Researcher: LNG Will Meet Shortfall in U.S. Gas Supply

Importing liquefied natural gas is "one part of the solution" to help supply an expected natural gas shortfall of 8 Bcf/d by 2010, according to Houston researcher Industrial Information Resources Inc. (IIR). It noted that by the end of the decade, U.S. consumption will reach 30 Bcf/d, and LNG imports will play an "increasingly important role" to power new natural gas-fired plants now under construction.

"Presently, there are not enough LNG terminals in operation to handle the import volume being considered," IIR said in a new research report. Ed Weatherly, the company's petroleum terminals group manager, said "there is a vast interest in getting these terminals constructed and commissioned to take advantage of the growing demand for natural gas in the energy and commercial sectors."

For LNG to be able to make an impact, more domestic infrastructure is necessary to handle the imports. In the United States there are currently two LNG receiving terminals with a combined regasification capacity of 1.4 Bcf/d. Two other facilities with a combined regasification capacity of 1.7 Bcf/d are in the process of being reactivated on the East Coast (see NGI, Feb. 12).

The two LNG terminals in the United States that are currently operating are CMS Trunkline's facility in Lake Charles, LA and the Cabot LNG terminal at Everett in Massachusetts, which was bought by Tractebel last year. The two mothballed facilities are Williams Cos. Cove Point terminal in Lusby, MD and Sonat's Elba Island LNG import terminal in Georgia. Sonat is a subsidiary of El Paso Corp. With all four operating, total regasification capacity would rise to 3.1 Bcf/d by the third quarter of 2002, still leaving a large shortfall in capacity, IIR said.

A plethora of recent new project announcements would indicate that energy companies also forecast a greater need for LNG in the future. Following announcements by big and small companies, including El Paso Corp., Phillips Petroleum, Enron Corp., Williams Cos., Texaco Corp., Shell Corp. and Cheniere Energy Inc., Dynegy Corp. said last week it would construct a LNG facility along the Gulf Coast (see NGI, July 16).

IIR noted that "four companies are presently evaluating the construction of seven new LNG terminals and expanding one existing LNG terminal, all located in the U.S." In April, CMS Energy Corp., which operates the largest currently operating LNG facility, announced it would expand (see NGI, April 9). "If completed, these terminals would provide a combined total regasification capacity of 7 Bcf/d of natural gas." The researcher noted that "two of these companies," El Paso and CMS, "are also evaluating the construction of four new LNG terminals in Mexico, two of which, due to their location, would be capable of supplying markets in California" (see NGI, June 18; June 25).

The Mexico LNG terminals "are worth an estimated $1.3 billion, and will have a combined regasification capacity of 4 Bcf/d if completed," said IIR. "Ultimately, these terminals could be expanded to supply up to 8 Bcf/d of natural gas by 2008."

Weatherly noted that LNG would be a "very economical way to transport natural gas. LNG has a regasification ratio of 618:1, and a specific gravity of 0.43. The average LNG tanker carries 125,000 cubic meters of LNG, which equates to 53,879 metric tons." He said that when it is regasified, "each metric ton is converted to 50,500 cubic feet of natural gas so each tanker can carry the equivalent of 2.7 Bcf or a three-day supply for an average LNG terminal."

LNG terminals also offer the advantage of receiving pre-processed gas, he said, and "hence would not have to invest in capital-intensive processing plants or lengthy pipelines" from producing areas. "In short, there is a vast interest in getting these terminals constructed and commissioned to take advantage of the growing demand for natural gas in the energy and commercial sectors."

For more information on IIR's LNG forecast, visit the web site at www.industrialinfo.com.

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