that the Long Island Sound region is healthier as a result of Broadwater s operations. One of the ways we plan to meet this goal is by establishing a social investment program that would be used to support Long Island Sound habitat enhancement. The projects will be selected in consultation with stakeholders to ensure the maximum benefit for the Long Island Sound. Projects could include marine habitat restoration, initiatives and educational programs. 23

Hard copies are available on request