March 26, 2013

Propane exports add fuel to Searsport terminal debate

By Tux Turkel tturkel@pressherald.com
Staff Writer

SEARSPORT — The energy company that wants to build a propane import terminal in Searsport has begun shipping the fuel overseas from a facility it owns in Virginia.

click image to enlarge

In this Friday, March 9, 2012 file photo, fuel storage tanks are seen from a town park in Searsport, Maine. (AP Photo/Robert F. Bukaty)

Denver-based DCP Midstream Partners disclosed during a recent quarterly financial briefing that it exported 6 million gallons of propane at its Chesapeake, Va., terminal in January, and is making engineering changes for additional shipments.

Opponents of the controversial Searsport project see the move as evidence that DCP ultimately wants to ship propane overseas from Maine, which could greatly increase the number of trucks on midcoast highways and tankers in Penobscot Bay. Instead of a half-dozen ships a year bringing propane from overseas, an export terminal could host that many in a month taking fuel away, they say.

But a DCP executive said Monday that it's incorrect to compare Chesapeake, an existing facility, with the Searsport proposal.

"Exporting from an existing facility isn't that costly," said John Pratt, director of Northeast sales. "But to build a new (export terminal), that's not what we're looking to do."

The developments are occurring as Searsport's planning board prepares Wednesday and Thursday to begin deliberations on a local permit.

The project has become the target of an intense campaign to defeat it. Public hearings this past winter brought out large and emotional crowds with concerns ranging from the visual impact of the 14-story storage tank to fears of a propane explosion.

Late last week, the Islesboro Islands Trust and the Tanks But No Tanks citizen group filed a notice-of-intent to sue the U.S. Army Corps of Engineers over the agency's approval of the project last year. In part, the notice cites new information suggesting that the region no longer needs a marine terminal to import propane.

DCP Midstream, which is a joint venture of Sprectra Energy and Phillips 66, has been working to line up the necessary approvals to build a $40 million propane terminal at the Mack Point industrial area. The proposal includes a 23-million-gallon storage tank. The company has gotten the go-ahead from state environmental regulators, as well as the U.S. Coast Guard and Army Corps.

The company and its supporters have cited the need for additional propane imports to reduce the region's dependence on heating oil. But new technology that has brought a sudden abundance of propane and other "natural gas liquids" to the Northeast has all but solved that problem, at least for the foreseeable future.

There's evidence that this is taking place, in part because domestic gas is cheaper now than overseas supplies. That has created a market in which there are no terminals on the East Coast importing propane.

In Newington, N.H., the Sea-3 tank farm has helped supply southern Maine with propane for decades. But Sea-3 unloaded only one ship last year. This year, it took propane previously imported from Europe and sent it back overseas.

In Tampa, Fla., a propane import terminal owned by Sea-3's parent company is now shifting to exports, according to Atlantic Northeast Rails & Ports.

Other terminals, including the former Marcus Hook oil refinery in Philadelphia, also have begun exporting propane to Europe and Latin America.

Pratt, the DCP Mainstream sales executive, acknowledged that propane could be trucked or transported by train from the Marcellus fields to Searsport, but said that's not what DCP Mainstream intends to do.

At this point, Pratt said, the company plans to move forward with the goal of securing permits for an import terminal. That process, slowed by legal challenges from opponents, will take time. The company expects that an import terminal will eventually make financial sense, Pratt said, although he couldn't point to any studies or industry research suggesting that would happen in the next five years.

"At some point, the world markets will come together," he said. "Supply and demand will balance."

But Steve Hinchman, a lawyer who represents the Thanks But No Tanks group, said the terminal is seeking permits for imports only. That need is no longer valid, because Maine's propane demand now is being satisfied by other means, notably Northeast sources delivered by rail.

"They say they still intend for this to be an import terminal," Hinchman said. "But the market is going to dictate exports, because there is zero import demand."

The planning board has set aside sessions into mid-April to deliberate on the project. A final decision is expected this spring.

 

Tux Turkel can be contacted at 791-6462 or at:
tturkel@mainetoday.com

 

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