Long-term forecasts by the Energy Information Administration (EIA) understate the true potential of liquefied natural gas (LNG) supply that could be available to the domestic marketplace through 2010, but the manufacturing and industrial sectors need to actively support the growth of the domestic LNG industry, according to a new report by Arlington, VA-based Manufacturers Alliance/MAPI.

“For manufacturers the future is now,” said Donald A. Norman, an economist for the nonprofit economic and policy research organization. “It is important that we move as quickly as possible to take advantage of the promise held out by expanding LNG imports so that they can help meet the threat of competition from manufacturers located in countries with lower-priced gas.”

In addition to enhancing U.S. energy supplies, LNG terminals would enable major users, such as the chemicals, plastics, or metal transforming industries, to procure supplies directly from sellers and thus secure long-term supply at attractive prices, the MAPI report noted. Manufacturers who can include LNG in their supply portfolio will improve their competitiveness.

This is good news for the industrial and manufacturing sectors of the economy, which have been decimated by high energy costs. Gas production declines and high gas prices have contributed to substantial domestic job losses, including over 90,000 in the chemicals industry alone, the report noted. Without LNG, gas prices will continue rising.

EIA projects that LNG imports will rise from 0.5 Tcf in 2003 to 2.2 Tcf in 2010, but MAPI said that even with limited capacity factors at terminals along the Atlantic Coast, the import total probably will be closer to 4.9 Tcf, or about 18% of consumption rather than the 8% predicted by EIA.

“Together the four existing terminals following their planned expansions, the two terminals that have received approval and the six additional terminals would have the ability to import 4.9 Tcf or gas by 2010,” the report said. “If eight new terminals are operational by 2010 (in addition to the two that have been approved) LNG imports would total 22% of projected consumption.”

Norman also believes that such an increase in LNG supply would cut nationwide gas supply costs 20-25% compared to current levels.

According to the MAPI report, even with such a large increase in LNG imports and the corresponding drop in gas prices, the U.S. market would remain economically attractive to LNG suppliers. A 25% cut in current gas prices puts prices at about $3.75, and most experts project that midpoint price for LNG to remain economical is about $3.00 and the total range is $2.50 to $3.50.

“Although increased supplies would put downward pressure on domestic gas prices, the gap between the current price of natural gas and the cost of bringing LNG into the United States suggests that even if prices fall substantially it would still be economical to import LNG despite the costs of liquefaction, shipping and regasification,” the report stated. “The low cost of producing gas in countries with stranded reserves, along with the falling costs of liquefaction, shipping and regasification makes LNG competitive.”

For copies of the report go to https://www.mapi.net. For more details on existing and proposed LNG terminals go to https://intelligencepress.com/features/lng/.

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