It’s time for Hess to withdraw proposal
“The times, they are a changing” was an iconic line from a popular Bob Dylan song of the 1960s. Then and now, agile adaptation to the forces of change is a must for any successful organization. However, Amerada Hess/Weaver’s Cove Energy, LLC doesn’t appear to be one of these. Hess officials do not seem to be able to show strong leadership by acknowledging and adapting to the recent major economic developments and changes in gas energy markets – key structural changes which completely negate the requirements for and merits of their quest to import foreign-sourced liquid natural gas (LNG) into Fall River, Mass. by 2015.
In its latest plans, Hess officials propose to:
• Build LNG facilities in the middle of Mt. Hope Bay and in Fall River, Mass., including an untested, high-risk, four plus-mile cryogenic pipeline on the Mt. Hope Bay sea floor connecting the two facilities.
• Transport LNG via approximately 70 round-trip tanker transits per year (20-plus miles one way, each with U.S. Coast Guardmandated large security zones) through the narrow, relatively populous, environmentally sensitive, recreation and tourism-centric Narragansett and Mt. Hope Bays, underneath two strategic bridges, in close proximity to two large U.S. Naval facilities.
Lately, there have been several editorials in local newspapers arguing the merits, both pro and con, of this latest Hess proposal. Also, in recent weeks, a R.I. Senate LNG Task Force has been holding informational hearings on this controversial issue. Unfortunately, in making their case, Hess officials and their proponents continue to make self-serving arguments and downplay or ignore almost all of the legitimate security, economic and environmental concerns expressed by the overwhelming majority of the people and officials in the affected R.I. and Mass. communities. Rather than listen to the voice of the people, they discount opposing viewpoints as being mere NIMBY noise.
But most importantly, Hess officials won’t acknowledge and discuss their latest proposal in the context of the recent key changes in energy markets that negate their assertion that their imported LNG will reduce regional energy costs. Because of these changes, there is now no valid requirement (if there ever was one) for importing LNG into southeastern New England, particularly not through the environmentally sensitive Narragansett and Mt. Hope Bays. If they were genuinely interested in embracing these new economic realities, Hess officials would withdraw their highly controversial, unwanted proposal.
Here are some of the profound changes that negate the merits of Hess’ LNG proposal. The Energy Information Administration (the authoritative, independent analytical arm of the U.S. Department of Energy) in its updated 2009 Annual Energy Outlook (April, 2009) is predicting significant surplus (up to 40%) natural gas supplies for the New England region for the next 20-plus years, primarily because:
• Domestic natural gas is in the process of being economically recovered, via new hydro-fracturing technology, from the recently found vast Marcellus shale deposits (estimated to be one of the largest in the world) in the nearby states of New York, Pennsylvania and the Appalachian basin.
• Pipeline companies are rapidly expanding infrastructure to carry Marcellus shale natural gas to New England markets.
• The existing LNG facilities in New England have been, and continue to be, substantially underutilized.
• The increasing demand in New England for electricity produced by natural gas will be offset not only by vast supplies of domestic Marcellus shale gas, but also by the rising supply of stimulus funded renewable “green” energy sources, including energy produced by wind farms.
Given these authoritative industry projections, and the resulting estimated price of domestic Marcellus shale-sourced natural gas in New England by 2015, Hess’ plan to ship foreign LNG into Fall River, Mass. will not be cost effective. Hess will never recoup their sunk costs, and their return on investment will be a continuous losing proposition.
In addition, Hess is swimming against the tide against strong Administration focus on achieving and maintaining good stewardship of our coastal environments and resources for the common benefit of all, not just for a few business enterprises. Furthermore, Hess’ proposal is contrary to current national security policy that promotes weaning us from imported carbon-based energy sources.
In the face of these realities, it makes one wonder why Hess offi cials still continue to persist in throwing good money after bad in order to implement their economic and environmentally destructive LNG proposal, over the overwhelming objections and best interests of the local communities. It’s time for Hess officials to show progressive leadership and stop this ideologically driven financial Waterloo and withdraw their ill- advised LNG proposal. They owe it not only to the people of R.I. and Mass., but also to Hess’ own stockholders!
John G. Shannon