An ongoing investigation at Cheniere Energy’s flagship export facility in Louisiana is raising red flags for the surging American gas industry.
Jenny Mandel, E&E News reporter, and Jie Jenny Zou, Center for Public Integrity reporter Energywire: Thursday, May 30, 2019
In just three years, a 1,000-acre complex surrounded by Louisiana swampland has become the unlikely epicenter of America’s booming natural gas business.
Sabine Pass terminal is the crown jewel of Cheniere Energy Inc., a Houston company that had a virtual monopoly on U.S. exports of liquefied natural gas, or LNG, until last spring. In November, Cheniere opened a second terminal — eclipsing competitors racing to construct their first sites. The company is in talks to close its third deal with China, worth an estimated $18 billion.
But cracks in Cheniere’s runaway success story have started to show.
Last year gashes up to 6 feet long opened up in a massive steel storage tank at Sabine Pass, releasing super-chilled LNG that quickly vaporized into a cloud of flammable gas. Federal regulators worried the tank might give way, spilling the remainder of the fuel and setting off an uncontrollable fire. It wasn’t an isolated event: Another tank was leaking gas in 14 different places. Both tanks remain out of service over a year later.
Investigators soon discovered that Cheniere grappled with problems affecting at least four of the five tanks at the terminal over the past decade. And officials at the Pipeline and Hazardous Materials Safety Administration, known as PHMSA, have found the company to be less than forthcoming in the ongoing investigation, noting Cheniere’s “reticence to share [its] sense of what might have gone wrong.”
The leaks are a red flag at a time of unprecedented expansion in the LNG industry, which promotes the fuel as not only safe but also a clean, more climate-friendly alternative to coal. The problem is that natural gas is made up mostly of methane, a greenhouse gas far more potent than carbon dioxide at warming the Earth’s atmosphere. Leaks erode the fuel’s climate advantage over coal.
Cheniere spokesman Eben Burnham-Snyder said workers and the public were never in danger, and last year’s leaks were about one hundredth of a percent of the facility’s permitted greenhouse gas emissions for the year. The tanks, he added, meet “all federal and state safety requirements.” But some other LNG export projects — including Cheniere’s newest terminal in Corpus Christi, Texas — have opted to use more expensive tank designs that offer greater protection against leaks and fires.
Sabine Pass was originally designed for imports. In 2012, Cheniere began converting the facility to handle exports instead, taking advantage of surging gas supplies from the shale drilling boom. The company upended the energy market when it began sending LNG overseas in 2016, quickly turning America into a top seller of the fossil fuel.
Over a dozen U.S. export projects are now in development, including a $10 billion project by Exxon Mobil Corp. and Qatar Petroleum on the Texas side of Sabine Pass. Federal regulations, though, haven’t kept pace. They were written for simpler import and gas-storage facilities, not complex, multibillion-dollar export facilities. In April, the White House directed regulators to update LNG safety rules. But it’s unclear what that will look like — or whether any new design requirements would apply to projects already in the works.
The industry trade group Center for Liquefied Natural Gas said its members — which include Cheniere — support the effort to revamp current regulations. That “goes hand in hand with our industry’s focus on continuous improvement,” spokeswoman Daphne Magnuson wrote in a statement. “We see a bright future for U.S. LNG and significant benefits to the planet at large.”
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