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Defining Community and Economic Benefits Associated with Energy Infrastructure Projects: LNG Case Study. Overview and Major Themes, I. “Perception is reality” with regard to public acceptance of or rejection of major projects

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Defining Community and Economic Benefits Associated with Energy Infrastructure Projects: LNG Case Study


Overview and major themes i
Overview and Major Themes, I Energy Infrastructure Projects: LNG Case Study

  • “Perception is reality” with regard to public acceptance of or rejection of major projects

    • Variations across different stakeholder groups on different issue dimensions

  • Certain issues dimensions are “emotive”

    • Wetlands, fisheries as “irreplaceable natural endowments” imbued with tradition


Overview and major themes ii
Overview and Major Themes, II Energy Infrastructure Projects: LNG Case Study

  • Perceptions of safety and security are complex

    • Tend to follow other concerns or come into play if net benefits are not perceived

  • Larger jurisdictions can clearly perceive energy supply benefits

    • Relationships to other stakeholder groups can be complex


Overview and major themes iii
Overview and Major Themes, III Energy Infrastructure Projects: LNG Case Study

  • “Psychology” of energy security

    • Complexity of commodity markets and basis differentials

    • Diffuse benefits (concentrated costs)

  • Benefits discerned relative to emissions

    • Both local/regional air quality and broader, GHG strategies


Overview and major themes iv
Overview and Major Themes, IV Energy Infrastructure Projects: LNG Case Study

  • Implications for cost-benefit analysis

    • Valuing intangible goods, heuristic valuations, subjective scorings, future generations

  • Implications for other critical infrastructure projects

    • Regulatory process, public intervention, public acceptance, issue domains

  • Considerations not discerned

    • Broader energy security themes


Natural gas industry performance
Natural Gas Industry Performance Energy Infrastructure Projects: LNG Case Study


Natural gas industry performance1
Natural Gas Industry Performance Energy Infrastructure Projects: LNG Case Study


Natural gas industry performance2
Natural Gas Industry Performance Energy Infrastructure Projects: LNG Case Study


Natural gas industry performance3
Natural Gas Industry Performance Energy Infrastructure Projects: LNG Case Study


Natural gas industry performance4
Natural Gas Industry Performance Energy Infrastructure Projects: LNG Case Study


Lng case study outline
LNG Case Study Outline Energy Infrastructure Projects: LNG Case Study

  • Objectives

  • Outcomes

  • Conclusions

  • Approach

  • Findings and implications for new projects

  • Path forward


Study objectives
Study Objectives Energy Infrastructure Projects: LNG Case Study

  • Increase clarity on local benefits for host communities, investors as well as larger market areas and national needs

  • Identify host community “costs”

  • Incorporate practical considerations stemming from LNG safety and perceptions of risk

  • Improve the knowledge base for presenting long term net benefits associated with international LNG trade well beyond the development project and for both new and existing facilities


Study outcomes
Study Outcomes Energy Infrastructure Projects: LNG Case Study

  • A tool for identifying net benefits from LNG and other facilities

    • Specific goal: develop an approach flexible enough for use on other large energy infrastructure projects, US and abroad

    • Tool kit includes: “check list” for assessment of net benefits for use by stakeholders for both external and internal analysis and communication


Key conclusions
Key Conclusions Energy Infrastructure Projects: LNG Case Study

  • Infrastructure siting process is dominated by actions to address stakeholder concerns and tradeoffs

  • Local and waterway community benefits are key for project success as these stakeholder groups face unique tradeoffs

  • Clear, early identification of benefits that target specific needs, concerns of stakeholders facilitate progress and dialogue

  • Successful infrastructure siting requires dialogue and consideration of multiple dimensions among multiple groups

  • No one dimension dominates stakeholder perceptions

  • Sharing in the benefits of an infrastructure project is paramount to project progress

  • A stakeholder group cannot perceive itself as a loser in the process


Tool kit check list
Tool Kit – Check List Energy Infrastructure Projects: LNG Case Study

  • Sources of and types of information

  • Issues of interest (issue dimensions)

  • Stakeholder group identification based on common interests and participation

  • Methods to capture, measure intensity of stakeholder postures towards proposed infrastructure project


Sources of information
Sources of Information Energy Infrastructure Projects: LNG Case Study

  • Data collection from sample of projects using the federal regulatory process as framework

    • US Federal Energy Regulatory Commission (FERC) for onshore licenses and US Maritime Administration/US Coast Guard (MARAD/USCG) for offshore licenses

  • Approach allows for data collection from “observable” and active stakeholders

    • Bias

    • Measuring, scoring intensities


Issue dimensions
Issue Dimensions Energy Infrastructure Projects: LNG Case Study

Information was collected for key issue dimensions identified from the regulatory process and based on pre-study surveys and analysis, including input from direct observation and outside sources


Stakeholders
Stakeholders Energy Infrastructure Projects: LNG Case Study

  • Stakeholders groups:

    • Are affected by LNG import facilities and activities in different ways

    • Have prescribed roles in the infrastructure siting/regulatory process

  • Stakeholders were disaggregated into distinct groupings based on combination of the two factors above


Immediate site host community
Immediate Site-Host Community Energy Infrastructure Projects: LNG Case Study

  • Usually adjacent to the site and a sub group of the local or greater communities

  • Key concerns: emissions, safety, displacement

Immediate Site Community


Waterway community
Waterway Community Energy Infrastructure Projects: LNG Case Study

  • Usually adjacent to or near the waterway or have interests in the waterway designated for LNG tanker traffic and related marine operations

  • Includes offshore facilities for marine projects and coastal crossings for pipelines

  • Distinguished from immediate site-host community to capture waterway related issues such as: waterway traffic and security, endangered species protection and fisheries and wetlands

  • CZMA considerations

Waterway Community


Local community city county

Can be influenced by perceptions of safety and security risk associated with potential consequences from large scale incidents

More prominent issues include: surface traffic, tax revenues (related to the project or potential changes in real property values), local emergency response preparedness, access to natural gas (or perceptions that intention is to “export”)

Political jurisdictions may have decision making power on site leases and local permits

Local Community (City/County)

Local Community


Greater community
Greater Community associated with potential consequences from large scale incidents

  • Encompasses other local stakeholders but distinct influence associated with political jurisdiction

  • Receives some direct and indirect revenues (tax base, industrial activity – jobs, local purchases, tax revenues)

  • Can be affected by changes in energy prices

  • Has regulatory or permit authority such as governor veto power on offshore terminal licenses and CZMA

Greater Community


Waterway Community associated with potential consequences from large scale incidents

Immediate Site Community

Greater Community

Local Community


Waterway Community associated with potential consequences from large scale incidents

Immediate Site Community

Greater Community

Local Community


Key results and findings
Key Results and Findings associated with potential consequences from large scale incidents

  • Findings, conclusions derived from comparative analysis for sample of 20 projects

  • Summary hypotheses tested once data collection was complete

  • Project groupings

    • Licensed/Non-licensed

    • Onshore/offshore

    • By region:

      • Pacific Northwest, California, Gulf Coast, Florida Northeast


Licensed projects
Licensed Projects associated with potential consequences from large scale incidents

Safety/Security

5

Other/Intangibles

Wetlands

4

3

Property Value

Fisheries

2

1

Air Emissions

Energy Costs

National Community

Contributor to energy security

Source of fuel of choice

External Interest Group

Active with regard to coastal environmental issues, safety and security.

Immediate Site Community

Concern about the loss of property value and safety and security

No detectable perceived benefit.

Waterway Community

Concern about the impacts on fisheries and related jobs; property value; safety and security

Minor perceived benefit on energy costs and tax revenue

Greater Community

Considerable positive impact on energy costs and employment

Concerns on impacts on fisheries

Local Community

Considerable positive impact on job creation and tax revenue

Minor perceived benefit on energy costs

Concerns about increased congestion during construction

Employment

Roads

Taxes


Non licensed projects
Non-Licensed Projects associated with potential consequences from large scale incidents

Safety/Security

5

Other/Intangibles

Wetlands

4

3

Property Value

Fisheries

2

1

Air Emissions

Energy Costs

Local Community

Positive impact on job creation, tax revenue and air emissions

Minor perceived benefit on energy costs

Concerns about safety and security and property value

Greater Community

Considerable positive impact on energy costs and minor on employment

Rising concerns on impacts on fisheries, wetlands and loss of property value. Safety and security concerns are present.

National Community

Contributor to energy security

Source of fuel of choice

Rising environmental impact concerns on coastal areas and marine habitat

External Interest Group

More active with regard to coastal environmental issues, safety and security.

Waterway Community

Rising concern about the impacts on fisheries and related jobs; property value; safety and security during transit;

Diminishing perceived benefits

Immediate Site Community

Concern about the loss of jobs, property value and safety and security

No detectable perceived benefit.

Employment

Roads

Taxes


Onshore vs offshore
Onshore vs Offshore associated with potential consequences from large scale incidents

Safety/Security

5

Other/Intangibles

Wetlands

4

3

Property Value

Fisheries

2

1

Safety/Security

5

Air Emissions

Energy Costs

Other/Intangibles

Wetlands

4

3

Employment

Roads

Property Value

Fisheries

2

Taxes

1

Air Emissions

Energy Costs

Employment

Roads

Taxes


Northeast projects
Northeast Projects associated with potential consequences from large scale incidents

Safety/Security

5

Other/Intangibles

Wetlands

4

3

Property Value

Fisheries

2

1

Air Emissions

Energy Costs

National Community

Contributor to energy security

Source of fuel of choice.

Concerns about impacts on marine habitat.

External Interest Group

Active with regard to coastal environmental issues, but highly mobilized on safety and security.

Immediate Site Community

Concern about safety and security and impact on fisheries.

No detectable perceived benefit.

Waterway Community

Concern about the impacts on fisheries and related jobs; property value; tanker traffic and safety and security

No perceived benefits.

Greater Community

Recognition of impact on energy costs and need for natural gas.

Rising concerns on impacts on fisheries, related jobs and property value. Concerns at the regional and state level about safety and security issues.

Local Community

Positive impact on job creation and tax revenue.

Clear recognition of benefit on energy costs and fuel choice.

Concerns about coastal environment and safety and security and road congestion

Employment

Roads

Taxes


Northeast projects1
Northeast Projects associated with potential consequences from large scale incidents

  • Offshore projects that use considerable already existing local distributed storage

  • A permanent FSRU could face opposition unless remote but a seasonal FSRU for continuous supply during peak seasons will likely not

  • Use of inland waterways can become problematic


Pacific northwest projects
Pacific Northwest Projects associated with potential consequences from large scale incidents

Safety/Security

5

Other/Intangibles

Wetlands

4

3

Property Value

Fisheries

2

1

Air Emissions

Energy Costs

Local Community

Positive impact on job creation, and tax revenue.

Transit community concerns.

Greater Community

Positive impact on energy costs and concerns on the impact on fisheries.

National Community

Contributor to energy security.

External Interest Group

Supportive due to decommissioning of dams, active on safety and security

Waterway Community

Rising concern about the impacts on fisheries and related jobs; property value; safety and security during transit.

Immediate Site Community

Concern about property value and safety and security.

No detectable perceived benefit.

Employment

Roads

Taxes


Pacific northwest projects1
Pacific Northwest Projects associated with potential consequences from large scale incidents

  • Small storage and regasification facilities

  • Serve local markets in areas where electricity will need to be generated thermally due to dam decommissioning

  • Excess volumes could eventually target other markets (via pipeline or wire)


Gulf coast projects
Gulf Coast Projects associated with potential consequences from large scale incidents

Safety/Security

5

Other/Intangibles

Wetlands

4

3

Property Value

Fisheries

2

1

Air Emissions

Energy Costs

Employment

Roads

Taxes


Central western gulf coast projects
Central/Western Gulf Coast Projects associated with potential consequences from large scale incidents

  • Large regasification facilities with associated storage (LNG or underground natural gas) near existing pipeline takeaway infrastructure

  • Preference for onshore projects to achieve economies of scale; potential overbuilding in the region

  • Possible constraint associated with limits to tolerance for further, intense coastal industrial development


Florida projects
Florida Projects associated with potential consequences from large scale incidents

Safety/Security

5

Other/Intangibles

Wetlands

4

3

Property Value

Fisheries

2

1

Air Emissions

Energy Costs

Employment

Roads

Taxes


Florida projects1
Florida Projects associated with potential consequences from large scale incidents

  • Offshore projects face environmental challenges due to pipeline construction

  • Novel construction techniques, if economically viable, may help with mitigation

  • Onshore projects near busy and congested ports could be supported as State shifts toward natural gas

  • Extension to greater Southeast as mid-term coal projects are displaced by natural gas


California projects
California Projects associated with potential consequences from large scale incidents

Safety/Security

5

Other/Intangibles

Wetlands

4

3

Property Value

Fisheries

2

1

Air Emissions

Energy Costs

Employment

Roads

Taxes


Hypothesis tests
Hypothesis Tests associated with potential consequences from large scale incidents

  • Refer to separate handout


Targeted benefits offered
Targeted Benefits Offered associated with potential consequences from large scale incidents

  • Offer to receive option to purchase natural gas at market rates

  • Regional promotion of “energy hub” and basic industries associated with LNG project

  • Commitment to invest in social development plan with local stakeholder groups

  • Commitment to invest in social development plan with local stakeholder groups

  • Financial aid and sponsorship (restoration and maintenance) to local lighthouse listed on National Register of Historic Places

  • Closing bonus to local government at groundbreaking

  • Direct discount to local community

  • Reductions in energy costs to local/state/regional economies


Cost to benefit conversion
Cost-to-Benefit Conversion associated with potential consequences from large scale incidents

  • Commitment to use US crews on LNG ships

  • Grants to offset fisheries impacts and for regional marine studies

  • Availability of natural gas to displace other fossil fuels and associated air emissions

  • Natural gas combustion to revaporize LNG avoiding ORV

  • Use air vaporizers to reduce both air emissions and avoid seawater associated impacts

  • Build LNG terminals at existing industrial facilities where waste heat can be used for revaporization

  • Use tunnels or other conduits for offtake natural gas pipelines to avoid impacts

  • Natural gas for power generation to displace dams

  • Net wetlands additions including donations for preserves

  • Residential property compensation and replacement


Going forward discussion
Going Forward: Discussion associated with potential consequences from large scale incidents

  • Application to other large energy infrastructure projects

  • NEPA and the regulatory process

    • Canada project comparisons

  • Perceptions of risk and risk communication

  • Public/constituent views on energy, energy supply, energy infrastructure


Us lng cargo receipts
US LNG Cargo Receipts associated with potential consequences from large scale incidents

Sources: U.S. EIA, World Gas Intelligence


For more information
For More Information: associated with potential consequences from large scale incidents

www.beg.utexas.edu/energyecon/lng

Houston forum: March 27, 2008


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