BP RELEASES DATA ON ECONOMIC POTENTIAL OF LNG FACILITY, RECOGNIZES LNG SAFETY RECORD AND BENEFITS OF BAY CROSSING PROJECT
April 14, 2005 

 
Galveston, Texas – April 14 – BP said today related to an appearance before a joint session of the Galveston City Council and the Port of Galveston Wharves Board that its proposed LNG facility on Pelican Island at Galveston would create hundreds of jobs and millions of dollars in local economic impact during the construction period.  As an example, BP anticipates the creation of 666 direct and indirect jobs in Galveston in year two of construction and an estimated $12.5 million in local spending.   

Providing preliminary data from an economic impact study conducted by an area economics firm, the company said that Galveston County could see nearly $35 million in spending in the second year of plant construction, and the greater Houston region could experience more than $130 million in residual economic benefit from the construction of the site. 

BP has said it intends to invest around $600 million to build a liquefied natural gas facility at Pelican Island, to be called Bay Crossing.  For every $100 million of taxable valuation, the company estimates that the proposed LNG facility will provide the Galveston area tax district $3 million, including about $1.5 million to the Galveston Independent School District, $540,000 for the City of Galveston, $628,000 for Galveston County, and $200,000 for Galveston College.    

In remarks before the City Council and the Wharves Board, BP Bay Crossing Project Director Bob Boyce said, “based on the preliminary results of our Economic Impact Study, the proposed LNG terminal will provide a solid economic base for decades to come.”  Boyce also said that “The Port will receive between $2 million and $2.75 million in revenue from vessel fees each year.”  

Boyce said BP recognized that the recent accident at Texas City has “heightened community concerns about the safety and security of our proposed LNG regasification terminal.  While the investigations at Texas City proceed, I want to point out that refining and LNG regasification are very different processes.   

“Refining operations are much more complex, require more people and equipment, and use higher temperatures and pressures in the processes,” he said.  “A refinery makes many products, and tailors products to different markets at different seasons, which requires variations in the processes during a year.  In contrast, LNG regas terminals have one primary process; that is to turn LNG into natural gas by heating the LNG. This process does not vary throughout a year.” 

Boyce noted “the good safety record of LNG shipping and regasification operations throughout the world.  In nearly 40,000 LNG vessel voyages over the last 30-40 years there has been no loss of LNG from the on-board containment tanks.  In almost 25 years there has been no loss of life aboard an LNG vessel or at a regasification terminal due to any loss of LNG containment or explosion.”  

Boyce said that “BP has more than 25 years of experience with LNG, producing it in places like Trinidad and Indonesia, shipping it around the world, and regasifying it, for instance, at our joint venture regas terminal in Bilbao, Spain.”  

Boyce said the driver for an LNG terminal for Galveston and Pelican Island is the increasing demand for natural gas in the United States and the strong market that exists in this region.  “We believe Galveston should want to be part of and benefit from the growing new LNG economy in Texas,” he said. 

Boyce pointed out that the ‘Galveston Comprehensive Plan – A Shared Vision for Galveston Island,’ calls for expansion of Port activity and intensified use of currently underutilized and idle Port facilities.  “It recommends the redevelopment and improvement of facilities at the Port of Galveston, including industrial activities related to the oil and gas industry,” he said.   

“BP’s proposed LNG terminal fits into this vision for Galveston’s future,” said Boyce.   

Boyce also said BP analyzed sites for a potential LNG terminal and Pelican Island was most suitable.  “It is remote – a mile and a half and two miles away respectively from the nearest neighbors, completely surrounded by an Army Corps of Engineers dredge spoils site that will be active for the next 50 years and easily accessible to berth an LNG vessel.” 

Boyce countered a number of claims made by opponents of the BP project.  “Perhaps most distressing is the blatant fear-mongering about the potential of an LNG accident,” he said.  “It appears that to make their best case, some have assumed the worst possible combination of events and bundle these up into a worst imaginable scenario which is unsubstantiated and in defiance of much of the physics associated with LNG, or of LNG ships or facilities.  Prevention and mitigation measures which can substantially reduce risk of any loss of containment and fire are being completely ignored.”    

“First of all, LNG is not explosive,” said Boyce.  “It does burn when ignited given the right gas to air ratio, but it burns back to its source.”  

“Secondly, we commend to you the recent study conducted by the Sandia National Laboratories which deals with the potential for large LNG spills from ships. It is underpinned and substantiated by good science applied by experts.” 

Boyce said that “safety and security will be BP’s central focus.  LNG is shipped in specially built double hulled ships with a containment system more than six feet in width.  And on land, current new construction LNG tanks are typically a full containment design of 9% Nickel steel, with a concrete outer tank and top.”  

Boyce said that “BP is confident that our proposal for Pelican Island is good for Galveston.  We will continue to provide information to local citizens on the proposed Bay Crossing LNG project as we go forward with our preparation of a FERC application, and we welcome any opportunities to meet with local citizens and community groups to address your concerns.” 

Tables and Charts Related to Preliminary Results of Economic Impact Study

Conducted by Robert F. Hodgin, Ph.D. (University of Houston – Clear Lake) and

Roberto Marchesini, Ph.D., both of Southwest Business Research, 17014 Chapel Park Way, Houston, TX 77059 

BP LNG Business Volume Impact by Geography 

LNG Terminal

BP LNG Job and Personal Income Impact by Geography

*Year 2004 dollar values in millions.  Amounts cannot be added across categories.