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EIA: Lagging LNG Imports in '05 Led to Underutilized Capacity

Due to increasing global competition, growth in U.S. liquefied natural gas (LNG) imports stalled again in 2005 despite record-high gas prices in the country, the Energy Information Administration (EIA) said in a new report.

U.S. LNG imports fell for the first time since 2002 and only the second time in the past decade, according to the EIA. "Constraints in global supplies and price competition, particularly from France and Spain in the Atlantic Basin portion of the global market, limited shipments to the United States. LNG imports for the year totaled 631 Bcf, down 3.2% from the [652 Bcf] level in 2004. With this volume, U.S. terminals operated at a utilization rate of about 50% of their annual regasification capacity of over 1,250 Bcf," the agency said.

Of the four operating onshore LNG terminals in the nation, Dominion's Cove Point LNG facility on the Chesapeake Bay in Lusby, MD, received the largest volume of imports in 2005 at 222 Bcf, or an average of 610 MMcf/d, the EIA noted. Three companies share capacity rights at the Cove Point facility: Statoil, Shell and BP. The SUEZ Energy Distrigas terminal in Everett, MA, received the next largest volume at 169 Bcf, or a daily average of 460 MMcf/d.

The other two onshore terminals -- Southern LNG's facility on Elba Island, GA, and Trunkline LNG's terminal in Lake Charles, LA -- received 132 Bcf and 104 Bcf in 2005, respectively, the EIA said.

Although many companies have announced intentions to participate in the emerging international LNG trade to the U.S., the agency noted that only a few are currently importing. BG Group in 2005 imported the largest volume of LNG for the third year in a row, accounting for about 37% of overall U.S. LNG imports, according to the EIA. SUEZ Energy's entire throughput (169 Bcf) was sourced in Trinidad and Tobago and imported through its Distrigas terminal.

BP (82 Bcf), Statoil (62 Bcf) and Shell (78 Bcf) were pegged as large LNG importers as well. All of their imports were delivered solely to the Cove Point LNG facility, resulting in a relatively high utilization rate for the southern Maryland terminal. Excelerate Energy's deepwater port in the Gulf of Mexico imported two cargoes in 2005, one each from Malaysia and Nigeria, for a total of 5 Bcf of imports.

The EIA ranked Trinidad and Tobago as the major supplier of LNG to the United States in 2005, accounting for nearly 70% of LNG imports, or 439 Bcf. The country's Atlantic LNG facility in 2005 supplied LNG exports to all four operating onshore U.S. terminals, although the Everett terminal was the primary destination for the cargoes, the agency said.

Shipments from Algeria, which was the largest supplier to the U.S. through 1999, totaled 97 Bcf in 2005, or 15.4% of all LNG imports, according to the EIA. Egypt joined the list of companies supplying the U.S. with LNG in 2005, shipping 73 Bcf. The United States also received relatively small volumes from Malaysia (9 Bcf), Nigeria (8 Bcf), Qatar (3 Bcf) and Oman (2 Bcf), it said.

The EIA noted that LNG prices in 2005 were competitive with pipeline imports and domestic natural gas prices at that time. "Demonstrating the competitiveness of LNG in the current U.S. marketplace, the average price of $7.82/MMBtu (or $8.26/Mcf) from all source countries in 2005 was lower than the average price of $7.94/MMBtu (or $8.09/Mcf) for imports by pipeline from Canada. The average price for LNG imports in 2005 was even competitive with the average U.S. wellhead price, which was $7.12/MMBtu (or $7.33/Mcf)," the agency said.

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