Imported liquefied natural gas (LNG) is the fastest growing source of natural gas in the United States and will continue to be so in the years ahead, according to a FERC staff overview of the market Thursday.
In 1996, the United States imported 40.3 Bcf of LNG from two terminals, representing less than two-tenths of a percent of domestic gas supply, but the Energy Information Administration (EIA) expects LNG imports to set a record of 855 Bcf by the end of this year, representing a 47% increase over 2006 levels, the staff of the Federal energy Regulatory Commission (FERC) said.
A 20% increase is expected in 2008, with imports totaling just over 1 Tcf, or 2.8 Bcf/d. This would represent 4.5% of U.S. gas supply, according to FERC. While domestic gas production is expected to grow at an annual rate of only 0.4% between now and 2025, LNG imports are likely to increase at an annual rate of 10.2% during that time period, accounting for 17% of domestic gas supply by 2025, staff noted.
FERC said the growth in U.S. imports is due to two factors — higher natural gas prices in the U.S. compared to the rest of the world, and the nation’s enormous storage capacity.
LNG regasification in the United States has increased from 1.5 Bcf/d to 6 Bcf/d since the start of the decade. An estimated 6.2 Bcf of regasification capacity is expected to be added in 2008, followed by a 3.4 Bcf/d increase in 2009, FERC said. By the end of the decade, the United States will see its regasification capacity increase by 10 times the amount that was available in 2000, the agency noted.
At the same time, LNG liquefaction capacity in the Atlantic Basin will almost triple to just over 10 Bcf, according to FERC. While U.S. regasification capacity is expanding faster than liquefaction capacity, FERC staff said this should enable the United States to take further advantage of the situations where the price differential favors importers bringing LNG to the United States.
FERC staff further noted that liquefaction capacity is rapidly expanding in the Middle East, especially in Qatar. While the Middle East isn’t considered part of the Atlantic Basin, these LNG supplies will help to satisfy Atlantic Basin demand, it said.
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