Lower Neches makes case for more water

NACOGDOCHES – Water issues simmered near the boiling point last Wednesday as members of the East Texas Regional Water Planning Group (Region I) debated whether to accept the Lower Neches Valley Authority’s (LNRA) request to supply more water to manufacturing customers.

Although LNVA will have to get ultimate approval from the TCEQ on the water rights permit amendment, the Region I meeting became a battleground in an upper basin vs. lower basin power struggle that involves billion dollar manufacturing plants storing liquid natural gas (LNG) on the Texas coast.

Some board members told the Cherokeean Herald that LNVA is trying to lay groundwork at the regional level for a TCEQ contested case hearing scheduled later this month in Austin to prioritize manufacturing needs ahead of municipal and agricultural needs in the upper basin.

The permit currently states that LNVA must subordinate to entities upstream that have municipal needs.

Cities and counties with water rights in the upper basin, including Cherokee County, stand to lose water if the LNVA prevails with their permit amendment.

During the discussion on the draft water plan, the Lower Neches Valley Authority provided significantly increased manufacturing water demand projections for use at proposed liquid natural gas facilities.

The first water group debate on Oct. 14 centered on whether to accept inflated manufacturing water requests in the Draft 2011 Regional Water Plan or whether to send the issue back to a technical committee for further review. With a March 2010 deadline to hand the 2011 draft to the Texas Water Development Board (TWDB), committee members extended a normally two-hour meeting into four hours and cast votes.

George Campbell, a Nacogdoches businessman who represented upper basin interests said the move by LNVA was an attempt to tie up water in the southern portion of the region and place “dibs” on water LNVA might need in the future. He said it was not based on current customer needs.

“The planning group is not a regulatory agency, and we don’t have the authority,” said Mr. Campbell. “What the LNVA is trying to use this water for made many in this group uncomfortable.”

LNVA wants to keep construction options viable for 2nd plant

Scott Hall, LNVA general manager, asked the group to accept the water demand revisions “as an opportunity for today” to keep “a viable project still moving forward.”

He distributed copies of a letter he received from the director of commercial Development at Sempra, regarding the company’s interest in constructing a LNG and crude oil terminal. Marvin L. Ivey wrote, “The availability of LNVAsupplied water is part of the attraction to develop theses projects in SE Texas. We would encourage LNVA to preserve industry’s access to quality water resources in the region.”

LNVA proposed increased water allocation to these facilities as a heat transfer fluid for warming the LNG. LNG facilities store liquid natural gas at -260 degrees F because in its liquid form, it takes up 1/600th of the volume compared to its gaseous state. These plants will require water to warm liquid natural gas at transfer points and return it to a gaseous state for pipeline movement.

Because of the significant temperature increase required, LNVA estimated that approximately 179,225 acre-feet per year of water will be necessary for each of the two plants. According to LNVA, the Golden Pass plant will need this volume of water annually by 2020. LNVA estimates that the Sempra plant will need this annual volume by 2030.

A Sept. 21 memorandum which served as a public notice of demand revisions, discussed Jefferson County’s 151,672 acre-feet of water usage for 2010. After the first LNG plant goes on-line, the 2020 water needs increase to 423,258 acre-feet.

Once the second plant begins operations in 2030, that demand jumps to 603,321 acre-feet a year, representing a 397 percent increase over 2010 anticipated usage. That volume of water would cover a 940 square-mile area with one foot of water, representing an area approximately 2/3 the size of Rhode Island.

Open loop vs. closed loop systems

Both LNG plants are permitted for water use in a closed loop network which burns natural gas to warm a heat transfer fluid, such as water, which then warms the LNG into a gaseous state.

In the noticed memorandum, the discrepancy between the LNG plants and LNVA’s request was noted: “... neither of the LNG plants is currently planning to utilize water to warm the LNG in the manner proposed by LNVA.

Mr. Campbell asked for further clarification on why LNVA’s request did not match the design plan of the LNG plants, which currently call for a closedloop piping system to re-circulate a heat transfer fluid through the LNG.

Mr. Campbell continued, “In the Sept. 21 memo, the consultants indicated that LNG facilities were not using water in the manner that the Lower Neches Valley Authority proposed. If we are taking their word for that fact, then we should use another method for heat transfer.”

Monty Shanks, general manager of the Upper Neches River Authority, read from a prepared statement suggesting that if the LNG plants change the method used for heat generation, then a new permit and environmental impact statement would be required.

LNVA attempted to plug in numbers at the regional water planning group level which would allocate massive amounts of freshwater from the Neches basin instead of a relatively small amount of water for a closed loop system.

Cherokee County Judge Chris Davis, who was unable to attend the quarterly meeting, anticipated the controversial agenda and assigned a proxy vote to Mr. Campbell to protect water interests in the upper basin and to vote against the LNVA request to get increased water allotments for industrial use.

LNVA’s current water rights extend north as far as Cherokee County and include Pine Island Bayou, the Neches River, Sam Rayburn Reservoir and B.A. Steinhagen Lake.

“Basically, the Lower Neches Valley Authority is trying to take our water,” said Mr. Davis. “They want our fresh drinking water to warm the liquefied natural gas, and then they are just going to dump it into the gulf. This is not a good use of our fresh water.”

On a vote near the end of the meeting, the group accepted the increased irrigation and manufacturing projections with a caveat that Jefferson County cannot use more water than the current water rights permit allows.

If LNVA pursues water that exceeds amounts allocated in their current permit, members of Region I said they will attend the contested case hearing at TCEQ in Austin to explain their concerns.

“They have a huge petro complex down there and the largest (agricultural) irrigation network in the area,” said Mr. Campbell. “I am sensitive to that and appreciative of that. But we need to make sure that decisions materially benefit the entire area in the long run. Jefferson County shouldn’t rule the roost.”

The drafts and recommendations made by Region I at the local level will become integrated into the 2012 State Water Plan.