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savings are inflated. That’s because, even with the LNG storage, NM Gas would still need to buy a lot of expensive gas on wholesale markets during cold winter days, said Aaron Gould, clean energy senior policy analyst for Western Resource Advocates.
For one thing, the new LNG facility will only store up to 1 billion cubic feet of gas, or bcf, for an entire winter, significantly less than the 2.6 bcf it stores at Keystone. And with average daily winter consumption by customers estimated at about 200 million cubic feet per day even without severe weather, the 1 billion bcf storage capacity doesn’t add up to much, Gould said.
“The company will still end up buying most of its gas on the wholesale market during winter,” Gould told the Journal. “… During Winter Storm Uri, the bulk of the $107 million in extra gas purchases by the company wouldn’t have been mitigated much by the proposed LNG facility. I’m not saying the storage facility wouldn’t help with price spikes, but only for a small amount of gas, so the price offset is limited.”
And, as for supply reliability, NM Gas didn’t have to curtail customer consumption during Uri, because even with the cutoff from storage withdrawals at Keystone, the company still supplied its customers with gas from the open market, Gould said.
“The real question is, is the limited benefits from the LNG storage facility really worth the $180 million spent to build it?” Gould said.
New Energy Economy also questions the savings and reliability benefits, which it says NM Gas could achieve through other means, such as diversifying third-party storage contracts beyond Keystone and investing in things like energy efficiency to reduce consumer demand for gas. In addition, as the state and country continue to transition from fossil fuels to renewables — including electrifying heating systems and home appliances and installing rooftop solar systems — NM Gas should not be “doubling down” on investments in gas infrastructure that down the road could become a superfluous, “stranded asset,” according to NEE.
The group is also concerned about potential, catastrophic events, such as explosions and massive fires that have engulfed some LNG facilities on the Gulf Coast and other places over the past decade. In fact, NEE held a community forum in July to discuss those concerns, asking local residents to speak out against the project during upcoming public comment at the PRC, scheduled for October.
NM Gas says recent accidents along the Gulf Coast happened at LNG import-export terminals, and at a facility that used LNG to power up an electric generating system, which are very different and much more complex facilities than an LNG storage plant. A major accident did occur at one storage facility in Washington state in 2014, but there are some 100 LNG storage plants currently operating safely in two dozen states.
“Our design engineers looked at all other plants to incorporate design safety into the facility,” Bullard said. “It will be a stateof-the-art plant from an operational standpoint.”
PRC hearings this fall
NEE is so far the only party directly opposing the project at the PRC, which will hold public hearings on the NM Gas proposal in October.
Apart from Western Resource Advocates, which has not yet taken a firm stance on the project, other case intervenors include the Attorney General, the Coalition for Clean Affordable Energy, and the PRC’s utility staff division. Some of those parties are currently in negotiations to reach a settlement, or “stipulation,” with NM Gas that could diminish opposition to the company’s proposal when hearings begin in October.
The three-member commission is expected to rule on the issue either late this year, or in early 2024.