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Plans to build liquified natural gas facilities near South Padre Island gaining opposition

PORT ISABEL — Not long after a deadly refinery explosion left her husband battered and traumatized, Flora Gundersen, 67, decided she could no longer bear the smokestacks and flares on the horizon. So the couple relocated to Long Island Village, a speck of land on the coastal waters near South Padre Island.

The couple had envisioned a retirement made up of leisurely fishing trips and golf in a subtropical paradise. And for most of the past decade, that was pretty much how life went for the Gundersens.

Now a proposal to build facilities for the liquefaction and export of natural gas, all within eyeshot of their back porch, has raised the specter of an industry they hoped to leave far behind.

“They’re going to turn our pristine waterway into the same thing as Texas City,” Flora Gundersen said. “That’s not something we want to be a part of.”

The Gundersens are not alone in their angst. In the past year, a growing number of residents and elected officials across Cameron County have resisted the liquefied natural gas proposals designed for the Brownsville Ship Channel, citing safety and environmental concerns, as well as fears that the industry could scare off tourists.

Despite the criticism, Texas LNG filed an official application with the Federal Energy Regulatory Commission this year, followed by NextDecade. A third company, Annova LNG, has said it will file its application soon.

The companies have drawn broad support from the Rio Grande Valley business community on promises that the industry will create hundreds of jobs and infuse the region with billions of dollars’ worth of investment. In addition, each company has sought to ease concerns and debunk popular misconceptions about their projects through community outreach.

“I consider myself an environmentalist,” said Langtry Meyer, chief operating officer of Texas LNG. “Having LNG is good for the global environmental because you’re displacing very dirty fossil fuel.”

The companies would bring in natural gas via pipeline from the Eagle Ford Shale or other producing areas, to liquefaction facilities at the ship channel, where the gas would be cooled to minus 260 degrees in what Meyer described as a high-tech refrigerator, then readied for export.

The Save RGV from LNG movement has rallied opposition to the projects in the Valley, cautioning residents against the flammable products used in LNG plants to refine and refrigerate the gas, vapor clouds from accidental spills and loss of habitat for a host of wildlife.

“The proposed site is home to diverse wildlife, including many endangered species like the ocelot, industrial lighting and noise from project construction and operation,” said Rebekah Hinojosa, conservation organizer for the Sierra Club.

Yet some experts argue that while the effect of alternative energy sources on the environment is largely unclear, LNG is arguably as good or better than most large-scale mineral extraction and fuels.

Large accidents are rare. In 2014, a blast at an LNG facility in Washington state sent a piece of debris flying into an LNG tank. That has stirred fears about Space Exploration Technologies Corp., known as SpaceX, which plans to launch rockets from nearby Boca Chica Beach, which is close to where the LNG plant would be built.

If a rising chorus of critics doesn’t derail the Brownsville projects, convincing FERC that several export terminals are necessary in an already saturated market could. In a decision that surprised many industry leaders, federal regulators in March rejected plans for an LNG export terminal in Coos Bay, Oregon, after it found that applicants had not demonstrated a need for the facility.

The facilities proposed for the Port of Brownsville will be capable of exporting between 2 million tons per year for the smallest project and 27 million tons per year for the largest.

“Global demand is about 240 million tons per annum, projects under construction will bring total capacity to 350, we have 720 (mtpa) more that is planned,” said Michelle Foss, chief energy economist at the University of Texas’ Jackson School of Geosciences. “It’s hard to see how new U.S. projects in an already oversupplied world can compete, especially with our typically volatile gas market at home.”

Each project would hire hundreds of local workers during the construction phase and between 80 and 165 permanent workers with an average salary of around $70,000 per year once the facilities are operational. That’s a considerable investment for an impoverished county where the median household income is less than $34,000.

A decision from FERC on whether to issue permits is expected before the end of 2017, and if the companies are successful in obtaining permits, construction would begin soon after.

Meyer said Texas LNG, should its project be approved, wouldn’t be operational until 2021, plenty of time for the demand-supply dynamics to shift in his favor. But Foss argues that many projects would have to drop out of the market to improve the expected supply-demand imbalance.

Meyer doesn’t agree.

“Globally, LNG is the second-largest commodity after crude oil. Because of the environmental benefits, the market is growing tremendously, with new countries entering the market,” Meyer said. “In the U.S., we have abundant and low-cost natural gas, which makes the U.S. an ideal export market.”

Several area chambers of commerce and officials have thrown their support behind the LNG projects, among them Lt. Gov. Dan Patrick, who wrote a letter to FERC in support of Texas LNG, praising the jobs it would create, the direct investment of $1.3 billion and $11 million in annual state and local tax revenue.

Eduardo A. Campirano, port director and CEO of the Port of Brownsville, reminded area residents in an open letter to local media that the port is geared toward luring industry and maritime commerce.

“At the end of the day, it’s a balancing act between developing our business potential and environmental stewardship,” Campirano said in an interview.

“As possibly the last of the ports on the Texas coast that has land available,” the Brownsville port is an attractive option for industry, Campirano added.

Meanwhile, NextDecade said it has been pleased with the enthusiasm from the local community, and Annova LNG says that around 70 percent of the community backs its project, according to its own research.

“From the beginning, we said for Annova to become a reality down there, we needed three things,” said Bill Harris, a spokesman for the company. “And that was success on all permitting and approval processes, signed long-term customers and broad public support.”

And yet the company has drawn stiff resistance from environmentalists and businesses, and there’s been a flurry of motions to intervene from cities that depend on tourist dollars, including Port Isabel, South Padre Island and Laguna Vista.

In a move that some felt was largely symbolic, the company donated $40,000 for GPS tracking collars to monitor the endangered ocelot, as well as agreeing to slightly move its proposed gas facility to give the animal ongoing access to a wildlife-crossing tunnel under a highway.

Separately, Annova asked school district officials in Port Isabel, a coastal community of 5,000, to grant the company a tax break under the Texas Economic Development Act.

When completed, Annova’s export facility will be valued at nearly $1.4 billion, the company informed Point Isabel Independent School District. But it asked the district to limit the facility’s valuation to $25 million for 10 years, drastically reducing the company’s school property taxes for that time period.

Limiting, or even eliminating, property taxes for a set time is a common economic incentive offered to companies to bring them into a particular community. In this case, Annova would pay about $270,000 in school taxes each year instead of an estimated $32.4 million annually, with the state covering the difference of what Point Isabel doesn’t tax.

In return for the trustees’ generosity, Annova would pay the district $3 million over a 10-year period, the school board president told local media.

But to the surprise of the company and its critics, the trustees unanimously turned down the Houston-based company’s application for a tax abatement, an extraordinary decision that signaled broader opposition to LNG than a mere smattering of environmentalists.

“It was a very courageous decision,” said Maria Galasso, a 63-year-old Port Isabel resident organizer with Save RGV from LNG. “We all understood this actually represented real money. It wasn’t just a vote.”

Ken Waller, a 59-year-old home builder from McAllen, guided his boat into the Brownsville Ship Channel. The rooftops of Long Island Village disappear, and the channel opens to untrammeled wetlands. The Laguna Atascosa National Wildlife Refuge is in the distance, and the heavy industry of the Port of Brownsville is still miles away.

He stopped his boat near the proposed location of one LNG terminal that he calculated was about 1.7 miles from the middle of Long Island Village, where he owns a home. He says that if the lights glowing in the night don’t decrease his home value, the export terminals rising above the flat landscape will.

It’s not that he’s opposed to industry, Waller explained, he just doesn’t want it in his backyard.

“They talk about all of the jobs this is going to create,” Waller said. “How many jobs are we going to lose?”