November 01, 2014

A match made in heaven? Co-development on the Outer Continental Shelf off the coast of New York

Benjamin Nussdorf

The renewable and nonrenewable energy industries in the United States have an opportunity to create a unique project in the coming years, provided that differing regulatory agencies can work together to ensure success. Liberty Natural Gas LLC has proposed a project known as Port Ambrose, a deep-water liquefied natural gas (LNG) terminal, which would import natural gas to serve the greater New York City market. Port Ambrose would reduce pricing spikes in this market and would satisfy demand that is currently outpacing the existing infrastructure. The proposed Port Ambrose site is roughly 19 miles off the coast of Long Island and about 29 miles from New Jersey. The proposed terminal would link up with an existing offshore gas pipeline located about 22 miles away. Port Ambrose’s regulators include the Maritime Administration at the U.S. Department of Transportation, the U.S. Coast Guard, and the U.S. Department of Energy.

What makes Port Ambrose unique is that its proposed location lies within a renewable energy corridor identified by the Bureau of Ocean Energy Management (BOEM) at the Department of the Interior—known as the North Atlantic Planning Area. Specifically, both projects plan to occupy or utilize portions of Outer Continental Shelf (OCS) blocks 6708, 6709, 6758, and 6657. The National Renewable Energy Laboratory has determined the average wind speed in the call area to be approximately 9 meters per second, meaning that this area has the potential to be a significant producer of offshore wind energy. Because of the renewable energy designation and wind speed in the area, the New York Power Authority, the Long Island Power Authority, and Consolidated Edison (“Collaborative”) proposed a 700-megawatt wind farm project in this same area. The proposed wind farm would cover 81,500 acres in between two established shipping lanes. BOEM is currently analyzing the environmental impacts of the proposed wind farm project and engaging in public interest determinations for issuing the lease. Consequently, allocating the site for exclusive use by Liberty Natural Gas LLC for the LNG terminal could potentially impair or inhibit the development of a significant wind energy resource that is important to both the states of New York and New Jersey. Alternatively, issuing a lease to the Collaborative could potentially impair the siting and development of the Port Ambrose LNG terminal.

Mutually exclusive?

It is currently unclear whether the development of the Port Ambrose LNG terminal and the Collaborative wind farm project are mutually exclusive. What is clear is that the same stretch of sea and the projects in question need approvals for siting, development, licensing, and National Environmental Policy Act approvals from at least four cabinet-level agencies (the Departments of Energy, Transportation, Homeland Security, and the Interior). Other agencies have regulatory requirements for both projects, but the four agencies mentioned would have principal authority necessary to approve the projects. The projects have competing interests and arguably very little overlap in terms of their goals and requirements. Both projects provide an opportunity for agency collaboration and cooperation and could serve the people of New York and New Jersey with both renewable and nonrenewable energy, produce energy from multiple sources, and, consequently, ensure stability and reliability.

In order to accommodate both projects, the federal agencies with regulatory authority should ensure that the leases associated with the Collaborative wind farm project and the Port Ambrose LNG terminal include conditions to ensure that one project will not impair the siting and development of the other. Both projects should work to use the same transmission corridor to deliver their products to markets while reducing burdens and potential interference with the established shipping lanes entering the Port of New York. Federal officials should consider appointing a working group to ensure that the two project development proposals do not hinder or cause problems with each other. Only through dedicated resources and a focus on co-development can both projects come to fruition.

President Obama believes the United States needs an “all of the above” energy strategy. Working to ensure the development of both the Port Ambrose LNG terminal and the Collaborative wind farm project would be consistent with such a policy and would reduce potential wasted resources on the outer continental shelf. With effective cooperation, collaboration, and stipulations within the leases for both projects, the development of the Outer Continental Shelf off the coast of New York can be a model example of “all of the above” energy development to increase renewable and nonrenewable energy reserves.

Benjamin Nussdorf

Benjamin Nussdorf is a senior regulatory advisor with the Department of Energy, Office of Fossil Energy, and professorial lecturer in Law at the Washington College of Law and at George Washington University Law School. The views expressed in this article are those of the author and do not necessarily reflect the views of Department of Energy or the U.S. government.