Questions and Answers

• LNG & Natural Gas


• AES Sparrows Point LNG


• Shipping & Docking


• Environmental Issues


• Dredging Issues


• Fishing Issues


• Safety


• Benefits
• High School students ask LNG questions: AES gives answers

LNG & Natural Gas

An easy way to think of LNG is that it, like water, can exist in three distinct states: vapor (steam), liquid (water), and solid (ice). As the temperature changes, the state of the substance - water or natural gas - changes. Natural gas originating from LNG is lighter than air once it is warmed above minus 160°F.

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Are LNG and natural gas different substances?
No. The two are essentially the same substance, but in different forms. LNG is natural gas as a liquid due to its low temperature. The composition of LNG differs slightly from natural gas because small amounts of impurities in the natural gas are removed during the liquefaction process - the process that is used to lower the temperature of the natural gas so that it converts to its liquid state.

Can LNG explode?
LNG is simply natural gas in liquid form. As a liquid, LNG cannot explode or catch fire. Once the LNG is revaporized into its more common gaseous state, it becomes the same fuel we use in our homes, in our businesses, and in such things as natural gas vehicles and power plants. As natural gas, the fuel can be ignited. If the ignition takes place in the open air, the fuel will simply burn until there is no more fuel. If the ignition takes place in a confined environment in the correct air-to-fuel ratio (5 to 15 percent fuel-to-air mix), it will expand rapidly (explode). It is this rapid expansion that provides the motive force for the motor vehicles and the power plants that use natural gas as fuel.

Is LNG safe?
LNG is a fuel. In its vapor form, it can be ignited and either burn or explode depending on whether it is ignited in an enclosed space. As with any fuel, it must be handled with care. With appropriate design and safety and security measures, including adequate set-back distances to account for any release of the LNG, it is a safe and beneficial source of fuel.

AES Sparrows Point LNG

Where will the project be located?
The proposed Sparrows Point Project will be located on an abandoned section of the Sparrows Point Shipyard in Baltimore, Maryland that is currently owned by Willis-Barletta Corp. The site consists of a 60-acre parcel of land located between the existing graving dock (southern boundary) and a floating dry dock (northern boundary). The water's edge is on the western boundary of the site, and the eastern boundary extends just beyond the existing fabrication building located on the boundary. The project site was previously owned by the Bethlehem Steel Corporation, and was used for manufacturing steel and shipbuilding. Currently, the site is used to store scrap metal material and to perform some light industrial maintenance work. A photographic simulation of the project site taken from a point on the water is shown below.

Importantly, the site is located more than one mile from the nearest residence. A photographic simulation of the proposed Sparrows Point Project as viewed from a location nearby the nearest residence is shown below.

What is the present condition of the land?
The land we are considering is suitable for building and operating an industrial project. The site was previously owned by The Bethlehem Steel Corporation and was used for manufacturing steel and shipbuilding. Currently, the site is used to store scrap metal material and to perform some light industrial maintenance work. Other than industry, we do not believe that the site is well suited for any other development.

I've heard of BLEVE. What is it and can it happen at the Sparrows Point Project?
BLEVE, or boiling liquid expanding vapor explosion, is a phenomenon associated with the sudden failure of a pressurized vessel. We are not aware of this ever occurring on an atmospheric tank containing LNG, which is what is planned at Sparrows Point. At Sparrows Point, the steel tank containing the LNG will be insulated with approximately three feet of insulation and encased within an outer tank with two-foot-thick concrete walls.

In a BLEVE incident, a pressure vessel is subjected to flame impingement and a BLEVE occurs when the heat of the fire increases the internal tank pressure, particularly at the part of the vessel not cooled by the internal liquid. As mentioned our LNG tanks are not designed for pressure, and even if subjected to external fire, cannot be over pressurize to a level that would cause a BLEVE event. LNG tanks of the type planned for Sparrows Point cannot BLEVE because:

• Tanks are doubled walled (outer concrete wall up to 3 feet thick).
• Outer shell will prevent direct flame impingement on the inner tank.
• Insulation between the outer and inner wall will greatly slow heat transfer to the LNG.
• Redundant pressure relief mechanisms.

This question gets to the general concern over a possible terrorist attacks on a facility like this one. It's a valid concern in today's world. However, you should know that this facility will be protected by numerous physical barriers, including vehicle barriers which can stop a truck going 50 mph. We will also have three firefighting tug boats accompany each LNG ship to the dock. Each of these tugboats - each one - brings about twice the firefighting capability that exists on the river today.

When you take into account these and other precautions - vehicle barrier, anti-climb fence, surveillance systems, tank-within-a-tank design, plus the remote location of the facility, it becomes a very unappealing target for would-be terrorists. A terrorist group looking to make a huge impact with limited resources is more likely to focus on much easier potential targets. We have put and continue to put a lot of effort into safe, secure design of the facility and dock. We are working closely with federal, state and local law enforcement and anti-terrorism agencies in the selection of our protective systems and procedures. All of these precautions will help make this facility one of the safest on the river.

Will there be more truck traffic on local roads?
The only significant truck traffic we are anticipating is during the construction phase. Once the facility becomes operational, there will be a very small increase in local traffic due to the delivery of supplies such as lubricants, paint, spare parts, and office materials.

Shipping & Docking

What changes will be made to the harbor to accommodate the LNG ships?
Improvements to the existing waterway will be required to accommodate the LNG ships. The channel dimensions will be determined by detailed LNG tanker computer modeling and other marine environment planning studies, conducted together with the local pilots and the U.S. Coast Guard.

Preliminary studies, based on the maximum anticipated vessel size indicate that AES will need to deepen and widen the existing marine channel to a depth of approximately 44 feet and width of approximately 650 feet. Additionally AES will dredge a turning circle to allow the ship to be turned under tug support and be berthed at the marine terminal bow out. The areas adjacent to each of the berths will also be dredged to a depth of approximately 44 feet.

How long will it take for the ships to dock once they leave the channel?
Initial conversations with representatives of the Maryland Pilots Association indicate that it will take approximately one hour for the ships to dock once they leave the Brewerton Channel. This time may decrease to close to 45 minutes once the pilots become more familiar with the ships and tugs and the waters around the berth.

Will Bear Creek be shut down?
No. There will never be a time when boats entering or leaving Bear Creek will be fully restricted. When the LNG ships are being moved from the Brewerton Channel to the berth, there will be some restriction for a short period of time in the waters between the project site and Ft. Carrol. This restriction will last as long as it takes to dock the ships. Additionally, there will be a security zone placed around the ships when they are docked at the berth. We expect this zone to be 500 yards of less measured from the ship at berth. The exact extent of the security zone when the ships are at berth will depend on the outcome of discussions with the U.S. Coast Guard on the use of floating barriers or other safety measures. Floating barriers are used to delineate restricted areas and provide both a visual and formidable security barrier in the water against small vessels. They are used around the world in many types of marine security applications.

Can an LNG vessel withstand stranding on the channel or river bottom?
We believe so. LNG tankers have withstood the effects of grounding and vessel collisions without any cargo release. An example of this is the El Paso Paul Kayser, which ran aground off the Rock of Gibraltar in 1979. The ship lost its hydraulic system while traveling at full speed. While the ship sustained substantial damage, there was no breach of the LNG tanks and no loss of cargo.

It is important to note that all LNG tankers are double-hulled vessels, and the inner and outer hulls are separated by several feet of open space and insulating materials. Additionally due to the material up the Chesapeake Bay and near the site, generally silt and silty clay, the potential for a ships hull to be breached by such a grounding is extremely unlikely.

Environmental Issues

How will the dredge material be handled?
Under development. For more information, visit www.cleanearthinc.com

What air quality effects can be anticipated from the installation?
The LNG terminal will meet all local, state, and federal air quality standards. The system AES intends to use for re-gasification of the LNG involves a closed loop glycol system to transfer heat from the boilers to the shell and tube heat exchangers for vaporization of the gas. AES will use low NOx burners and flue gas recirculation on the boilers to help reduce the overall facility emission levels.

The project environmental analysis will also consider air emissions from the tug boats and the LNG tankers. LNG tankers use natural gas as fuel for their voyage, but have typically switched to fuel oil for the 20 hours or so that they are at berth.

Will there be more truck traffic on local roads?
The only significant truck traffic we are anticipating is during the construction phase. Once the facility becomes operational, there will be a very small increase in local traffic due to the delivery of supplies such as lubricants, paint, spare parts, and office materials.

Dredging Issues

How will the dredge material be handled?
Under development. For more information, visit www.cleanearthinc.com

How will you address loss of bottom habitat due to dredging or effects on channel fishing and shellfish harvesting?
First, it is important to note that the dredging associated with the project will be limited to the area between the Brewerton Channel and the project site. All impacts, both direct and indirect, as well as cumulative impacts will be a part of the project environmental analysis. The project will only proceed after detailed environmental planning and an impact report is completed and reviewed and approved by dozens of federal, state, and local agencies. The extent of mitigation and/or compensation efforts will be determined in that evaluation and review process. Based on our preliminary studies, we are confident we can plan the waterway improvements without significant adverse environmental impacts.

Fishing Issues

How will you address loss of bottom habitat due to dredging or effects on channel fishing and shellfish harvesting?
First, it is important to note that the dredging associated with the project will be limited to the area between the Brewerton Channel and the project site. All impacts, both direct and indirect, as well as cumulative impacts will be a part of the project environmental analysis. The project will only proceed after detailed environmental planning and an impact report is completed and reviewed and approved by dozens of federal, state, and local agencies. The extent of mitigation and/or compensation efforts will be determined in that evaluation and review process. Based on our preliminary studies, we are confident we can plan the waterway improvements without significant adverse environmental impacts.

Will the dredging project impact local recreational boaters or commercial fishing?
Under development.

Once the project becomes operational, what will be the impact on recreational boaters and commercial fishing?
Under development. This issue will be part of the Waterway Suitability Assessment that is currently being reviewed by the U.S. Coast Guard.

Safety

How will AES ensure the ships are protected from terrorist attacks?
Under development. This issue will be part of the Waterway Suitability Assessment that is currently being reviewed by the U.S. Coast Guard.

Who will pay for added security precautions associated with LNG transport on the Patapsco River?
The Federal Energy Regulatory Commission has directed Sparrows Point to work with local and state agencies to work out funding for required security measures. The agency requires that we have a funding plan in place before construction may begin.

To meet this requirement, we will sit down with state and local officials for discussions in the coming months to review the Coast Guard's security recommendations, to come to agreement on how best to provide required services, and how they are funded. Generally speaking, security measures that are above and beyond the capability of the local enforcement agencies to provide, will be provided or paid for by AES.

Is LNG good for the environment?
Environmentally, LNG has the least impact of any fossil fuel. If spilled on water or land, it will not mix with the water or soil. Instead, it will simply evaporate and dissipates into the air. As a vehicle fuel, natural gas is much cleaner, reducing particulate emissions to near zero and CO2 emissions by 70 percent. When burned for power generation, because of the volumes, the results are even more dramatic - SO2 emissions are virtually eliminated, and CO2 emissions are about one-half of that produced by a coal-fired facility. The result is more energy with less impact on the environment.

How safe is the LNG industry?
The LNG industry has one of the best safety records among fuel suppliers worldwide. The ships and storage tanks are all double-walled, with insulation between the walls to ensure the LNG stays cold. This type of construction makes these vessels extremely resistant to failure. There has never been a large-scale marine release of LNG in the history of the LNG shipping industry. Since the inception of modern codes and standards, there has never been a large-scale release of LNG in at any land-based facility.

How safe is the equipment used to handle LNG?
The ships and storage tanks are all double-walled, with thick insulation between the walls to ensure that the LNG stays cold. This type of construction makes these vessels extremely resistant to failure due to any type of impact. Inspection techniques - all welding is 100 percent radiograph inspected - ensure that there will be no failures resulting from construction defects. In inner walls of the tanks are built of materials proven to resist the extremely low temperature of the LNG. Use of any other material might result in failure of the tank.

Other equipment associated with the importation and re-gasification of LNG, including piping, pumps, and heat exchangers, is also designed to withstand the extremely cold temperature of the LNG. The equipment is tested and inspected prior to installation using highly rigorous standards. Where necessary, redundant equipment is installed to ensure that operation will not be interrupted and safety will not be compromised.

What is the real story behind the LNG disaster that took place in Cleveland, Ohio in 1944?
The disaster that took place in Cleveland in 1944 was truly tragic. It was an example of poor siting, poor design, and poor manufacturing that led to the deaths of 128 persons. All those issues have been addressed in today's rigorous codes and standards such that an event like Cleveland could not take place again.

The facts surrounding the event are as follows: In 1941, the East Ohio Gas Company built the first commercial LNG peakshaving facility. A peakshaving facility is used to store large amounts of natural gas in its liquid form for peak use events such as a severe cold snap when delivery pipelines are not able to handle the sudden increase in localized demand. Such peakshaving facilities are common throughout the United States - there are over 110 facilities, including three tanks in downtown Baltimore.

The facility was operated safely and reliably until 1944 when a new, larger tank was added alongside three existing tanks. The new tank was not built of the same steel alloy as the other tanks due to material shortages during World War II. Instead of using nine percent nickel steel, the new tank was built with a nickel content of only about 3.5 percent or other material capable of handling the cold temperature such as stainless steel or aluminum.

At 2:15 pm on October 20, 1944, the new tank failed and released all of its contents into the adjacent streets and sewers. The LNG released from the new tank was able to flow into the streets and sewers because there was no containment around the tank.

Once the LNG was in the open, it ignited and a fire ensued that engulfed nearby residences, businesses, and the other LNG tanks. After a short time, when the initial fire was nearly extinguished, a second tank fell and released its contents that immediately vaporized and ignited. The failure of the second tank was caused not by the fire, but by the content of the LNG from the first tank to the uninsulated legs of the second tank. Neither of the other tanks failed. Today, set-back distances are maintained between LNG facilities and populated areas.

The subsequent investigation report issued by the U.S. Bureau of Mines concluded that the accident resulted from low temperature embrittlement of the inner shell that was made of the 3.5 percent nickel steel. The tank's susceptibility to brittle fracture was compounded by its location close to a heavily trafficked railroad station and a munitions stamping plant - additional siting errors. Excessive vibration from the trains and stamping plant accelerated the cracking of the tank. The investigation report noted that the two unconfined vapor clouds resulting from the two tank ruptures did not result in explosions. The only explosions that took place were limited to the confined sewers where the LNG ran and vaporized into the correct fuel/air mixture that allowed for combustion.

The Bureau of Mines concluded the report by stating the concept of liquefying and storing LNG was valid if proper precautions are observed.

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Benefits

Lots of things influence prices, including thermometer settings at homes and businesses in Maryland (resulting in either lower or higher demand), as well as availability of additional supplies. So by conserving energy - turning down thermostats, using more energy efficient appliances - we can reduce demand. However, we'll still need additional supplies.

LNG is one source for these supplies. Another source could be opening new territory, such as areas offshore Florida, to exploration for natural gas. Adding significant new supplies of natural gas to the US market, in conjunction with conservation efforts, would put downward pressure on prices here. The Sparrows Point LNG project would bring in a new supply - approximately 15 percent of today's demand for natural gas in the Mid-Atlantic region - and so could be expected to have a stabilizing affect on prices in the region.

The other issue is that Maryland and the region sit near the end of pipelines carrying natural gas here from the Gulf of Mexico. In the peak heating periods of winter, demand for gas is greater than what can be delivered in the pipelines. That's why local utilities like SJ Gas maintain their own storage tanks of LNG at various locations in New Jersey; during periods of peak demand, they tap these tanks to meet the heating needs for their customers. As demand continues to grow in this region (1.8 percent per year), the pipeline constraint will only grow worse, increasing the possibility of shortages.

Here's a few facts about natural gas in this (Mid-Atlantic) region:

• The region currently consumes about 7.8 bcf (billion cubic feet) of natural gas per day.
• Gas demand here is increasing about 1.8 percent per year.
• The LNG facility will deliver about 1.2 bcf/day of additional supply into the region, or about 15 percent of current demand in the region.
• Any time you introduce a significant new supply of a commodity into a given market, it will tend to have a stabilizing effect on prices.

What will the economical impact on the surrounding communities, Baltimore County and the state of Maryland?
Under development.

High School students ask LNG questions: AES gives answers