The Beauty and the Beast - fighting the LNG monster in Italy

"Arriva il mostro" ('Here comes the monster'): this was the reaction of a number of regional newspapers and NGO websites to the recent arrival of a gigantic tanker converted into a full-blown gas storage and regasification plant in the Tuscan port of Livorno after a short stop in the Malta dockyard on its way from Dubai.

The gigantic 115,156 ton vessel is now moored approximately 22 kilometres offshore from Livorno at a water depth of 120 metres. It is expected to start operating in 2014.

The Livorno project is very similar to one of the options being considered by the Maltese government. It has been hailed by mainstream politicians and energy multinationals as a major boost to the Italian economy in its bid to diversify energy sources.

Through a strange twist of fate, on its way to Italy the giant vessel stopped briefly at the Palumbo dockyard, giving the Maltese a glimpse of one of the options being considered by the Maltese government in its bid to reduce electricity bills. 

This is nearly 10 years after the commencement of studies, which inaugurated a decade of controversy between environmentalists, local authorities and energy multinationals.

The Liquefied Natural Gas (LNG) from the plant will be transferred onshore through a 36.5 km long pipeline operated and managed by Snam Rete Gas, of which 29.5 km are at sea and 7 km on dry land and is set to provide 5% of Italy's energy needs.

The Maltese connection

The Golar Frost tanker was converted to a Floating Storage and Regasification Unit known as the FSRU Toscana with storage capacity of 137,000 cubic metres of LNG in Dubai.

But the Maltese connection to Livorno is not limited to the short visit of the Fuel Storage and Regasification Unit (FSRU) vessel in Malta.

Similar to the Italian government, the present Maltese government is presently considering an offshore LNG terminal connected to a 7,300 square metre jetty in Delimara. 

Although no mention of offshore facilities was made before the general election, this option is considered in both the Project Development Statement and the latest plans submitted to MEPA.

These documents refer to the possibility of using a permanent vessel for storage (FSU) or using it both for storage and as a regasification plant (FSRU). The latter option would eliminate the need for any onshore infrastructure.

This will enable the company winning the gas supply tender to sell the ship in its entirety if the gas pipeline option is taken on board by the EU.

All three options presented in plans to MEPA depict an onshore regasification plant, but two of the options refer to the vessel either as an FSU or an FSRU.

According to the PDS, 180,000 cubic metres of storage tanks may be required to store the LNG prior to regasification.

According to the PDS, this would be the largest single item within the LNG regasification facility that must be sited on the current Delimara power station area.

The transformation of the Golar Frost in to an FSRU plant started in June 2009 and took four years to complete. The project was delayed by contractual litigation.

One major difference is that while the FSRU Toscana will be 22 km offshore, an argument used to address safety concerns in Italy, plans show that the vessel will be berthed much closer to the Marsaxlokk shore.

Mobilisation against project

One notable difference is that while in Malta local communities and civil society have shown no opposition to the project, Tuscan civil society was mobilised around the Offshore No Grazie ('Offshore - No Thank You') movement, with groups like Greenpeace Italy, the World Wildlife Fund and Lega Ambiente taking a leading role in protests and legal initiatives against the FRSU plant.

In 2008, the TAR (Tribunale Amministrativo Regionale) of Florence nearly blocked the project due to procedural errors in its approval but the decision was later reversed by an appeal's court because the court action initiated by NGOs was not commenced with 60 days of the approval of the project.

7,000 signatures were collected against the plant and thousands of people took to the streets in 2007 and 2010.

One major factor which explains the different reaction to the project is that while in Tuscany the project was an entirely new one, the Maltese plant is poised to replace a power station operated by Heavy Fuel Oil which is more polluting than LNG.

But some of the concerns raised by Italian NGOs also apply to the Maltese scenario.

For although the project was approved by national and local authorities following an extensive Environment Impact Assessment, reputable organisations like Greenpeace and Lega Ambiente insisted that the studies were incomplete and defective.

Greenpeace claims that the project will not only disorient whales which frequent the area, but irreparable damage will be caused by the annual dumping of 3.6 tons of chlorine the sea which would have a negative impact on marine life in the Pelagos Cetaceans' Sanctuary.

The claims were substantiated in a report commissioned by the World Wildlife Fund, which questions the use of chlorine as an anti-fouling agent in regasification plants.

Environmentalists also questioned the impact of the FSRU plant on seabeds of Posidona oceanica, insisting that Environmental Impact Assessment (EIA) was incomplete in this regard. 

But the major concern of the population of Livorno, centred around the project's impact on bathing water quality and safety issues.

A technical report presented by Offshore No Grazie quotes the Sandia report conducted in the United States in 2006. The report analyzes the consequences of an unlikely intentional or accidental release of 200,000 m³ from two tanks of LNG. It was determined that a wind speed of 2 m/s could result in a flammable vapour cloud extended about 11 km downwind from the LNG Floating Storage and Regasification Unit.

An international commission of experts appointed by the Tuscany region in 2010 also found shortcomings in studies with regards to the security aspects of the FSRU plant. 

The report stated in clear terms that while a lot of emphasis was put on "subjective" speculation on the probability of accidents, not enough consideration was given to major events, which could lead to the "catastrophic" breakdown of the plant.  Lega Ambiente Pisa welcomed the report and pointed out that the plant would be particularly vulnerable to terror attacks and human errors.

But the committee of experts also stressed that, beyond the real safety of the plant, its location - being very far from the coast - rules out "any circumstance in which an incident, whether accidental or intentional, at the site, could pose a danger to those who find themselves on the mainland. This is the obvious benefit to public safety from this separation of 22km between the plant and the nearest concentration of the public". 

Ultimately despite widespread opposition, the project still enjoyed support from both centre left and centre right governments, and some of the protestors were singled out for making alarmist and catastrophic claims. 

One of the most sensational and exaggerated claims was made by an Italian Professor who claimed that an explosion would result in the collapse of the leaning tower of Pisa. 

Proponents rebut criticism

OLT, the company responsible for the project, insists that he FSRU Toscana regasification unit is based on simple, safe and established technology, with the use of components already in place for a long time in different sectors of the oil industry. It also states that no significant incidents have occurred in 33,000 journeys of LNG carriers throughout the world over the past 20 years.

The company refers to a Coast Guard study in the USA which described LNG as one of the least hazardous substances among the many substances and fuels transported at sea.

OLT even dismissed concerns on the impact of earthquakes and any resulting tsunamis, insisting that such events do not affect any moored vessel in deep water but may affect moored vessels in shallow water close to the coast.

It also claims that the concentration of free active chlorine will be significantly lower than those prescribed by national regulations.

It also addresses concerns about sea water temperature variations, insisting that those monitored by the competent Italian authorities during the authorisation process and will also be subject to a constant monitoring by the Authorities during operations.

Financial viability questioned

Doubts have also been expressed on the financial viability of the LNG plant in the Livorno project. The European Investment Bank - which granted a €240 million loan to OLT - estimated the project to cost €600 million.  

Other official figures dating back to 2009 put the cost at a staggering €850. Critics of the project claim that a project initially costed at €200 million in 2003 has spiraled to €1 billion.

But supporters of the project claim that this investment will result in a multiplier effect, estimated at €400 million over a 20 year period for the region.

Miguel Antoñanzas, President of E.On Italia, claims that the regasification plants will also result in a decrease in bills by helping Italy diversify its energy supply from gas sources which are not directly connected to the European grid. In fact, flexibility in gas supplies is one of the arguments used to justify offshore LNG terminals.

But activists claim that the project is a burden on public finances; an allegation substantiated by a recent decision by the Italian authority for Energy (AEEG), which will give "a revenue guarantee" for the investors involved.

An article published on European Spot Gas Market in July quotes an Italian gas analyst saying that concerns over the current state of the wider gas market may have pushed the main shareholders in the OLT - Italian IREN and German E.ON - to ask the State to guarantee support in case of poor revenue.

The guarantee factor is the incentive given by the Italian state to new LNG infrastructure. It guarantees marginal profits to investors to cover the costs of investment through pre-fixed tariffs for about 20 years.

The Livorno plant will be the first FSRU in Italy. Another offshore plant is located on an artificial island in Rovigo in the Adriatic, and an onshore terminal was constructed in Panigaglia in Liguria in 2008. At least five more plants are in the pipeline.

Political deadlock?

Opposition to regasification plants is one of Beppe Grillo's Five Star movement's battle cries. As a result of mounting local opposition, regional authorities, especially those governed by the centre left, are becoming more hesitant in their support for this technology, with Trieste deciding against a similar project.  The project has already raised the ire of the Slovenian government which described the offshore terminal as an "environmental threat".

Nichi Vendola the charismatic left-wing governor of the Puglia region, is also opposing the development of a regasification plant in Brindisi. A proposed land-based LNG plant in Gioa Tauro in Calabria in a highly seismic area is also being reconsidered despite a decision by the late Monti government to allocate €1.2 billion for this mega development. 

What is LNG?

Simply put, it is natural gas cooled to minus 162 degrees Celsius, at which point it becomes liquid. In this compressed form, large volumes can be transported, allowing foreign sources to be  shipped to any country in the world. Gas is transported in methane tankers at 160°C below zero in liquid state, and it is then unloaded at regasification plants. In these installations, the temperature of liquefied natural gas (LNG) is increased and it is thus transformed into a gaseous state to feed the energy grid. The storage and regasification can take place on land or on ships berthed some distance away from the coast.

LNG is highly flammable, and its leakage can create a vapor cloud that is easily ignited, but accidents involving these plants have been few and far between.

The last major serious incident involving an LNG plant dates back to 1944, when 130 people were killed following an explosion. The subsequent explosion shot flames of over half a mile into the air. The temperature in some areas reached three thousand degrees Fahrenheit.

The accident was a serious set back for LNG technology which only started to recover in the 1970s. But industry claims that technology has evolved since the 1940 and the explosion was due to the use of obsolete technology which is no longer in use.

But while the 1944 incident involved a small storage tank with a capacity of only 5,000 cubic metres, a modern storage tank would have a capacity of over 160,000 cubic metres.

An accident at an LNG liquefaction facility in Algeria in 2004 created a huge fireball that killed 27 people in the vicinity of the plant and shattered windows up to five miles away.