imports

While there are “ample” natural gas reserves throughout North America, the cost of developing “frontier” projects is substantially greater than importing additional quantities of LNG from Trinidad, South America, Africa, the Middle East and Australia, the Zeus Development Corp. said.

In another indication that liquefied natural gas could becomemore than a niche fuel in North America, San Francisco-basedChevron said yesterday it is “reviewing options” for importing LNGto serve the West Coast. If the project proves economically viable,Chevron said its first supplies could arrive by 2005.

Despite current plans to reactivate LNG imports and expand the Cove Point LNG plant, Columbia Energy Group has decided the Lusby, MD-based facility does not fit into its core group of assets. The company announced plans last week to sell Cove Point and a related pipeline to Williams Gas Pipeline for $150 million. The sale is subject to clearance under the Hart-Scott-Rodino Act but should be completed by July 2000, the companies said.

Despite current plans to reactivate LNG imports and expand theCove Point LNG plant, Columbia Energy Group has decided the Lusby,MD-based facility does not fit into its core group of assets. Thecompany announced plans yesterday to sell the LNG facility andrelated pipeline to Williams Gas Pipeline for $150 million. Thesale is subject to clearance under the Hart-Scott-Rodino Act butshould be completed by July 2000, the companies said.

Despite Tuesday’s large opening gap and 11.8-cent collapse, theMarch contract found support in the high $2.40s yesterday andmanaged a small 1.5-cent gain to end the regular trading day at$2.530. It hit bottom at $2.465 and reached a high for the day of$2.545. April was down 0.3 cents to $2.541, and nearly all of theremaining months were unchanged from the day prior.

Statoil Energy is bullish on gas prices this winter and over thelong haul, so bullish, in fact, it may begin long-term LNGimporting in the next few years, company officials said at a pressbriefing last week at the company’s U.S. headquarters inAlexandria, VA.

The Energy Information Administration continues to be bearish ongas wellhead prices this year but expects prices to remain abovethe $2/Mcf mark because of the possibility that temperatures willbe higher than normal this summer and coal delivery problems maypersist in Texas. In its May Short Term Energy Outlook, the EIAsaid it expects wellhead prices to average $2.15/Mcf this year,down 3.6% from the $2.23/Mcf average in 1997.

Last year, Duke Energy’s LNG imports soared 337% to 30.6 Bcf.But 1998 is expected to be even better because the recent economiccrisis in Asia has stifled demand while LNG shipping and productioncosts have been declining. Duke Energy LNG Sales announcedyesterday it purchased three more spot cargoes of liquefied naturalgas (8.9 TBtu) from the North West Shelf LNG Project in Australia.The company has arranged to sell the LNG in U.S. markets in June,August and November. It will be imported at Duke’s Trunkline LNGreceiving terminal located in Lake Charles, LA. The shipments willcome from North West Shelf’s liquefaction facilities located atWithnell Bay in the port of Dampier in Australia.

The current North American Free Trade Agreement (NAFTA) tariffon gas imports into Mexico is holding up pipeline development fromthe U.S. to northern Mexico, said consultant George Baker of Baker& Associates. “The only people that have to pay this tariff arethe private industry who would contract with a U.S. gas supplier.If they buy [gas] from Pemex [Petroleos Mexicanos], however, it’s arolled-in price and they don’t pay it.” The tariff, originally 10%in 1991, is rolled back 1% a year and currently stands at 5%.That’s still too high for the private sector to feel confident itcan make money shipping gas to Mexico, Baker told attendees Tuesdayat the conference portion of Houston Energy Expo ’98, formerlyknown as Gas Fair. “That’s an important delay, and the origin of itis largely Pemex’s wanting to say, ‘we’re not ready for competitionyet.’ Some people say, ‘have you ever heard of a state monopolythat has acknowledged that it’s ready for competition yet.’ Mostpeople say no.”