PSE closing in on Tideflats LNG plant construction start

Puget Sound Energy is still at work on the public-relations campaign for its Port of Tacoma liquefied natural gas plant, but much of the behind-the-scenes work to get the project into construction appears complete.

The October decision by the state Utilities and Transportation Commission to allow the financial mechanism to build and run the plant was the last remaining significant regulatory hurdle for the $310 million project, unless the Puyallup Tribe’s court challenge upends its shoreline development permit. Now the agency is sending informational mailers and preparing to host a forum Monday to explain what it intends to build.

“All the permits from the federal agencies and the state agencies, we have,” said Jim Hogan, PSE’s consulting project manager for the Tacoma LNG project.

This does not entirely clear the path for the plant to be constructed and begin operations, but it’s close. The city of Tacoma has granted some of the building permits PSE needs. The company hasn’t yet applied for other city permits. Whether PSE will be required to submit a few large applications or a stack of smaller ones for specific aspects of the plant still needs to be worked out between the utility and the city, Hogan said.

Either way, he anticipates a permitting process with less regulatory discretion than the federal and state agencies had.

“They’re very objective,” Hogan said of the city’s process. “You meet the code, you get the permit.”

Hogan, who is a former Enumclaw city councilman, said he anticipates a meeting with Tacoma officials in December to map out how the application and review process will go.

The Tacoma Fire Department controls key safety permitting for the plant, but PSE hasn’t filed that formal application yet.

Fire Chief James Duggan said it is expected to take “a couple months” to study whether the LNG plant adheres to a safety standard set by the National Fire Protection Association. The department plans to hire an outside consultant to review PSE’s permit application, Duggan said.

Although he has not received the application, the chief and his department have been taking a preliminary look at the siting study PSE filed with the city. The city posted the same documents online after The News Tribune obtained and published a copy amid PSE’s court efforts to suppress their release. Those studies include video simulations of a variety of leaks at the plant, which PSE officials explained in a News Tribune video.

So far, Duggan said he has identified nothing in the plant he is concerned about.

“So far, what we’re seeing preliminarily seems to suggest that they’re going to work to comply with the requirements,” Duggan said, “but again, we don’t want to prejudge that.”

Based on what’s become public so far, several conclusions can be drawn about the status of the $310 million project, which would pipe in natural gas and produce 250,000 gallons of LNG a day. A tall storage tank on the plant site would hold 8 million gallons of LNG. Most of the LNG will be sold to customers including the shipping company Totem Ocean Trailer Exchange, while PSE plans to use the storage tank’s contents as a backup supply for high-demand gas days.

How the process goes from here is largely in PSE’s hands.

The company’s timeline shows three years of construction, with the plant going into production in late 2019. Federal agencies that have granted regulatory permits include the U.S. Coast Guard and the U.S. Army Corps of Engineers. State agencies that have given permits include the departments of Ecology, Transportation, and Fish and Wildlife.

Because the plant decides when to file its applications with the city, the fire chief and other officials don’t have anything to contemplate yet. Other city processes are already complete, most significantly, an environmental impact statement in 2014 and the granting of a shoreline development permit. In December, a court is to assign a trial date for the Puyallup Tribe’s appeal on the shoreline permit.

Attempts by the anti-fossil fuels citizen group RedLine Tacoma have failed to persuade the city to reopen the environmental review, which drew only 27 written comments when it was open for input in summer 2015. Since then, the hostile reaction to a proposal to build the world’s largest gas-to-methanol plant on a nearby port site, withdrawn after more than 1,000 people attended a public meeting about it, has attracted wide attention to port industrial development.

RedLine members also asked the Tacoma-Pierce County Health Department to study the project. But with no official role in the process, the department has not taken any action.

PSE, meanwhile, has obtained permits to clear the site and begin some preliminary construction work. Absent a government agency intervening, the remaining work boils down to the utility asking for city permission to build and the city checking whether the plant is up to code.

That the utility company’s courtship of public opinion arrived after it passed key government-approval milestones has not gone over well.

PSE’s courtship of city and state officials for the plant dates to at least 2013, when Mayor Marilyn Strickland sent a letter that called Tacoma “delighted” about the prospect of the plant. In 2014, the Legislature passed a bill by wide margins that gives the plant and TOTE tax breaks on the gas that will be converted into LNG and used as marine fuel.

In a memo, port CEO John Wolfe estimated the break would save the two private companies $2.5 million to $3.5 million together in taxes yearly. In 2015, fewer than 30 people showed up to a public meeting to comment on the LNG plant.

Then in 2016, the quiet series of government machinations evolved into a sustained public protest by RedLine members.

The regular attendance of a dozen or more LNG plant opponents at City Council and port meetings prompted Mayor Strickland to call for more sunshine on the company’s plans. PSE responded with an advertising campaign, a Nov. 21 “open house” at the Greater Tacoma Convention & Trade Center, a Nov. 17 webinar and a public conference phone call Dec. 1.

It remains unclear whether the protests can have any significant effect on the plant, given the number of governmental approvals already granted.

Not every issue related to LNG plants is settled business. Volatile chemicals that will be used in the Tacoma production process are under federal re-evaluation.

In May, the federal Pipeline and Hazardous Materials Safety Administration held a workshop for scientists and regulators to work toward a consensus on the newly-realized dangers posed by volatile chemicals known as hydrocarbons — including propane, butane and ethylene — at large LNG plants. A spokesman for the federal agency said there’s no timeline for a decision on new regulation.

The chemicals play two roles in the Tacoma plant. They’re stripped out of the gas that’s piped in to make LNG. They’re also to be used in the Tacoma plant’s refrigeration system. That system could have been designed to use nitrogen, which doesn’t explode, as is done in other modern LNG plants, experts said. PSE spokesman H. Grant Ringel said the utility chose to use hydrocarbons instead of nitrogen to chill more efficiently.

If hydrocarbons leak or spill, the gases can form a cloud that — unlike an LNG cloud — can explode if ignited in an open space. An explosion at an LNG plant can have a cascading effect if it creates a force powerful enough to damage other parts of the plant, from the 8 million gallon LNG tank to the piping, said Jerry Havens. He is a chemical engineering professor at the University of Arkansas who helped create the federal government’s long-used computer models for LNG vapor cloud dispersion.

Havens said safety studies he has examined of LNG plants, including Tacoma’s, do not take into account the possibility of a high-powered explosive force a cloud of leaked hydrocarbon gas could create, though he said he did not have enough specific data about the Tacoma facility to calculate the potential risk if there was an explosion.

PSE’s plant siting study shows a 9,700-gallon tank of refrigerant liquid and a 4,000-gallon tank for hydrocarbons removed in gas purification. Those tanks are to be buried in sand. Leaks from them were not part of the series of leak studies done on other parts of the plant, though a break in the refrigerant pipeline was. Tacoma’s fire chief said he would use the “reasonable standards” now on the books for hydrocarbons to evaluate them.

Even at the brink of construction starting, several aspects of the plant’s long-term future remain unsettled.

Nearly half the LNG the plant can produce is earmarked for sale to customers that the company doesn’t have yet. It’s not known if the new customers would be other shipping companies or land-based concerns. Potential customers that PSE officials have discussed include Carnival Cruise Lines and Washington State Ferries.

Selling to a marine company would involve building a new waterfront facility to pump fuel onto ships or fuel-bunkering barges, whether as an extension of the TOTE dock or elsewhere. Hogan said PSE plans to have the buyer of its gas take responsibility for building a fueling setup. Selling to a land concern would mean trucking out the LNG, which is not currently transported by rail.

If built, the plant is projected to meet PSE’s peak-day needs for some time while the area’s population and demands grow. According to the siting study, the system projects to have a gas deficit equivalent to about 2.4 million gallons of LNG on peak days by 2026, making the 8 million gallon tank a sufficient resource.

But its industrial use would add to the area’s demand for piped-in natural gas. A consultant’s report filed in September with the state Utilities and Transportation Commission said the gas system would “need additional pipeline capacity within the next several years.”

The study said that if larger LNG facilities for export or methanol projects — two planned for elsewhere remain alive — are built, “a new greenfield pipeline would be required with the ability to move up to 2 to 3 billion cubic feet per day and possibly greater quantities.”

The study notes that gas pipeline expansion projects “would be challenged by environmentalists and may be delayed based on the history of recent pipeline projects in the Northeast U.S.”

It does not take into account what is anticipated to be a more pipeline-friendly regulatory process implemented in Donald Trump’s presidency.

Derrick Nunnally: 253-597-8693, @dcnunnally