State Studies LNG Plant at Ports

RALEIGH – A plant to export liquid natural gas could be built at the state ports in Morehead City or Wilmington, according to a report presented recently to the N.C. General Assembly.

Though significant hurdles exist, the 41-page report by the N.C. Department of Commerce estimates that a liquid natural gas, or LNG, export plant and storage facility at either port could create as many as 3,500 temporary construction jobs and 60 permanent, full-time jobs.

With the supply of domestic natural gas booming – thanks to fracking in the shale fields of Pennsylvania, Ohio and Texas – the legislature in its energy bill last year required the Commerce Department to determine whether a LNG plant was feasible to meet the demands of a growing foreign market.

It was déjà vu all over again for Tom Kies, executive director of the Downtown Morehead City Revitalization Association. The city’s downtown adjoins the port, which 15 or so years ago floated a plan for a plant to import natural gas on port land on Radio Island. It raised a mighty stink among business owners and residents of Morehead City and nearby Beaufort and was eventually dropped.

The stink, though, lingers.

“For many,” said Kies, “LNG raises a red flag.”

pat mcelraft

Rep. Pat McElraft

rick-catlin

Rep. Rick Catlin

Kies had not seen the new report. Neither had state Rep. Pat McElraft, a Republican whose district includes Morehead City. She said she didn’t want to comment until she had a chance to review the analysis.

“I’m not in a position to comment,” McElraft, who has been out of the state on business, said in an interview Thursday. “I don’t know what it entails, how dangerous it might be or what it would look like.”

She acknowledged that the prospect of an LNG plant is a sensitive subject in her district. “I know when we talked about it years ago, it was a seen as a negative for the area,” McElraft said.

Rep. Rick Catlin, R-New Hanover, said he supports looking at LNG exporting as part of an overall push to improve the two state ports. He said it’s not certain that fracking for natural gas in North Carolina or drilling for it offshore would ever become sources for the plant. Catlin, though, questioned the report’s conclusion that there’s no nearby pipeline source for an LNG facility. He thinks a pipeline that currently supplies a power plant near Wilmington could also be used to feed an LNG plant at the port there.

The lack of pipelines connecting the ports to the shale fields, along with the lengthy permitting and review process, are among the major hurdles any LNG plant would have to clear, the report notes.

“North Carolina does not currently have the necessary infrastructure to support an LNG export terminal,” the report states, “particularly a diverse pipeline network covering multiple sources, subsurface natural gas storage capacity, or an existing LNG import facility which could be converted for exports.”

Catlin said that last year he had discussions with officials of Piedmont Natural Gas, who indicated the company was interested in the idea of an LNG export facility. Catlin asked the company to evaluate whether the pipeline that supplies natural gas to Duke Energy’s L.V. Sutton power station near Wilmington could be upgraded to also feed an export plant. Catlin said the initial response was positive, but that a more technical analysis is needed.

The bigger problem, Catlin said, will be in keeping the channels to the ports deep enough. The report says the channels would need to be dredged to a depth of about 50 feet to accommodate the ships that would load the gas. That would all but rule out using the Wilmington port, Catlin said.

This is a map of all domestic interstate (blue) and intrastrate (red) liquid natural gas pipelines in the United States. Notice none are in eastern North Carolina. Source: Energy Information Administration, Office of Oil & Gas, Natural Gas Division, Gas Transportation Information System

This is a map of all domestic interstate (blue) and intrastrate (red) liquid natural gas pipelines in the United States. Notice none are in eastern North Carolina. Source: Energy Information Administration, Office of Oil & Gas, Natural Gas Division, Gas Transportation Information System

“If the preliminary numbers I have heard are correct we would have to deepen our channels to close to 46 feet,” Catlin wrote in a follow up email. “The Wilmington State Ports facility would require 26 miles of dredging, so I think we should focus our ideas toward the Cape Fear River southern port property or the Morehead port, which would both require less length of channel improvements.”

Catlin is referring to the 600 acres that the state bought near Southport for a proposed megaport. Local opposition forced the state to drop the plans.

Mike Rice, co-director of Save the Cape, which grew out of a movement to stop the megaport, said he doesn’t think any of the possible sites work for an LNG facility.

“Our existing state ports, which the Department of Commerce listed as possible locations, are in populated areas and are altogether lacking in the necessary infrastructure,” Rice said in an email.

The megaport site is also not feasible and would require even more investment, he said.

Rice said that given the economics he, like Kies, is not worried that a LNG plant is coming, especially with other plants being built north and south of the state.

“Any such project would be done with private capital, an energy company, which would base its location decisions on economics and practical considerations, not political ambition,” Rice noted.

Meanwhile, state-level discussion of how to approach improvements to the port continues. The Joint Legislative Transportation Oversight Committee met Tuesday to review Gov. Pat McCrory’s proposed transportation strategy for eastern North Carolina. Although a new LNG plan was not part of the mix, much of the discussion that followed focused on the Morehead port.

Sen. Bill Rabon, R-Brunswick, told committee members that the state should put a major effort into improving its existing ports.

Rep. Charles Jeter, R-Mecklenberg, said he would like to see the state move forward with a major project to improve the Morehead City port, which he says has strong advantages over major competitors like Charleston and Savannah.

“If we want to do something big, if you change the Morehead City port and then put in the infrastructure,” he said. “It’s a multi-billion dollar project, but it gives us a competitive advantage in geography that no other city has.”

Part of that plan is already under discussion. McCrory’s 25-year transportation strategy for the region includes upgrading U.S. 70 to interstate standards and building new rail and highway access bypassing Morehead City and reaching the port from the eastern side.

While the community understands the push for development at the state port, Kies said, it’s about looking for a use that works given the port’s proximity to the towns and the beaches. “We’re always looking for a partnership,” he said, “but one that’s compatible.”

About the Author

Kirk Ross

Kirk Ross is a longtime North Carolina journalist based in the Triangle. In addition to Coastal Review Online, he covers the legislature and state government for Carolina Public Press and The Washington Post. He can be reached at kirkrossreport@gmail.com.