Uncertainty in Liquefied Natural Gas due to Rare Coral Reef

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Uncertainty in Liquefied Natural Gas due to Rare Coral Reef

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The third receiving terminal has been postponed for environmental reasons – the prospective impact on a unique reef.

Citing the need for further study of the rare coral reefs that lie nearby beneath the waters off Taoyuan County, the Environmental Protection Administration (EPA) on October 26 called for further postponement of a project  to build Taiwan’s third liquefied natural gas (LNG) receiving terminal in Guantang, adjacent to the Datan natural-gas power plant on the Taoyuan coast. The NT$60 billion (US$2 billion) project to accommodate increased imports of LNG is considered vital to the government’s plans to transform the energy mix away from nuclear power and coal and towards cleaner natural gas and renewable energy.

Standing in the way of immediate implementation of the project are concerns that it would damage two endemic species of coral and two species of crustose coralline algae. In what scientists are calling an unprecedented discovery, the coral and algae have formed a collaborative reef, estimated to be 7,500 years old, which provides a habitat for a number of marine species, many of them valuable to Taiwan’s fisheries.

These endemic species were only discovered in 2000 and have not yet been adequately studied. But they have already experienced widespread damage from the largescale development and industrial pollution characteristic of the Taoyuan coastal region.

“There is no baseline data for the endemic species of coral, so according to Taiwan law, the Council of Agriculture needs to initiate a full-scale research project, otherwise there is no way to review any proposal,” says Chaolun “Allen” Chen, a research fellow at the Academia Sinica Biodiversity Research Center and an expert in coral reef ecology.

The EPA has delayed the LNG terminal development in order to further study these rare coral/algal reefs. Photo: Chaolun “Allen” Chen

The EPA’s Environmental Impact Assessment (EIA) committee voted to postpone the project for at least a year to allow time for the research to be carried out. The decision is a temporary victory for environmentalists but a disappointment for the Tsai administration’s plans to greatly expand natural-gas-fired power generation capacity.

“They (EIA committee) were facing a lot of pressure from the government but didn’t know how to deal with the environmental groups,” explains an energy insider in Taiwan who asked to remain anonymous due to the sensitivity of the issue. “Their way out was to find something that is a legal concern, and that was the reefs.”

“We are still pondering what to do next,” says Lee Huang-chang, deputy CEO of the natural-gas division of state-owned oil company CPC Corp., Taiwan’s only importer of natural gas. Lee notes that as one possible solution CPC is considering moving the receiving terminal to a site further from the coral reefs but still within the Datan industrial zone. He says a decision will be forthcoming in the next few weeks.

The Guantang LNG terminal would be Taiwan’s third, and would provide crucial receiving and storage capacity to supply the Datan power plant, Taiwan’s largest gas-fired unit and the source of the August 15 blackout. Datan is currently being supplied by an undersea pipeline from the Taichung Second LNG Terminal, but in case of problems, undersea pipelines can take hours or even days to repair, resulting in extreme power shortages. Further, energy insiders say that the existing LNG terminals are not only already running at full capacity, but in fact are in the unprecedented situation of exceeding the nameplate capacity.

The Taiwan Power Co. (Taipower), the state-run monopoly that would be the sole customer for the Guantang terminal’s LNG, has two new gas-fired units under construction. Scheduled to come online starting in 2022, they will increase generating capacity by 1,000 megawatts (MW), equal to one gigawatt (GW).

“If the terminal cannot be completed on time, it will postpone our power-supply project, so we sincerely hope that the third terminal will proceed smoothly and according to schedule,” says Taipower spokesman Frank Lin.

The Tsai administration’s goal is to eliminate nuclear power from the mix by 2025, as well as to reduce the proportion of coal from over 40% of generation to 30%. Natural gas’s share is to increase from the current 35% to 50%. Renewable energy sources, especially offshore wind and solar, are to provide the remaining 20%.

To meet these expectations, Taipower is working on adding 13.5GW of gas-fired capacity by 2025 (with an additional 3.5GW by 2028), according to Taipower’s Long Term Power Development Project released in 2016. Factoring in the 2.93GW of current gas-fired capacity due to be retired by 2025 (with an additional 1.33GW in 2026), a net 10.61GW would thus be added to the Taipower system for a total of more than 24GW in gas-fired capacity by 2025.

These plants will need to be supported by a huge expansion in the LNG receiving capacity. Taiwan currently has just over 10 mta (million tons annual) of storage capacity – 7.44 mta at Yongan in Kaohsiung and 3 mta at Taichung, with perhaps an additional 1.5 mta in the pipeline system. It will need an additional 8-10 mta by 2025, and the Guantang terminal was expected to contribute 3 mta of that amount.

Several alternatives to building the Guantang terminal have been proposed. One idea, relocating the project to the Port of Taipei, has been rejected by CPC, which cites the difficulty of construction at that site, plus the fact that it is already an operating commercial port. For safety reasons, when an LNG tanker enters a port, the channel must be cleared of traffic and all activity halted for the 20 hours needed to unload the cargo. The two operating LNG terminals are separated from commercial ports, although the Taichung LNG terminal reportedly shares a channel with the harbor.

The use of Floating Storage Regasification Units (FSRU) – LNG tankers repurposed as floating terminals – is another alternative. This idea, too, has been rejected by both environmentalist and CPC, as it would require a breakwater as protection from Taoyuan’s notoriously rough weather, including typhoons. Building a breakwater would inflict equal damage to the reefs as building the terminal there.

By itself, postponement of the Guantang terminal doesn’t necessarily disrupt Taiwan’s vision for expanding reliance on natural gas for power generation. In fact, Taipower hopes to build some of its own LNG importation terminals, instead of relying entirely on CPC.

The utility plans to convert its Hsiehho oil-fired power plant near Keelung to 1,300MW of gas-fired capacity by 2025. As this area is located far from CPC’s main pipelines, Taipower would supply this power plant with LNG from a dedicated terminal with capacity “sufficient to meet the power station and will also include sufficient capacity for a 25-day reserve margin,” says Taipower’s Lin. Sources put the actual capacity at around 1.5 mta in the first phase, with the total likely rising to 2.5-3 mta by 2032 when the second- phase construction is due to be completed.

Another Taipower LNG terminal in Taichung, scheduled to come online by 2024, would supply two new gas-fired units with a combined capacity of 2,600MW and possibly other nearby power plants such as Tongxiao #5. Lin stresses that both these projects are at a very preliminary stage and are still awaiting government approval enabling them to proceed to the EIA process.

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