The Long Island Association (LIA), a prominent business group on Long Island, NY, issued the following statement Wednesday on the Broadwater Energy LNG Terminal proposal:
"It is clear that for its long-term economic health Long Island will need new energy sources and supplies for power generation as well as growing residential, business, and institutional uses. While Long Island should put greater emphasis on conservation and the use of alternative and renewable sources of energy, it is not likely that the region's energy needs can be satisfied by those methods alone.
"Because natural gas is the most benign of the fossil fuels in terms of its environmental impact, and because it is likely that the replacement or re-powering of the region's aging electric generating plants likely will require additional natural gas, Long Island's reliance on natural gas will increase. According to the New York State Energy Research and Development Authority, the New York System Operator, and most informed experts, including former Federal Reserve Chairman Alan Greenspan, North American supplies of natural gas are expected to diminish over the next few decades and there is expected to be even greater competition for those supplies due to increased energy consumption in this hemisphere.
"As a result, there clearly is a need for Long Island to diversify and improve its access to new supplies of natural gas to ensure that there is a reliable, economically efficient, and stable supply to meet the region's future demand. As a practical matter that means that our region needs more liquefied natural gas (LNG). The only way to transport natural gas to Long Island from more distant global sources, where it is in plentiful supply, is in LNG tanker ships.
"Broadwater Energy proposes to construct at its expense and risk a terminal that would provide the region with a new supply of LNG. The Broadwater proposal should be considered dispassionately, balancing the region's long-term energy needs with its legitimate environmental and safety concerns.
"A persuasive study conducted for LIPA indicates that there could be a $10 billion direct economic benefit to New York City and Long Island area rate- and taxpayers over an initial 10-year period associated with the 1bcf/day supply of LNG that Broadwater would provide. That would have a significant positive effect on the region's economy.
"Broadwater's Draft Environmental Impact Statement (DEIS) raises a variety of environmental and marine issues that have been identified by Federal and State regulatory agencies. Those issues must be fully and satisfactorily resolved before the Federal and State governments issue permits allowing the Broadwater project to proceed. Additionally, careful provision should be made by the United States Coast Guard to ensure that Broadwater-related shipments of LNG are scheduled at times and using routes that minimize disruption to ferry service, private boating, and commercial fishing operations, especially in the area of The Race.
"Various organizations and governmental agencies have raised concerns about the security of the Broadwater LNG terminal and the LNG delivery process. Any security issues found to be of concern by the United States Department of Homeland Security, the United States Coast Guard, and all relevant New York State law enforcement agencies must be resolved to the satisfaction of those agencies before the Federal and State governments issue permits allowing the Broadwater project to proceed.
"In addition to the satisfactory resolution of the environmental, marine, and security issues, LIA's support of the Broadwater project would depend upon the satisfaction of the following conditions:
- Because Long Island is to bear most of the burden of having the Broadwater terminal off its shore, Long Island should realize special offsetting economic and environmental benefits from the project.
- The first such benefit should come in the form of long-term reductions in the cost of producing electricity on Long Island. That must be accomplished through the execution of long-term contracts between Broadwater or its agent and LIPA for the sale to LIPA of natural gas sufficient to meet LIPA's current need for natural gas, plus any incremental need that may grow out of the re-powering of any existing electric generation plant, or the construction or any new generation plant, at a price significantly discounted from the Transco Zone 6 index price, which should be negotiated by LIPA.
- Broadwater Energy must also provide to Long Island for the duration of the operating period of the project:
--an Environmental Benefit Fund sufficient to significantly benefit environmental conservation throughout the entire region,
--a Commercial Fisherman's Fund, sufficient to compensate the loss of current revenue by any commercial fishing operation located on Long Island,
--a Community Benefits Fund, sufficient to provide meaningful support on an annual basis to Long Island's not-for-profit community,
--a Safety and Security Fund, sufficient to fully compensate any county or municipal entity for the direct and indirect costs associated with providing security for the Broadwater terminal or any of its associated operations,
--Payments In Lieu of Taxes (PILOTS), sufficient to provide the Town of Riverhead with substantial additional revenue."
"Long Island's need for additional supplies of natural gas is growing and will continue to grow in the future. We will need more natural gas to generate more electricity and warm our homes. Because North American supplies of natural gas are likely to diminish over time, Long Island will have to rely on liquefied natural gas to meet our needs. Broadwater Energy proposes to bring LNG directly to the Long Island region, which, under certain conditions, can both meet our regional needs and provide Long Island with significant economic advantages.
"The LIA's support of the Broadwater Energy proposal is conditional. All environmental and security concerns identified by the appropriate Federal and State agencies must be resolved to the satisfaction of those agencies. Then, because Long Island will bear most the burden of having the Broadwater LNG terminal off our shore, our region should realize special offsetting economic and environmental benefits from the project.
"Broadwater must contract with LIPA to supply natural gas for electric power generation at a significantly discounted price. That will produce savings on electric rates for all Long Island homeowners and businesses. In addition, Broadwater must establish and maintain and Environmental Benefit Fund, a Commercial Fisherman's Fund, a Community Benefits Fund, a Safety and Security Fund, and it must also make payments in lieu of taxes to the Town of Riverhead.
"Assuming that all of these conditions are met, and that Broadwater agrees to these conditions in writing following negotiations with the LIA, the LIA will recommend to the Federal Energy Regulatory Commission and to New York State that the Broadwater Energy proposal to locate a liquefied natural gas terminal in Long Island Sound be approved."