Gas boom may spell doom for Texas village

QUINTANA, Texas — Teresa Cornelison stands on her porch looking west as night falls on Quintana, an island town of just a few dozen residents.

A sea of pipes, tanks and other industrial structures ­looms to her right, disrupting the deserted beach and threatening the village’s future.

About 10 years ago, Cornelison was on the losing end of a battle against Houston-based Freeport LNG, the company behind a liquefied natural gas import facility just a quarter mile from her home. Now, it wants to build again — this time to send gas overseas in response to the changing dynamics of the global natural gas market.

“I feel like they’re building me inside the terminal,” she says.

This time, however, Freeport LNG offered to buy her house for $225,000. She has no intention of leaving, even though the offer may exceed the value of her home.

“I love this place. It’s paid for. The taxes are low. Why the hell should I go? I was here first.”

Cornelison isn’t alone. As Freeport LNG planned its expansion last year, it made the unusual offer to every homeowner in the sleepy island town just southeast of Freeport. As residents began grumbling about the potential impact of the facility, the company offered to buy the home of anyone who wanted to sell, and it says more than half of the owners have said yes.

That makes Quintana a unique chapter in the story of the American energy renaissance. While there’s been a litany of narratives about boom towns from North Dakota to South Texas, Quintana may be the only community that could shrink — or even vanish, some holdout homeowners fear — in response to the country’s surge in energy production.

Future of houses

Mark Mallett, Freeport LNG’s senior vice president for operations and projects, said the firm came up with a plan last September to pay above market value, plus $25,000, for any of the homes. He said the company wasn’t trying to take over the island, but to address residents’ concerns.

The company doesn’t know exactly what it’s going to do with the houses. Ones in poor shape probably will be demolished, Mallett said, while others could house construction workers and eventually employees.

Moody’s: Freeport LNG exports will boost gas producers and pipelines

But opponents of the export project say the offer was a tactic to mute critics and even turn them into Freeport LNG cheerleaders. In addition to the housing offer, the company has said it will pay homeowners who choose to stay on the island $25,000 to offset the inconvenience of years-long construction.

It also offered to pay for $1 million in infrastructure improvements for the town, once the project receives all the permits it needs.

Quintana Councilman Harold Doty, who lives half a mile from the site of the proposed new facility, believes the payouts are a deliberate attempt to divide the community and make it harder for residents to fight the project.

“They’d like there to be no city,” Doty said.

The company denies such a strategy, but there is evidence of the community fissures Doty describes.

In a June petition filed with the Federal Energy Regulatory Commission, the federal body that will determine whether construction can proceed, 57 people who identified themselves as Quintana residents urged the commission to deny the permits. That represented a huge portion of the town’s 66 registered voters.

Today, some of those petitioners no longer oppose the project, and in fact are unlikely even to be residents by the time it would come online in 2018. Company officials say they’ve signed options to purchase 44 of 73 residences in Quintana.

“We don’t need to buy anyone’s home to be able to safely construct and operate this project,” Mallett said. “We’re trying to address the concerns.”

History of decline

In the 19th century, Quintana reportedly boasted a hotel, pool rooms and dance halls. The wake of the Galveston hurricane of 1900 sped its decline. Today, residents and vacationers alike enjoy the isolation, and it lacks much of anything but houses, parks and a campground.

And Freeport LNG.

About a decade ago, the company picked the island as the site for a terminal to receive tankers full of chilled liquefied natural gas, warm it back to its natural state and pipe it to U.S. consumers.

In 2008, the facility received its first shipment.

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By 2010, the U.S. was awash in cheap natural gas set free by the domestic shale boom, and foreign customers were willing to pay a premium for it.

That set off a rush of applications to the federal government for new and converted LNG export facilities, since imports no longer made economic sense. Freeport LNG was one of the first, filing its initial paperwork with the Energy Department in 2010.

Today, as Freeport LNG awaits the go-ahead from federal officials, its operations are quiet. Fewer than 10 ships a year typically call at the company’s existing facility on the east end of Quintana.

That quiet won’t last for long if the company gets the permits to begin the four years of construction to complete the $14 billion export project.

In a report issued this spring, the Federal Energy Regulatory Commission said construction would bring noisy barge traffic, construction vehicles, delivery trucks and pile-driving that will mean “greater annoyance” for residents.

Yet Freeport LNG wants those same residents to support the project. In an April 3 letter it asked some supportive residents to write to regulators and express confidence that the company will minimize the impact of construction.

Freeport LNG offers talking points for residents, and a reminder that the company won’t finalize its purchase of homes until the federal agency approves the project. “The sooner all the required permits are received, the sooner we can purchase the houses under contract and the sooner thousands of jobs will be created in Brazoria County,” wrote Anne Rappold, the company’s public information officer.

Officials say that statement simply reflects reality: Buying homes is expensive, and the company won’t do so until the project’s future is assured. The home purchases and other payouts from Freeport LNG have contributed to the division in town between those who want to stay and fight, and those who hope to avoid a protracted battle.

Researcher: Profits from US natural gas exports could disappoint

Regardless of how residents feel, they seem to lack the political clout to stop the project. Local, state and federal leaders have embraced it, and Brazoria County even offered tax abatements to entice Freeport LNG to build.

“The economic boom to Brazoria County is tremendous now,” said County Commissioner Donald “Dude” Payne.

‘Nothing for Quintana’

Christopher Kall, who’s owned a home on the island since 1997, points to the irony that Quintana is one of the few places that won’t benefit from the project. “They talk about what it’s going to do for the economy,” Kall said. “But it does nothing for the economy of Quintana.”

Kall believes Freeport LNG is strong-arming residents, knowing it will be difficult for them to sell their homes once the plant is built.

Quintana Councilwoman Linda Martin said she’ll sell her home to Freeport LNG and considers the offer more than fair.

“I wouldn’t have been able to sell it for the offer they made me,” she said. Moreover, she believes she recognizes something her neighbors don’t: The project involves forces larger than Quintana’s handful of homeowners.

“They’re here, and there’s nothing you can do about it,” Martin said. “This is part of our world trade. It’s going to bring trillions of dollars to the United States.”

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Mallett, the company vice president, cited its long history with Quintana residents. “Not all of it’s been good,” he acknowledged. “But there are a lot of folks who’ve benefited from us being there, as well as the city.”

Others don’t buy the feel-good language. “They make themselves sound like they’re good for the community,” said Hanh Nguyen, who’s owned a home here since the early 1990s.”They turned it into an industrial island.”

The focal point of the project will be three pieces of equipment called “liquefaction trains” designed to cool gas into a liquid for shipment. Along with electric substations, piping, storage areas, truck unloading stations and ground flares, the whole thing is too close for comfort to residents like Nguyen.

The good news for residents is that while federal officials say construction of the facility will be messy, the terminal won’t be significantly disruptive once it’s online.

Nguyen, a Dow employee, is skeptical. “I work in a chemical plant,” she said. “It’s not how I choose to spend my retirement.”