Lebanon Gas Depot Fatal Flaw Analysis Revealed


A two-and-a-half-year-old report, only recently released to the public, sheds new light on safety concerns for Liberty Utilities’ proposed liquefied natural gas storage depot near the city landfill in West Lebanon.

In a fatal flaw analysis memo prepared for Liberty in August 2015, engineers at the consulting firm Sanborn Head concluded from initial “conceptual level thermal radiation modeling” that an “exclusion zone” surrounding a potential fire at the facility would barely fit within the site’s boundaries, as required by federal safety codes. However, the report also cautioned that additional computer modeling required for the project could result in an exclusion zone that extends beyond the property’s boundaries, one of which is Route 12A.

The exclusion zone predicted by the thermal radiation model is shown on the map above by the red circle.  According to the legend, the blue circle represents “the nearest point located outside the owner’s property line that can be used for an outdoor assembly by groups of 50 or more persons”.

Significantly the Sanborn Head fatal flaw analysis notes that there had been no vapor dispersion modeling, which is necessary to determine the boundaries of the “50% LEL exclusion zone”.  LEL is the Lower Explosive Limit, which is the lowest concentration, by percentage, of a gas or vapor in air that is capable of producing a flash of fire in the presence of an ignition source.  The memo goes on to “strongly recommend” that vapor dispersion modeling be done as soon as possible, “since it is our experience that keeping the 50% LEL exclusion zone within the property boundaries is typically more challenging than keeping the 10,000 BTU/hr-ft2 exclusion zone [the red circle] within the property boundaries”.  The memo mentions some mitigation measures — insulated concrete, vapor fences, water spray systems — that could be considered if the 50% LEL goes beyond the property line.

Of course, we have no way of knowing if Liberty has followed their engineers’ recommendation and completed the vapor dispersion modeling.  We also don’t know if bedrock or wetlands will further constrain the siting of the facility, as the memo noted might be the case.

The Sanborn Head fatal flaw analysis was one set of information that Liberty Utilities had previously redacted to keep it hidden from public scrutiny.  Liberty claimed protection for the report and a great deal of additional material, citing an exemption under the New Hampshire right-to-know law for commercial information.  The Public Utilities Commission allowed the material to remain redacted for almost a year after citizen intervenors Ariel Arwen and Jon Chaffee objected to the abuse of that statute. Finally, in its March 5 order granting Liberty a gas distribution franchise for Lebanon and Hanover, the PUC ruled that the company had to release much of the redacted information, including the fatal flaw analysis.  If the two citizens representing themselves before the PUC without an attorney had not forced the issue, the information in the memo would never have seen the light of day.

And that’s why we stay vigilant.

Lebanon Gas Depot Fatal Flaw Analysis Revealed

Also see:

Liberty Utilities gas franchise approved (03/06/2018)

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Why is Liberty Utilities pushing its gas on Lebanon?

Liberty Utilities has plans to build a fracked gas distribution system in Lebanon and Hanover, starting with construction of a depot in Lebanon to store compressed natural gas (CNG) delivered by truck.  They plan to later expand the depot to include multiple 60,000 gallon tanks holding liquefied natural gas (LNG).

Why does Liberty persist in pushing their project when it has virtually no community support?  The answer to that question may lie in the regional context of aggressive expansion by the gas industry. That expansion is being driven by international energy conglomerates, and it has little to do with the “public interest” that regulated public utilities are supposed to serve.

The Canadian company that owns Liberty Utilities has been a partner in a project to construct a major interstate pipeline to deliver fracked gas from Pennsylvania to Massachusetts.  The developers of that pipeline have argued that New England needs greater gas pipeline capacity to cover the region’s energy needs during the coldest weather.  However, the developers have sought and been granted approval to send that gas on an existing pipeline to terminals in the Canadian Maritimes, from where it will be exported overseas.  To win approval of federal regulators for the new infrastructure, the developers are required to justify the project based on “need”, which has traditionally been demonstrated by signed contracts with local gas utilities.  That’s where Liberty Utilities comes in, by signing a contract to buy gas from a pipeline in which its parent company has a financial interest.  Liberty and its parent can’t lose because the captive rate payers bear the risk of the gas utility’s investments.

Liberty Utilities is owned by Algonquin Power and Utilities Corp (APUC), one of Kinder Morgan’s partners in the Northeast Energy Direct (NED) pipeline project.  The NED pipeline was conceived to run through upstate New York, Massachusetts and New Hampshire, ending at the gas hub in Dracut, MA.  NED, along with Enbridge’s Access Northeast pipeline, was intended to supply fracked gas from Pennsylvania to the Canadian Martitimes for export overseas on LNG tankers.

To justify approval by the Federal Energy Regulatory Commission (FERC), the projects needed to produce contracts from customers for the gas.  Liberty Utilities, in its capacity as a local gas company, signed an agreement to buy gas from NED.  In October 2015, the NH Public Utilities Commission approved the agreement.  Notably, the PUC’s order approving the agreement contained a “growth incentive”, which imposed penalties on the company if it failed to expand its gas sales substantially each year.

Kinder Morgan withdrew NED in 2016 due to lack of sufficient contracts.  Enbridge suspended Access Northeast in 2017 for the same reason.  That’s not the end of the story by any means, though.

Two separate LNG export terminal projects are moving forward in Nova Scotia.  If built, these terminals would liquefy fracked gas from Pennsylvania and export it to overseas destinations.  Gas is already being sent north from the hub in Dracut on the Maritime and Northeast Pipeline that until recently carried gas only south from Canada.  The export projects were conceived back when NED and Access Northeast were still on the table.  Now, the Trump administration’s commitment to unbridled fossil fuel development may prove to be a game changer for speculative projects like those.

Interstate pipeline developers, such as giants Kinder Morgan and Enbridge, and Liberty Utilities’ parent APUC, are required to demonstrate a “need” for new gas infrastructure before a project can gain approval from the FERC.  The justification for additional capacity has traditionally been provided by long-term contracts with local gas utilities.  However, Liberty Utilities has been part of a troubling new trend, where gas utilities that have become subsidiaries of pipeline companies sign contracts to buy gas from a pipeline that their parent company has invested in.

State-regulated utilities are legally guaranteed a profit on investments they make to provide service to their customers.  They will realize the profit even if the investment ultimately proves to be a poor bet.  When the contracts used to demonstrate the need for infrastructure expansion are between a pipeline developer and gas utilities that it owns, then there’s reason to think that  benefits of the transaction will be transferred away from the utilities’ captive rate payers to the developer, while the financial risks are offloaded in the other direction.  In that case, the developer and the utility have a mutual financial interest that may well be against the interests of rate payers and the public as a whole.  That mutual financial interest may also provide an incentive for the subsidiary utility to sign up for more pipeline capacity than its customers need.

Just that sort of too-cozy relationship came about between Liberty Utilities and its parent APUC with the NED pipeline, before the project was ultimately withdrawn for lack of sufficient customers.  NED is gone, but the gas industryhas not given up its plans to build major new pipelines into New England from the Marcellus region of Pennsylvania.  If enough expansion plans being pushed by local gas utilities are approved by state regulators, we can expect Kinder Morgan and Enbridge to come back with new plans for bigger pipelines.

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Update on PUC ruling from Energy & Climate Upper Valley

No decision yet from the PUC … 

Almost four months since the hearing in early September, the NH Public Utilities Commission has still not issued a decision on whether to grant Liberty a gas distribution franchise for Lebanon and Hanover.  We can expect a decision before much longer, though, and we should expect that the PUC will grant the franchise according to the terms of a settlement agreement reached by the gas company, PUC staff and the Office of the Consumer Advocate. The agreement, which was not supported by the City of Lebanon, the Town of Hanover or any of the citizen intervenors, recommends that Liberty be granted a monopoly franchise to distribute gas by pipeline in Lebanon and Hanover.  According to the agreement’s terms, construction of each of the two initial phases of the system would not start until customer commitments for gas service reach a certain threshold of guaranteed revenue.  Phase 1 would operate on a trucked-in supply of compressed natural gas (CNG), while phase 2 would employ 60,000 gallon storage tanks for liquefied natural gas (LNG), which would also be delivered to Lebanon by truck.  You’ll find more background in this report that we sent out shortly after the hearing.

… but we’re not waiting passively

Since the project can’t go forward without enough of a customer base, we intend to do everything we can to turn potential customers away from Liberty’s dirty and climate-changing gas and toward clean renewable alternatives.  Thanks to the vision and hard work of Jon Chaffee, who provided powerful testimony at the hearing, Energy & Climate Upper Valley has received two grants, from New England Grassroots Environmental Fund and the Anne Slade Frey Charitable Trust.  The grants will support a demonstration project, in partnership with a Lebanon business, to analyze the cost and energy benefits of retrofitting an existing commercial structure with renewable energy systems.
When the time comes we will engage in Lebanon’s land use review process.  The city’s regulators will need to hear from and see us so that they know there’s no public support for the project.
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Closing Statement at NH PUC Hearing

 “The City of Lebanon entered this proceeding primarily concerned with retaining its local jurisdiction over land use regulation, excavations, and public safety, and fire code issues. However, the City Council, in a discussion last night, did ask or support my attendance, and wanting to make clear to the Commission that our current Master Plan, which is the official policy of the City adopted by both the Planning Board and the City Council, does not support the expanded use of natural gas. It’s not consistent with our goals to move more quickly to reduce our carbon footprint as a city and to develop renewable energy. We would prefer if Liberty Utilities would focus more of its entrepreneurial efforts in working with the City on those goals, and to better accelerate development and integration of local renewable energy resources and a beneficial electrification of transportation and space heating, such as through our proposed pilot that we’re working on…”
-Lebanon City Councilman Clifton Below, for details see “News”

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PUC Holds Hearing on Fracked Gas Pipeline


Some of the Upper Valley residents who made the trip to Concord

The New Hampshire Public Utilities Commission (PUC) took testimony on Thursday on the fracked natural gas storage facility and pipeline proposed for Lebanon and Hanover.  Much of the focus during the three and a half hour hearing was on a “settlement agreement”, signed the previous week by Liberty Utilities, PUC staff and the New Hampshire Office of the Consumer Advocate (OCA), to which citizen intervenor Jonathan Chaffee, representing himself without an attorney, voiced strong opposition.  None of the other parties to the review, the City of Lebanon, the Town of Hanover, and a second citizen intervenor, offered any support for the agreement.  The settlement was negotiated during sessions that were closed to all but the three signing parties.  It can be read here.

The agreement, if approved by the three-member PUC, would grant Liberty Utilities a monopoly franchise to distribute gas by pipeline in Lebanon and Hanover.  Construction of each of the two initial phases of the system would not start until customer commitments for gas service reach a certain threshold of guaranteed revenue.  However, under questioning by Commissioner Kathryn Bailey, PUC staff analyst Stephen Frink acknowledged in his testimony that, although his office would review the financial projections provided by Liberty once the company claims it has met the revenue threshold, nothing in the agreement would prevent Liberty from building the system if the analysis were to be found insufficient.  So far, the company has announced no commitments in the form of contracts from large potential customers.

Chaffee, who is the former director of the Lebanon Housing Authority, provided powerful testimony against the proposed pipeline and the settlement agreement.  He offered evidence in the form of peer-reviewed scholarly research that natural gas, and especially fracked gas, has a greater climate changing greenhouse impact than any of the fuels that it would replace in Lebanon or Hanover, refuting Liberty’s assertion that natural gas is environmentally friendly.  Using a spreadsheet “calculator” provided by Liberty Utilities, he demonstrated that virtually all households in the two communities that are currently heated with oil would pay more to heat with gas, a point that was eventually conceded by the company.  Chaffee illustrated for the Commission that the US Energy Information Agency, whose forecast Liberty Utilities cited to support its contention to prospective customers that gas prices will remain low long into the future, actually projects steep price increases.  He concluded his testimony by asking the commission to deny the company’s request for a franchise.

“Smart customers wouldn’t buy pipeline gas,” Chaffee said after the hearing concluded.  “Is Liberty betting that people can be mislead into signing on? Liberty would be free to try out a bad business bet if the PUC okays this settlement, and other rate payers would have to reimburse them for it with rate hikes.”  He also said: “Liberty’s proposal to get more people to buy natural gas, which actually increases emissions, flies in the face of both Hanover and Lebanon. Our municipalities want to persuade residents to switch to renewable energy and reduce emissions. It would be extraordinary for the PUC to approve this pipeline in direct opposition to policies Hanover and Lebanon have adopted.”

The Town of Hanover was represented at Thursday’s hearing by Town Manager Julia Griffin, who testified about the town’s commitment to renewable sources of energy.  She spoke about the disinterest of Dartmouth College in natural gas as an energy source and reported that she had had discussions with a Dartmouth Hitchcock Medical Center adnistrator and had been told that the hospital had recently signed a three year contract with a different energy supplier.

The City of Lebanon was represented by city councilor Clifton Below, a former PUC commissioner and former state senator.  In his closing statement to the commission, Below told the Commission that the City’s Master Plan does not support the expanded use of natural gas and instead calls for a shift from fossil fuels to renewable energy and greater energy efficiency.  He also said the City would prefer that Liberty Utilities work with the City to achieve its goals to deeply reduce greenhouse gas emissions by accelerating the development of local renewables and beneficial electrification of transportation and heating, rather than continue to pursue this natural gas distribution franchise.  Below pointed out that one of the factors that the Commission has said it uses to determine whether the granting of such franchises would be for the public good is whether the proposal is consistent with the orderly development of the region.

According to Below, “The City’s Master Plan expresses official local policy for what is appropriate for the future development of the region and Liberty’s natural gas proposal is not consistent with that policy.”

The lawyer for Liberty Utilities, Michael Sheehan, objected to Below’s request on behalf of the City that the board issue a final order that includes a review in the form of a hearing once Liberty makes a claim of reaching sufficient customer commitments to pay for its system.

24 residents of the Upper Valley made the drive to Concord to attend the hearing.  Eight of them, including state representative Lee Oxenham of Plainfield and Cornish, made oral comments at the start of the hearing, with concerns about climate chaos being a common theme.  Several people connected the recent extreme weather disasters, including Hurricane Harvey, to the use of fossil fuels.


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