INSIGHT: US energy supply prey to seaborne terror

10 January 2008 15:43  [Source: ICIS news]

By Joe Kamalick

 

WASHINGTON (ICIS news)--As the US becomes increasing dependent on overseas energy sources - especially liquefied natural gas (LNG) - the nation’s energy supply and economy are increasingly vulnerable to terrorist attacks on tankers, a new federal study shows.

 

Congress investigative arm the Government Accountability Office (GAO) said that as US dependence in particular on overseas LNG supplies grows, the nation’s energy base and economic stability are increasingly at risk from terrorist attacks on supply vessels anywhere in foreign or domestic ports and along the tens of thousands of miles of sea lanes.

 

In 2005, the report noted, the US imported 55% of its crude oil and about 3% of its natural gas by tanker.

 

“In addition to crude oil, the US also imports highly combustible liquefied energy products, such as gasoline, jet fuel and liquefied gases, such as liquefied petroleum gas (LPG) and LNG,” the GAO said.

 

“Daily ship-based imports of LNG now average about 1.7bn cubic feet [bcf], or the equivalent of two LNG tankers arriving at a US port every three days.”

 

“This already extensive reliance on imported energy commodities is expected to increase - and for LNG to grow substantially,” the office said. 

 

The report cited US Energy Department projections that while US imports of crude oil will increase by some 4% by 2015, the nation’s LNG imports are expected to grow more than 400% by that year.

 

That huge increase in LNG imports not only means a larger number of potentially vulnerable tankers docking daily at US ports, it also serves to create more potential terrorist targets in additional LNG import terminals.

 

There are now only five US LNG import terminals, but the number will grow fast. As the GAO reported, the Federal Energy Regulatory Commission has recently approved plans for 11 additional terminals “and dozens more have been proposed”.

 

“Port facilities are inherently vulnerable because they must provide access by land and sea and because they are sprawling installations, often close to population centres,” the report said. 

 

“Likewise, the ships that transport these products are vulnerable because they travel on direct routes that are known in advance and, for part of their journey, they may have to travel through waters that do not allow them to manoeuvre away from possible attacks.”

 

The entire seaborne supply chain is vulnerable, the GAO said. Indeed, attacks have already been made, including suicide attacks, stand-off assaults using rocket grenades and even armed assaults. 

 

“For example, well-armed bands have used small boats to attack tankers, loading facilities and oil workers,” the GAO reported, adding that “many other types of potential attacks exist, such as internal crew conspiracies and collisions with other vessels piloted by terrorists”.

 

A 2002 suicide attack on the French tanker Limburg off the coast of Yemen punched a truck-sized hole in the hull, nearly sinking the ship.

 

As the US dependence on an ocean-going energy supply chain increases, the risk multiplies. 

 

In 2006, said the report, there were some 3,550 registered crude tankers of 300 gross tons or more and 200 registered LNG tankers. As the global market for crude continues to expand and the LNG sector expands exponentially, there will be more and more tankers plying the seas.

 

“For tankers in transit in international waters, the primary challenge involves patrolling the lengthy travel routes and frequent danger spots with a limited number of naval vessels,” the GAO said.

 

“A successful attack on an energy commodity tanker could have substantial public safety, environmental and economic consequences,” the report said. 

 

“For instance, highly combustible commodities such as LNG and LPG have the potential to catch fire, or in a more unlikely scenario - if they are trapped in a confined space such as under a dock - explode, posing a threat to public safety.”

 

“Finally, the economic consequences of a major attack could include a temporary price spike reflecting fears of further attacks, and supply disruptions associated with delays of shipments if major transit routes, key facilities or key ports are closed,” the GAO said.

 

“The loss of one cargo of an energy commodity might not have a significant, sustained price impact. However, if an attack results in port closures for multiple days or weeks, price responses and higher costs could mean losses in economic welfare to consumers, businesses, and government amounting to billions of dollars.”

 

The GAO study noted that much work is being done internationally to deter or protect against such attacks, but the supply lines are long and vulnerable.

 

As Department of Homeland Security assistant secretary Robert Stephan has often stated, in matters of antiterrorism security “we have to be right 100% of the time; the terrorists only have to get it right once.”

 

Those odds and the nearly $100/bbl cost of oil is why US business interests this year plan to mount a full-court press on Congress to lift its 26-year-old ban on exploration and development of vast US domestic oil and gas resources in 85% of the nation’s 200-mile-wide outer continental shelf regions offshore.

 

As US Chamber of Commerce President Thomas Donohue put it: “I don’t think anybody is interested in continuing to pay $100/bbl for oil, and I don’t think people in Congress want us to remain dependent on some not very dependable people overseas for our oil and gas supplies.”

By: Joe Kamalick
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