Backers of the beleaguered Weaver's Cove liquefied natural gas (LNG) terminal proposed for Fall River, MA, recently released an economic analysis of the region's gas supply and demand outlook. The analysis says the project would lead to lower gas prices, as well as lower power prices since much of New England's power comes from gas-fired generators.

"Although energy efficiency keeps gas use in the residential, commercial and industrial sectors at a flat consumption level, the rise of power sector demand creates the need for increasing gas supplies to the region," says the report by Global Insight. "By 2017, the power sector's demand for gas will grow by 73 Bcf, an almost 20% increase from 2007 levels."

The report asserts that increasingly, power generators in New England will be forced to turn to regasified LNG as a generation fuel. "By 2017, we expect the East Coast will import 50% of the total LNG brought to the United States," the report says. To achieve such deliveries new terminals, like Weaver's Cove, will be needed, the report says.

Gas supplies in North America are in decline, the report asserts. "The decline started in 2001 when North American gas production peaked at 23 Tcf. This decline will continue as environmental restrictions limit gas producers from drilling and developing new supply sources," the report says. "In addition, Canadian gas supplies, which are also declining, will continue to be diverted to heat the Canadian oilsands for producing crude oil."

The report projects that the gap between gas supply and demand in North America will be more than 4 Tcf in 10 years, "an amount that is more than five times New England's 2007 natural gas demand."

There is no doubt that Canada is burning more of its natural gas to aid the production of oilsands. Additionally, the country is in the midst of a drilling slump, and a strong Canadian dollar relative to the U.S. dollar makes exporting gas to the United States less attractive. Last week Canada's National Energy Board said it expects that long term, Canadian gas exports will decline to zero (see related story).

However, North American gas production is not heading straight down, at least not according to some. The U.S. Energy Information Administration recently reported that U.S. gas reserves last year stood at levels not seen since 10 years before (see NGI, Nov. 12). And domestic gas producers will say that they've succeeded in growing their output, particularly from unconventional plays, where importers have failed to bring in the LNG cargoes the industry once expected (see related story).

Meanwhile, the Weaver's Cove project continues to struggle against opponents who have seemed bent on killing the project one way or another.

Last month, Rep. Barney Frank (D-MA) appeared before a House Natural Resources subcommittee to urge adoption of legislation that would designate the Taunton River in Massachusetts as a Wild and Scenic River, throwing another hurdle before the Weaver's Cove project (see NGI, Nov. 5).

Weaver's Cove, which is sponsored by Hess LNG and Poten & Partners, calls for LNG tankers to come up the Taunton River to reach the proposed terminal site. The river feeds into Mount Hope Bay and Narragansett Bay about 50 miles south of Boston.

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