bureau of economic geology, the university of texas at austin defining community and economic...

Bureau of Economic Geology, The University of Texas at Austin

Defining Community and Economic Benefits Associated with Energy Infrastructure

Projects: LNG Case Study

©CEE-UT, 2

Overview and Major Themes, I

• “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

©CEE-UT, 3

Overview and Major Themes, II

• 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

©CEE-UT, 4

Overview and Major Themes, III

• “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

©CEE-UT, 5

Overview and Major Themes, IV

• 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

©CEE-UT, 6

Natural Gas Industry Performance

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LNG Imports

Total Natural Gas inStorage

©CEE-UT, 10


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©CEE-UT, 11

LNG Case Study Outline

• Objectives

• Outcomes

• Conclusions

• Approach

• Findings and implications for new projects

• Path forward

©CEE-UT, 12

Study Objectives

• 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

©CEE-UT, 13

Study Outcomes

• 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

©CEE-UT, 14

Key Conclusions• 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

©CEE-UT, 15

Tool Kit – Check List

• 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

©CEE-UT, 16

Sources of Information

• 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

©CEE-UT, 17

Issue Dimensions

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

©CEE-UT, 18

Stakeholders

• 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

©CEE-UT, 19

Immediate Site Community

Immediate Site-Host Community

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

• Key concerns: emissions, safety, displacement

©CEE-UT, 20

Waterway Community

Waterway Community

• 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

©CEE-UT, 21

Local 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

©CEE-UT, 22

Greater Community

Greater Community

• 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

©CEE-UT, 23


Waterway Community

Local CommunityGreater Community

©CEE-UT, 24


Local Community

Waterway Community

Greater Community

©CEE-UT, 26

Key Results and Findings

• 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

©CEE-UT, 27

Local CommunityConsiderable positive impact on

job creation and tax revenueMinor perceived benefit on

energy costsConcerns about increased

congestion during construction

Waterway CommunityConcern about the impacts on

fisheries and related jobs; property value; safety and

securityMinor perceived benefit on

energy costs and tax revenue

Immediate Site CommunityConcern about the loss of

property value and safety and security

No detectable perceived benefit.

External Interest GroupActive with regard to coastal

environmental issues, safety and security.

National CommunityContributor to energy security

Source of fuel of choice

Greater CommunityConsiderable positive impact on

energy costs and employmentConcerns on impacts on

fisheries

Licensed Projects


Greater Community (State)

Waterway Community

National Community (Federal)

Local Community (City)

External Interest Group

Immediate Site CommunityImmediate Site Community

Greater Community (State) Greater Community (State)

Waterway CommunityWaterway Community

National Community (Federal)National Community (Federal)

Local Community (City)Local Community (City)

External Interest GroupExternal Interest Group

1 – Perceived Benefit3 – Indifferent5 – Perceived Cost

1

2

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5Safety/Security

Wetlands

Fisheries

Energy Costs

Roads

Taxes

Employment

Air Emissions

Property Value

Other/Intangibles

©CEE-UT, 28

All Projects



Waterway Community











Main Concerns: Fisheries, Safety/Security, Property Value, Air EmissionsMain Benefits: Energy Costs, Taxes, Air Emissions

Maximum over all Projects

Minimum over all Projects

1

2

3

4

5Safety/Security

Wetlands

Fisheries

Energy Costs

Roads

Taxes

Employment

Air Emissions

Property Value

Other/Intangibles

1

2

3

4

5Safety/Security

Wetlands

Fisheries

Energy Costs

Roads

Taxes

Employment

Air Emissions

Property Value

Other/Intangibles

1

2

3

4

5Safety/Security

Wetlands

Fisheries

Energy Costs

Roads

Taxes

Employment

Air Emissions

Property Value

Other/Intangibles

©CEE-UT, 29

Immediate Site CommunityConcern about the loss of jobs,

property value and safety and security

No detectable perceived benefit.

External Interest GroupMore active with regard to

coastal environmental issues, safety and security.


Source of fuel of choiceRising environmental impact

concerns on coastal areas and marine habitat

Greater CommunityConsiderable 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.

Local CommunityPositive impact on job creation,

tax revenue and air emissionsMinor perceived benefit on

energy costsConcerns about safety and security and property value

Waterway CommunityRising concern about the

impacts on fisheries and related jobs; property value; safety and

security during transit; Diminishing perceived benefits

Non-Licensed Projects



Waterway Community











1

2

3

4

5Safety/Security

Wetlands

Fisheries

Energy Costs

Roads

Taxes

Employment

Air Emissions

Property Value

Other/Intangibles

©CEE-UT, 30

Onshore vs Offshore



Waterway Community











1

2

3

4

5Safety/Security

Wetlands

Fisheries

Energy Costs

Roads

Taxes

Employment

Air Emissions

Property Value

Other/Intangibles

1

2

3

4

5Safety/Security

Wetlands

Fisheries

Energy Costs

Roads

Taxes

Employment

Air Emissions

Property Value

Other/Intangibles

©CEE-UT, 31

Local CommunityPositive 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

Waterway CommunityConcern about the impacts on

fisheries and related jobs; property value; tanker traffic and

safety and securityNo perceived benefits.

Immediate Site CommunityConcern about safety and

security and impact on fisheries.No detectable perceived benefit.

External Interest GroupActive with regard to coastal

environmental issues, but highly mobilized on safety and security.


Source of fuel of choice.Concerns about impacts on

marine habitat.

Greater CommunityRecognition 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.

Northeast Projects



Waterway Community











1

2

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4

5Safety/Security

Wetlands

Fisheries

Energy Costs

Roads

Taxes

Employment

Air Emissions

Property Value

Other/Intangibles

©CEE-UT, 32

Northeast Projects

• 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

©CEE-UT, 33

Immediate Site CommunityConcern about property value

and safety and security.No detectable perceived benefit.

External Interest GroupSupportive due to

decommissioning of dams, active on safety and security

National CommunityContributor to energy security.

Greater CommunityPositive impact on energy costs and concerns on the impact on

fisheries.

Local CommunityPositive impact on job creation,

and tax revenue.Transit community concerns.

Waterway CommunityRising concern about the

impacts on fisheries and related jobs; property value; safety and

security during transit.

Pacific Northwest Projects



Waterway Community











1

2

3

4

5Safety/Security

Wetlands

Fisheries

Energy Costs

Roads

Taxes

Employment

Air Emissions

Property Value

Other/Intangibles

©CEE-UT, 34

Pacific Northwest Projects

• 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)

©CEE-UT, 35

Gulf Coast Projects



Waterway Community











1

2

3

4

5Safety/Security

Wetlands

Fisheries

Energy Costs

Roads

Taxes

Employment

Air Emissions

Property Value

Other/Intangibles

©CEE-UT, 36

Central/Western Gulf Coast Projects

• 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

©CEE-UT, 37

Florida Projects



Waterway Community











1

2

3

4

5Safety/Security

Wetlands

Fisheries

Energy Costs

Roads

Taxes

Employment

Air Emissions

Property Value

Other/Intangibles

©CEE-UT, 38

Florida Projects

• 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

©CEE-UT, 39

California Projects



Waterway Community











1

2

3

4

5Safety/Security

Wetlands

Fisheries

Energy Costs

Roads

Taxes

Employment

Air Emissions

Property Value

Other/Intangibles

©CEE-UT, 41

Targeted Benefits Offered• 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

©CEE-UT, 42

Cost-to-Benefit Conversion• 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

©CEE-UT, 43

Going Forward: Discussion

• 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

©CEE-UT, 44

US LNG Cargo

Receipts

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Henry Hub AECO NBP Zeebrugge Dutch TTF

©CEE-UT, 45

bureau of economic geology, the university of texas at austin defining community and economic...

Documents

process slide

complex slide

communication slide

displacement slide

lng case study slide

waterway community benefits

local benefits

ghg strategies slide