Safety Officials Order Partial Shutdown of Sabine Pass LNG Export Facility After Discovering 10-Year History of Leaks

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Sabine Pass LNG Export Facility

Sabine Pass, for now the only liquefied natural gas (LNG) export facility in the country, has reportedly been experiencing safety issues for the past decade, and yet federal safety officials were only informed of this history while investigating the terminal's latest leak in January. Owned by Cheniere Energy, Sabine Pass is located on the Gulf Coast on the border of Texas and Louisiana.

Regulators became aware of the export facility's issues after the most recent accident and leak at an LNG storage tank. As NOLA.com reported:

“Supercold liquefied natural gas leaked into a space between inner and outer walls of a major storage tank at the Sabine Pass LNG export facility in Cameron Parish on Jan. 22, and its minus 260-degree temperature created numerous 1-foot to 6-foot cracks in the carbon steel outer tank wall, allowing some of the gas to escape.”

As a result of this recent leak, Alan Mayberry, associate administrator for the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) sent a Corrective Action Order to Cheniere. The contents of this communication were not encouraging:

“To date, Sabine has been unable to correct the long-standing safety concerns described above involving the affected tanks, cannot validate the exact source or amount of the LNG that may have leaked into the annulus of the affected tanks, and cannot identify the circumstances that allowed the LNG to escape containment in the first place.”

According to PHMSA, the operators of the Sabine Pass facility don't know how much LNG has leaked, don’t know how it happened, and can’t fix the problem, which seems like reasons for concern, especially considering problems with this and another tank began in 2008:

“After initiating its investigation, PHMSA received from Sabine a copy of a prior investigative report that Sabine commissioned from Matrix and received in March 2017. That report documented 11 past upsets (dating from 2008-2016).”

In addition to just becoming aware of these decade-old issues, PHMSA noted that while the Sabine facility had documented the problems, no one appeared to know how or why they were occuring. As a result, PHMSA’s corrective order instructs Cheniere to shut down the at-risk facilities:

“After evaluating the foregoing preliminary findings of fact and considering the ongoing investigation of the incident, I find that the continued operation of the affected tanks without corrective measures is or would be hazardous to life, property and the environment.”

Energy Exports Breaking Records, Increasing Risks

The oil and gas industry has a history of moving faster than regulation when there is big money to be made. This often leads to the “hindsight” approach to safety, in which a loosely regulated industry waits until something goes wrong and then figures out how to deal with the problem.

Recent examples include the sinking of the Sanchi — an oil tanker full of light petroleum condensate which the industry doesn’t know how to respond to during large marine spills. Or the exploding Bakken oil trains. Or the fact that when cleaning up tar sands oil spills it is important to know the oil is likely eventually going to sink. Or how the industry continues to under-report methane leaks while simultaneously claiming methane emissions are going down.

And the export of LNG is no exception. Sabine Pass wasn’t even built to export LNG but instead was supposed to be an import facility. However, with the hydraulic fracturing (fracking) boom and the glut of gas in the U.S., Sabine Pass was converted into an export facility.

The following graph shows how fast American LNG exports are expected to grow:

The U.S. Energy Information Administration predicts a massive expansion of LNG exports, with 10 more export terminals approved in the U.S., at a time when it is clear that safety officials have been unable to adequately inspect and regulate the existing facilities. An increase in leaks and accidents like the most recent one at Sabine pass should be expected to accompany the rise in facilities.

“This incident is a reminder that the expansion of LNG projects poses a grave threat to our communities and our climate,” said Nathan Matthews, a lawyer for the Sierra Club. “It's a relief that no one was hurt, but allowing the facility to continue to operate until it's clear how widespread these issues are would be extremely reckless.”

One of the “issues” with the Sabine Pass facility was noted in an article in the trade publication LNG World Shipping, which pointed out that Sabine Pass does not have “full containment tanks” like those at the other LNG export facility Cheniere is currently building. This design might have prevented the type of leak Sabine Pass recently experienced.

“Cheniere itself has opted for full containment tanks for Corpus Christi LNG, its greenfield export terminal now being built in Texas. With full containment tanks both the inner and outer shells are capable of holding LNG.”

In a full containment design, the exterior tank can also withstand LNG's extreme cold temperatures, unlike the steel tanks at Sabine Pass which cracked during this latest incident.

Regulation Was in Trouble Before Trump’s Deregulatory Moves

Federal regulatory agencies have been targeted by the Trump administration, which has taken a decidedly deregulatory approach to governing. For example, in Trump's first year, the U.S. Environmental Protection Agency collected “49 percent less in civil penalties against violators of federal environmental laws” than the previous three administrations did in the same time period. From a safety and public health standpoint, this is not an ideal environment to be massively ramping up oil and gas production and exports.

But thanks to the influence of the oil and gas industry, PHMSA was in trouble long before Trump was elected.

Rep. Jackie Speiers (D-CA) has been a critic of PHMSA for years ever since a gas pipeline exploded in her district and killed eight people. “The system is fundamentally broken,” Speiers has said. She has also called “PHMSA … a toothless kitten, a fluffy industry pet that frightens absolutely no one.” And that was before Trump was in charge.

A December 2017 Government Accountability Office (GAOaudit of PHMSA found that the agency's oversight of natural gas storage facilitites was lacking in fundamental ways. These conclusions are outlined in the report “Natural Gas Storage: Department of Transportation Could Take Additional Steps to Improve Safety Enforcement Planning.”

The GAO specifically reviewed PHMSA's performance-based goals and noted serious flaws, including that “PHMSA’s goal focuses on training and does not address other core program activities, such as conducting effective inspections.” Without effective inspections, it is difficult to argue that a regulatory agency can be more than a “fluffy industry pet.”

PHMSA is part of the Department of Transportation, which also houses the Federal Railroad Administration (FRA). Unfortunately, the FRA currently has no one in charge because even the interim person appointed by Trump had to resign and may be facing criminal charges.

And performing inspections requires having an adequate operating budget to hire and train inspectors. In July 2017, Dr. Rachel A. Meidl, deputy associate administrator in the Office of Hazardous Materials Safety at PHMSA, spoke about the expected budget issues at an industry gathering

PHMSA is already “operating in a difficult and challenging environment right now, with the demands continuing to grow,” Meidl said. “There are so many new energy sources … the scope of our work continues to grow. That’s a little bit of a challenge, considering the new administration and some of the budget shortfalls we have right now.”

“So many new energy sources.” A regulatory system already struggling to maintain oversight of the oil and gas industry. And an administration intent on further dismantling the regulatory system. Unfortunately, this sounds like a recipe for future accidents. 

Main Image: Sabine Pass LNG Export Facility and Tanker Credit: Think DefenceCC BY-NC 2.0

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