prospects slim for globally traded lng market sandia … slim for globally traded lng market ... it...

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Prospects slim for globally traded LNG market

Sandia LNG study changes landscape for terminal siting

Advances in small-scale LNG technology provide user options

Copyright by PennWell Corporation

ISSUES, TRENDS, TECHNOLOGIES

Amid little fanfare, the US Department of Energy (DOE) in December 2004 released the

results of a Sandia National Laboratories study on the potential effects of a large LNG release over water.1 But all govern-mental and private stakeholders in the LNG debate quickly realized that the Sandia study changed the landscape for

evaluating public safety issues surround-ing LNG terminals.

The study addresses difficult ques-tions about LNG spill risks in an era of international security tensions and pro-vides the most solid science platform yet for evaluating the risks of LNG transpor-tation. At press time, policymakers were still evaluating and applying the study’s

conclusions to new and existing LNG terminals.

The US Coast Guard (USCG) is integrating the Sandia study into its devel-opment of incident action plans for LNG vessel transits, which includes the required risk-mitigation measures. The US Federal Energy Regulatory Commission, with jurisdiction over the siting of onshore LNG terminals, has promised to review LNG projects under the microscope of new science as it emerges. It now appears to be folding Sandia into its detailed siting review process. And state and local govern-ments are assessing the study’s implications for LNG emergency preparedness.

The Sandia study’s recommenda-tions, therefore, are fast becoming de rigueur components in the risk-analysis processes of various stakeholders, from federal agencies to local firefighters.

It remains to be seen how the study ultimately will affect the political debate over LNG, and uncertainties remain about how agencies will apply the study’s

Sandia LNG study changes landscape for terminal sitingJacob DweckSteven SparlingDavid WochnerSutherland Asbill & Brennan LLPWashington

Estimated impact of intentional LNG breaches, spills on public safety, property1

Event Potential ship damage, spill Potential hazard

Potential impact on public safety2

~500 m 500-1,600 m >1,600 m

Insider threat or hijacking

Intentional, 2-7 sq m breach and medium-to-large spill

• Large fire High Medium Low

• Damage to ship High Medium Low

• Fireball Medium Low Very low

Intentional, large release of LNG



• Vapor cloud fire High High-medium Medium

Attack on ship

Intentional, 2-12 sq m breach

and medium-to-large spill



• Fireball Medium Low Very low

1 Very low – little or no property damage or injuries; Low – minor property damage and minor injuries; Medium – potential for injuries and property damage; High – major injuries and significant damage to structures. 2 Distance to spill origin, varies according to site. Source: Sandia Report, p. 54.


conclusions. As each project or facility will face its own set of unique questions, one thing seems certain: US decision makers are viewing LNG risks through a new, more exacting lens.

Empirical assumptionsThe Sandia study represents the

latest installment in a series of LNG hazard studies commissioned by the US government and industry stakeholders. As such, the study does not stand alone but complements and refines previous work, most notably a 2004 study com-missioned by FERC and conducted by ABSG Consulting Inc.2

Moreover, the importance of the Sandia study is best understood within the broader context of LNG hazard studies undertaken after Sept. 11, 2001. Several studies created a climate of uncertainty around the science models for LNG terminal projects.

These uncertainties arose from how the studies were conducted and being applied.3 The Sandia study, however, brings key differences that distinguish it as a critical enhancement to LNG spill modeling science:• The study consists of two major com-ponents, a causation study and a conse-quence study.

The causation study evaluates sce-narios, both accidental and intentional, that involve a breach of an LNG vessel’s cargo tank. The causation analysis allowed Sandia to develop empirical parameters for modeling effects and consequences.

In the consequence study, Sandia analyzed the assumptions and science models used to evaluate LNG spill con-sequences. It also offered general preven-tion and risk-mitigation suggestions.

Sandia stresses that it considers all the LNG release scenarios to be low-prob-ability events. While the DOE distributes the consequence study freely, the US government has classified the causation component as secret, in the interests of security. Subject to the requisite security clearance, however, federal and state offi-cials involved in LNG siting and vessel-transit evaluations, including those at the

USCG and FERC, have been briefed on the secret report in order to execute their responsibilities properly.• The Sandia study assumes generally greater damage to an LNG tanker from an intentional hull breach than regula-tory agencies have been using in their hazard models.

Specifically, FERC has previously assumed hole sizes of 1 m and 2.5 m in diameter, or about 0.79 and 4.9 sq m of area, respectively.4 The Sandia analy-sis—based on the results of the causa-

tion study—recommends assuming hole sizes ranging from 2 sq m to 12 sq m, with a nominal hole size of between 5 and 7 sq m. • Previous LNG hazard models assumed a spill would come from only one con-tainer aboard an LNG tanker. Critics of this approach argued that the heat of an LNG fire could lead to secondary releases from adjacent containers.

Sandia considered this possibility and concluded that LNG vapor trapped within a tanker vessel indeed could

Sandia study defines hazard zones, consequences

Several practical effects emerge from Sandia’s LNG hazard study, but the most immediate of these is the study’s three-zone approach to defining hazards and con-sequences from an intentional, large LNG spill over water and the resulting fire.

This hazard-zone model will help decision makers identify the areas at greatest risk, plan mitigation measures, and develop emergency response plans.

• In the first two hazard zones, the biggest danger is thermal radiation gener-ated by an LNG pool fire. The heat would be greatest in Zone 1, defined as the area within 500 m of an LNG vessel. Populations and structures within this zone would experience “severe negative impacts,” according to the Sandia study.

As a result, the study recommends the “most rigorous deterrent measures” within Zone 1 areas, including strict vessel security and control, and waterway traffic management. It also recommends careful evaluation and coordination of port security and emergency-response stakeholders.

Sandia also recommends using computational fluid dynamics (CFD) analysis to assess site-specific Zone 1 conditions and develop more precise and effective prevention and mitigation measures.

• The study defines Zone 2 as the area between 500 m and 1.6 km of an LNG vessel. The consequences of an LNG fire would be lower within this zone than in Zone 1, but injuries and property damage still could occur.

Sandia recommends that security and safety measures for Zone 2 focus on vapor dispersion and fire hazards, with strategies to include emergency response plan-ning and community education and warnings to ensure that inhabitants under-stand the risks and precautionary measures.

• Zone 3 is the area farther than 1.6 km from an LNG vessel. While the effects in Zone 3 of a pool fire are significantly minimized, the chief danger is the possibil-ity of a vapor cloud “burn back” to the source of a spill.

For this zone, the study recommends emergency response measures aimed at dealing with vapor cloud dispersion, as well as public education planning similar to that for Zone 2.

LNG stakeholders are now applying Sandia’s three-zone model to existing and planned LNG terminals and shipping routes and, as a result, will re-evaluate the risks and adjust their plans accordingly.

The results of such analysis could pose difficult questions for some projects, but in general the Sandia model will yield fundamentally stronger public safety and security for the nation’s LNG infrastructure.


ignite and cause damage to the vessel or other cargo tanks. Such events, however, would most likely affect no more than two or three additional containers, and the main results would be to expand the size of an LNG fire by perhaps 20% to 30%, and to increase its duration.• The Sandia study yields a new approach to analyzing hazards to people and structures near an LNG spill and fire. Specifically the Sandia study defines three “hazard zones” with varying factors, consequences, and recommendations for each. (See accompanying sidebar on previous page and figure above.)• The ABSG study questioned the appropriateness of cutting-edge model-ing systems—specifically computational fluid dynamics (CFD)—to simulate the behavior of an LNG spill over water. Sandia, however, used CFD models and other advanced computer-modeling techniques to develop its science models and, furthermore, recommends using CFD models more “to improve analysis of site-specific conditions.”

Unlike previous studies, the Sandia study has not generated any meaning-ful criticism. This is attributable, in part, to the more advanced modeling approaches and empirical assumptions mentioned previously.

Additionally, the credibility of the study’s analysis is bolstered by Sandia’s reputation as a technically proficient research organization without apparent ties to stakeholder groups or political agendas.

Finally, the report itself addresses many controversial issues in a direct and useful way, and overall the report is heav-ily detailed and well documented.

As a result of these factors, the Sandia study provides the LNG industry with a stronger basis for evaluating hazards and recommending remedies. Using Sandia’s empirically derived assumptions in combi-nation with modeling techniques set forth in the ABSG study, the industry now has a strong set of LNG hazard models.

At the same time, however, the Sandia study does not model conditions at any

specific facilities or on specific routes. This leaves decision makers to apply the study’s estimates and suggestions to individual projects and shipping corridors.

Additionally, because the study’s cau-sation analysis is classified, its assumptions are difficult to verify and therefore leave room for questioning its conclusions.

CFD questionsThe Sandia study addresses several

controversial questions about evaluating LNG shipping hazards, including ques-tions about hole sizes and chain-reaction releases from adjacent tanks. It docu-ments its consequence-modeling ratio-nales in exhaustive detail.

The report includes Sandia’s analy-ses of several leading LNG-hazard stud-ies and describes the advanced modeling techniques Sandia chose for its indepen-dent consequence study.

Specifically, Sandia uses finite-ele-ment analysis and CFD for modeling many aspects of a spill scenario, including hull breach, LNG spreading, dispersion, and combustion. It uses a modified-ori-fice model to simulate tank-emptying and leakage between hulls, and it combines spill-leakage, fluid-flow, and fracture-mechanics codes to model structural damage to an LNG ship and cargo tanks.

However, the study’s use of CFD models creates new uncertainty for gov-ernment officials as well as LNG terminal developers—most notably about whether and how CFD analysis should be used to quantify specific risk factors better.

The earlier ABSG study addresses the question of CFD models by saying “they require significantly more effort to apply but provide little or no benefit” over simpler approaches when the goal is to predict heat flux at certain distances from the fire. The study notes, however, that CFD models can be effective in modeling “effects on objects engulfed in fire and in modeling fires with irregular geometry.”

The Sandia study takes that analysis a step further, applying CFD for its own models. The study suggests additional CFD analysis is warranted in cases where an LNG fire would have a potentially

Sandia's nominal hazard, consequence zones* Fig. 1

Significantly minimized fire risks; possibility of vapor “burn back”;measures focus on vapor dispersion and public education

Injuries from fire still possible; mitigation measures to focus on fire and vapor

dispersion and community education

*Use of concentric circles here is for representational purposes only and is not intended to depict the likely behavior of an LNG fire or vapor cloud. It is generally accepted that the actual shape of any such fire or cloud will be affected by such conditions as the direction of the LNG spill, land forms, wind factors, and waves.

Greatest thermal radiation; “severe negative impacts” to population and structures;

“most rigorous deterrent measures”

Spill occurrence

Zone 1

Zone 2

Zone 3

Zone 1

Zone 2

Zone 3


high impact on public safety and prop-erty and where terrain and structures would likely interact with LNG spill, dis-persion, vaporization, and fire hazards.

“CFDs…can be used to analyze cascading effects where hazards might induce additional failures and subse-quent fire hazards,” says the study.

Sandia explains that CFD modeling might be useful for studying and refin-ing mitigation techniques, such as vapor barriers, firebreaks, and water-spray countermeasures, especially in Zone 1 hazard areas. Further, the study says that, although CFD analysis probably is too complicated for widespread application, CFD modeling might be used to develop “correction factors” that can be input into simpler modeling systems, improv-ing their accuracy and effectiveness.

At the same time, however, Sandia warns that CFD analysis is only as good as the quality of the models used and that verified and validated models still must be developed to simulate “1) the dynamics of cryogenic liquids, including evaporation and spread on water, and 2) the mixing and burning of low temperature natural gas vapor in very large plumes.”

The Sandia study calls for CFD models to be developed, refined, and used to improve LNG-hazard analysis and mitigation measures. The Sandia study is not a rulemaking document, however, and Sandia has no authority to direct the industry or its regulators to pursue CFD modeling.

Thus far, neither FERC nor the USCG is requiring CFD modeling as part of regulatory proceedings, which raises questions about whether and how Sandia’s CFD recommendations might be applied. If and when regulators do require CFD, project sponsors need to know what models will be used, how they will be validated, and who will bear the potentially high costs of undertaking the analysis.

Until regulators begin requiring CFD models, however, those questions are likely to remain unanswered. In the meantime, DOE is sponsoring a project to develop and validate CFD analysis methods for

LNG spill and fire scenarios, a process that might take 2 years or more.

Until then, the industry and regula-tors will use the more traditional model-ing techniques described in the ABSG and Sandia studies to evaluate risks on a less sophisticated but more widely accepted basis.

Applying SandiaAlthough the Sandia study strength-

ens the science platform for evaluating LNG-shipping hazards, its application has raised new questions for LNG terminal operators, developers, and regu-latory agencies.

Opponents of LNG terminals already have begun using Sandia’s expanded hazard zones to challenge sit-ing decisions on safety grounds.5 Less clear is how regulators and local officials will integrate Sandia’s conclusions into their regulatory processes.

Specifically, the USCG’s applica-tion of the Sandia study is likely to result in additional conditions and mitigation measures for shipping routes to many facilities. LNG projects in Massachusetts and Rhode Island, for example, are facing USCG review under the new Sandia regime.

Additionally, FERC will use the Sandia study—and USCG recommen-dations that follow from it—in its own certification processes. FERC appears to have adopted Sandia’s analysis in its environmental impact statement processes, particularly as it applies to tankers moored at receiving terminals. As a result, FERC’s application of the Sandia study might result in new cer-tification conditions being imposed on terminal operators.

Finally, officials at the state and local levels will develop emergency-response plans using Sandia’s approach to defining hazard zones and eventually its recommendation to apply site-specific CFD analysis. As terminal operators par-ticipate in proceedings to enhance first-response planning, they will face new requirements and procedures affecting their operations and costs.

Each terminal site presents a unique set of factors, and the Sandia study will affect each site differently. The study’s effect on individual projects—and on the US LNG industry as a whole—will become better understood as agencies and officials integrate its conclusions into their decision-making processes.

The burden now is to ensure these processes appropriately address the safety and security needs at LNG sites. Applied correctly, the Sandia study will put the LNG industry in a strong position to expand in the US and maintain its exemplary safety record, even in an era of terrorism and geopo-litical instability. LNG

References1. Hightower, Mike, et al., Sandia National Laboratories, “Guidance on Risk Analysis and Safety Implications of a Large Liquefied Natural Gas (LNG) Spill Over Water,” Pub. No. SAND2004-6258 (unlimited release December 2004).

2. ABSG Consulting Inc., Consequence Assessment Methods for Incidents Involving Releases from Liquefied Natural Gas Carriers (May 13, 2004), available at FERC Docket No. AD04-6-000.

3. Dweck, Jacob, et. al., “FERC works toward LNG safety for US ports,” OGJ’s LNG Observer, Sept. 4, 2004, p. 8.

4. KeySpan LNG LP, FERC Docket No. CP04-223-000, “Draft Environmental Impact Statement” (Nov. 30, 2004) at 4-119 and 4-120.

5. For example, Weaver’s Cove Energy LLC (FERC Docket No. CP04-36-000), letter from Patrick C. Lynch, Attorney General of the State of Rhode Island, to FERC Chairman Pat Wood, III (Jan. 25, 2005), enclosing map depicting con-sequence assessment of LNG tanker breach in Providence Harbor.


Steven Sparling (ste-ven.sparling@ sablaw.com) is an attorney with Sutherland, Asbill & Brennan LLP who heads the LNG group’s marine, safety and operations prac-tice. He has extensive experience address-ing commercial and regulatory concerns associated with LNG operations and project siting. Prior to joining the firm, Sparling served as a naval officer for 7 years and was assigned to the commission-ing crew aboard the USS Barry. Sparling holds a JD (magna cum laude, 2000) from George Mason University School of Law and a BA (1990) from the University of Pennsylvania.

AuthorsJacob Dweck ([email protected]) is a partner with Sutherland Asbill & Brennan LLP. His energy law practice spans 30 years. As chair of Sutherland’s 13-lawyer LNG group, Dweck’s responsibilities include siting, expansion, terminal use, vessel transportation, pipeline, regulatory, legislative, corporate and finance, and contracting projects involving existing or proposed US regasification terminals. He is an honors graduate of Georgetown University Law Center (JD 1975) and the City University of New York (BA 1972).

David Wochner (david.wochner@ sablaw.com) is an attorney with Sutherland Asbill & Brennan LLP’s energy practice, focusing on regulatory and operational aspects of LNG, including FERC regulation, project siting, and legislative issues. He also repre-sents large industrial companies on natural gas matters before FERC. Wochner graduated from Georgetown University Law Center (JD 2002) and Georgetown University’s School of Foreign Service (BSFS 1996).

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