Coast Guard Waterway Suitability Report                               

AES Sparrows Point LNG Terminal

Project Description

• AES Sparrows Point LNG proposes to site, construct and operate a new LNG import terminal with an initial capacity of 1.5 billion cubic feet per day of natural gas. The proposed terminal would be located on an approximately 80 acre parcel located at the Sparrows Point industrial complex situated on the Sparrows Point peninsula extending into the Chesapeake Bay east of the Port of Baltimore, in Baltimore County, MD.
• The terminal would receive LNG from ocean-going ships (approximately 120 to 150 ships per year), store the LNG onshore in full-containment tanks, re-vaporize the LNG as needed, and then deliver pipeline quality gas to the Mid-Atlantic Express pipeline.

Coast Guard Review Process

• The Federal Energy Regulatory Commission (FERC) is the lead federal agency for approving the siting, design, and operation of a shore-side LNG terminal.
• The Coast Guard is responsible for evaluating the suitability of the waterway for LNG marine traffic, and releases its suitability findings in a Waterway Suitability Report (WSR).
• The Coast Guard requires a prospective LNG terminal to: (1) conduct a risk analysis of the waterway; (2) propose risk mitigation measures when necessary; (3) perform a gap analysis of the available and necessary resources to perform the mitigation measures; and (4) advise the Coast Guard as to the method(s) whereby the gapped resources would be obtained. Collectively, this is called the Waterway Suitability Assessment (WSA). The Coast Guard reviews the WSA when evaluating the suitability of the waterway for LNG marine traffic.

Coast Guard Findings

• In November 2006, AES submitted a WSA for the proposed project that: (1) assumed the Coast Guard would be the sole source provider for many of the required risk mitigation measures; (2) did not contain a gap analysis; and (3) did not advise the Coast Guard as to the method(s) whereby the gapped resources would be obtained. The Coast Guard returned the WSA for revision. In June 2007, AES submitted its revised WSA to the Coast Guard.
• During its review of the revised WSA, the Coast Guard consulted many stakeholders and conducted an independent risk assessment. Based upon its review of the revised WSA and the independent risk assessment, the Coast Guard determined that the Chesapeake Bay is not currently suitable, but can be made suitable for the type and frequency of LNG marine traffic associated with the proposed LNG terminal. The primary reasons the waterway was found currently not suitable were: (1) the Coast Guard did not concur with several of the WSA's risk calculations and proposed risk reduction measures; (2) the port community currently does not have sufficient resources available to implement the safety and security measures necessary to responsibly manage the maritime safety and security risks; and (3) AES did not provide the method(s) whereby the gapped resources would be obtained.
• The Coast Guard's required risk reduction measures include a combination of armed fixed security zone enforcement, LNG ship escorts, shore-side surveillance patrols, pre-staging of law enforcement assets, aerial reconnaissance, video surveillance, and periodic use of divers.

Next Steps

A Coast Guard determination that the waterway is suitable for LNG marine traffic would require the following:

• AES must propose risk reduction measures which meet the level of safety and security required as determined by the Coast Guard's independent risk assessment.
• The port community must have sufficient resources to implement the safety and security measures necessary to responsibly manage the risk.
• AES must develop a Transit Management Plan, in consultation with the Coast Guard and participating agencies, that clearly spells out roles, responsibilities, and specific procedures for the LNG ship, the LNG terminal, and the various agencies involved in responsibly managing the risks of LNG marine traffic.
• The environmental impacts of the LNG ship transits and the accompanying risk reduction measures must be fully understood and considered.