Executive Summary
Recent hurricanes and energy price volatility have focused the nation’s attention on natural gas markets. However, North American natural gas production faced challenges, even prior to the hurricanes. In order to meet projected North American natural gas demand, energy companies are increasingly looking to import liquefied natural gas (LNG) as an alternative to domestic and Canadian natural gas. There are currently five terminals where LNG can be offloaded from tankers and shipped to North American customers via pipelines and trucks, with a total existing capacity of over 4 billion cubic feet per day (bcfd). Energy companies have proposed 41 LNG projects (both new construction and expansions), totaling over 47 bcfd of capacity. If the new projects are built according to schedule, they will bring the ultimate total North American LNG capacity to just over 51 bcfd by 2010, which is equivalent to 83% of the U.S. average daily natural gas demand for the period 2001 – 2004.
Such LNG capacity, if fully utilized, has the potential to flood the North American market with natural gas and drive prices down substantially. However, the global LNG supply averaged less than 18 bcfd in 2004, which is considerably less than the proposed 51 bcfd mentioned above. There are also questions about the viability of some projects due to legal, environmental, and engineering issues. In addition, the ultimate capacity will not be fully utilized 100% of the time, since the number of available tankers and the quantity of available supply will likely be limiting factors. Finally, the U.S. will be increasingly dependent on a highly competitive global marketplace for LNG, with established consumers such as Japan competing for available supplies, which may tend to keep U.S. natural gas prices elevated.
Motivation for LNG Imports
n flat or declining since the early 1970s, Canadian production has flatlined since about 2001, and hurricanes have recently taken a bite out of Gulf of Mexico production capacity. Conversely, some overseas suppliers produce more natural gas than can be used locally. In order to export this natural gas, the gas is liquefied at temperatures around -260ºF, which greatly reduces its volume, and is then loaded on cryogenic tankers and shipped overseas. At the destination, the LNG can be trans-shipped via rail or truck, or can be regasified and fed into existing pipeline networks.
Background on North American LNG Imports
To offset increasing demand and decreasing North American supplies, energy companies are proposing a wave of LNG terminal projects [1]. Although the U.S. already imports LNG at 5 existing locations, 41 proposed North American projects and expansions will permit an increase in imports of LNG from overseas suppliers. Much of this imported LNG will be sourced from existing suppliers, such as Algeria, Trinidad and Tobago, Indonesia, Qatar and other Persian Gulf nations. In addition, increasing supplies are being shipped (or soon will be) from Nigeria, Russia, and the Caspian region in central Asia.
LNG Capacity Projections
We obtained information on 41 new projects and expansions from the Federal Energy Regulatory Commission (FERC) website [2] and a variety of commercial and government websites. For a map showing locations of these projects, see Appendix A. For a detailed list of all existing and proposed LNG projects, project information, and references, see Appendix B.
We obtained estimated startup dates on most projects from both corporate and government sources. Estimated startup dates could not be found for a few projects, so we extrapolated startup date estimates based on the status of their FERC/EPA proposals (see Appendix B for more information).
Projections of year-by-year capacity additions are shown below in Figure 1. As shown in the chart, 2008 appears to be a significant year for LNG capacity, with about 20 bcfd of capacity scheduled to come on-line in that year alone.
Natural gas is a key component of the U.S. economy: it heats our homes and businesses, supplies key industries with heat and power, and powers an increasing share of our electrical capacity. Unfortunately, supply shortfalls have contributed to large price increases in recent years. Domestic natural gas production has bee
Recent hurricanes and energy price volatility have focused the nation’s attention on natural gas markets. However, North American natural gas production faced challenges, even prior to the hurricanes. In order to meet projected North American natural gas demand, energy companies are increasingly looking to import liquefied natural gas (LNG) as an alternative to domestic and Canadian natural gas. There are currently five terminals where LNG can be offloaded from tankers and shipped to North American customers via pipelines and trucks, with a total existing capacity of over 4 billion cubic feet per day (bcfd). Energy companies have proposed 41 LNG projects (both new construction and expansions), totaling over 47 bcfd of capacity. If the new projects are built according to schedule, they will bring the ultimate total North American LNG capacity to just over 51 bcfd by 2010, which is equivalent to 83% of the U.S. average daily natural gas demand for the period 2001 – 2004.
Such LNG capacity, if fully utilized, has the potential to flood the North American market with natural gas and drive prices down substantially. However, the global LNG supply averaged less than 18 bcfd in 2004, which is considerably less than the proposed 51 bcfd mentioned above. There are also questions about the viability of some projects due to legal, environmental, and engineering issues. In addition, the ultimate capacity will not be fully utilized 100% of the time, since the number of available tankers and the quantity of available supply will likely be limiting factors. Finally, the U.S. will be increasingly dependent on a highly competitive global marketplace for LNG, with established consumers such as Japan competing for available supplies, which may tend to keep U.S. natural gas prices elevated.
Motivation for LNG Imports
n flat or declining since the early 1970s, Canadian production has flatlined since about 2001, and hurricanes have recently taken a bite out of Gulf of Mexico production capacity. Conversely, some overseas suppliers produce more natural gas than can be used locally. In order to export this natural gas, the gas is liquefied at temperatures around -260ºF, which greatly reduces its volume, and is then loaded on cryogenic tankers and shipped overseas. At the destination, the LNG can be trans-shipped via rail or truck, or can be regasified and fed into existing pipeline networks.
Background on North American LNG Imports
To offset increasing demand and decreasing North American supplies, energy companies are proposing a wave of LNG terminal projects [1]. Although the U.S. already imports LNG at 5 existing locations, 41 proposed North American projects and expansions will permit an increase in imports of LNG from overseas suppliers. Much of this imported LNG will be sourced from existing suppliers, such as Algeria, Trinidad and Tobago, Indonesia, Qatar and other Persian Gulf nations. In addition, increasing supplies are being shipped (or soon will be) from Nigeria, Russia, and the Caspian region in central Asia.
LNG Capacity Projections
We obtained information on 41 new projects and expansions from the Federal Energy Regulatory Commission (FERC) website [2] and a variety of commercial and government websites. For a map showing locations of these projects, see Appendix A. For a detailed list of all existing and proposed LNG projects, project information, and references, see Appendix B.
We obtained estimated startup dates on most projects from both corporate and government sources. Estimated startup dates could not be found for a few projects, so we extrapolated startup date estimates based on the status of their FERC/EPA proposals (see Appendix B for more information).
Projections of year-by-year capacity additions are shown below in Figure 1. As shown in the chart, 2008 appears to be a significant year for LNG capacity, with about 20 bcfd of capacity scheduled to come on-line in that year alone.
Natural gas is a key component of the U.S. economy: it heats our homes and businesses, supplies key industries with heat and power, and powers an increasing share of our electrical capacity. Unfortunately, supply shortfalls have contributed to large price increases in recent years. Domestic natural gas production has bee
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