Plans in the western United States for developing a new liquefied natural gas (LNG) import business along the Pacific Coast of North Baja in Mexico will have to compete with an aggressive push by China to rapidly ramp-up an LNG industry, according to an Arizona-based energy attorney with worldwide oil/gas development experience.

With strong air emission clean-up incentives to counter its historic dependence on coal, China’s communist government has decreed that its national gas use would jump from 5% to 10%, and the government has proposed up to four new LNG receiving terminals in South China that translate into 7 to 10 Bcf/d of added gas, said Douglas Fant, who represents the Arizona Power Authority among other energy clients. Speaking at the “Electric Power in the Southwest” conference in Las Vegas Tuesday, Fant also predicted lower demand and prices for natural gas in the years ahead.

China offers LNG suppliers closer proximity to Australia, Indonesia and other Southeast Asian LNG sources, Fant said, noting that the plans for various West Coast North American LNG receiving terminals likely will not be completed in the time frames now contemplated (2007-08), but two or three years later.

Significantly, it is a three-day roundtrip to ship LNG from Australia to China, compared with a 10-day roundtrip to North Baja from Australia.

In the meantime, Fant projected that natural gas price and demand will soften because of items such as 6-10 Bcf/d of new supplies from the Arctic, gas feedstock industries (tire and petro-chemicals) moving offshore closer to the sources of gas, and some fuel switching.

He said El Paso’s system is pretty well “locked in” to its current and proposed upgrades, and Arizona will have to build more pipeline capacity into the stae in the wake of the re-allocation of capacity on El Paso Natural Gas that forces East-of-California customers to now designate a specific delivery point for supplies under the same terms available to all other shippers on the system. California shippers are now in a better position relatively, he said.

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