Liquefied natural gas (LNG) imports may not be the final solution to the nation's gas supply problem, but they are expected to grow dramatically over the next decade -- at least 7% per year through 2015, as long as there is enough pipeline and storage infrastructure built to support the growth, industry experts said at an LNG conference in Houston on Wednesday.
Speaking at Infocast's fourth "Gas Storage: Impacts of LNG" conference, R.W. Beck Inc. consultant Bill McAleb said the number of proposed LNG regasification terminals to be built in North America over the next few years is still uncertain, but there is "no way" that all 44 of the currently proposed terminals will be built -- "no where close to 44."
Beck estimates there will be no more than five to seven new terminals built in North America in the next few years -- and most of them will be along the Gulf Coast. Nine Gulf Coast LNG import terminals have been approved in the past two years by FERC or the Maritime Administration. Two terminals are operating, including Trunkline LNG's terminal at Lake Charles and Excelerate's Energy Bridge offshore Louisiana deepwater port, the first new LNG terminal to enter service in the last quarter century. Meanwhile, at least 12 other terminals have been proposed for the Gulf Coast or Gulf of Mexico and at least nine projects are planned for the East Coast of the United States with four more in eastern Canada and three more in the Bahamas.
"Many of the proposed facilities will not be built," McAleb told conference attendees. One of the biggest problems with some of the proposals is the "substantial amount of local opposition, especially along the Atlantic Coast. We don't believe any of the West Coast facilities will be built, except for in Mexico. Our opinion is there will be five new terminals by 2010...potentially seven."
Beck is forecasting one or two terminals in Mexico -- the first likely in Altamira. The firm is predicting that only one of the competing terminals in Atlantic Canada will be built -- either Anadarko's Bear Head terminal in Nova Scotia or Irving Oil/Repsol's Canaport facility in New Brunswick. Two other terminals have been planned in Quebec.
If any new terminals are approved along the East Coast, a likely candidate is Excelerate's proposed offloading terminal offshore Massachusetts -- but that too is problematic for the locals, McAleb noted.
Four likely will be approved along the Gulf Coast, he said, noting "the first shovel in the ground wins." Cheniere Energy already has three permit approvals in hand, for LNG facilities in Sabine Pass, LA, in Freeport, TX, and in Corpus Christi. Besides those, McAleb said Freeport McMoRan's proposed Main Pass LNG terminal off the Gulf Coast is a likely candidate for completion. "That one has a better than even chance."
One problem for new LNG construction, however, is a lack of pipeline capacity -- except for in the Gulf Coast area. There also is a lack of adequate storage. "The pipeline corridor capacity is key," McAleb said. "Net infrastructure is required. If you have five to seven new LNG terminals, the sendout needed for all of those is about 8.3-8.4 Bcf/d." McAleb noted the Energy Information Administration estimates there will be another 6.6 Bcf/d needed by 2010.
New storage would benefit LNG facilities, by offering a "pipeline infrastructure buffer," he said, along with the ability to manage supply chain interruptions. "We've seen in the past month what interruptions can do. More storage would help with that." More LNG storage also would help to manage price volatility, said McAleb.
El Paso Corp. LNG consultant Kyle Sawyer said LNG is much more important now than it ever was, and "expectations for LNG are very high."
Sawyer said a lot of new LNG projects are gaining momentum, but he agreed with McAleb. "It will be very hard to get certified on the West Coast."
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