Embracing LNG

US imports of liquefied natural gas (LNG) jumped by 29 percent last year and added three percent to the

's supply of a critical energy. Natural gas consumers benefited as this additional supply helped to keep prices stable for home heating and other uses, according to the

.

As shown in Fossil Energy’s recently released Natural Gas Imports and Exports Fourth Quarter Report 2004, the increase to 652 billion cubic feet (Bcf), from 507 Bcf in the previous year, caps a rise of 300 percent in LNG imports since 1999. LNG imports are projected to account for 20 percent of supply by 2020. Seventy percent of US LNG imports currently come from Trinidad and Tobago.

In 2002, LNG imports to the United States totalled 229 Bcf, or six percent of imported gas. In 2003, imports totalled 506 Bcf, or 13 percent of all imported gas, more than doubling 2002’s total. Data for 2004 shows that LNG accounted for 15 percent of total imports, nearly a tripling in volume in just two years. The LNG numbers will increase yet again in 2005, and in the years beyond.

Natural gas serves most of the USA's households and many industries in which it is not easily replaced. Both have been hard-hit by higher prices since 2000. Natural gas is used in about 6 of every 10 US households – around 63 million – mostly for heat. It is an indispensable feedstock for fertiliser and chemical manufacturers. And, according to the report, it has been a growing source of fuel for electric-power generation. Using LNG imports to expand supply can moderate price and deliver relief to both household and industrial users.

EIA's Annual Energy Outlook 2005 foresees that the USA will need much more LNG over the next 20 years. This year's projections say it should account for almost 10 percent of supply by 2010, which means imports of 2.5 trillion cubic feet, and more than 20 percent of supply by 2025, imports of 6.4 trillion cubic feet. The imports will be necessary to satisfy increases in demand that cannot be accommodated by domestic or other North American production of gas. The import estimates are up strongly from those of the Annual Energy Outlook 2004.

High-volume production and global trade in LNG constitute an emerging energy resource for the United States and the world in a time of rising demand. Present use is limited by a lack of liquefaction capacity among producing nations and a lack of import terminals among consuming nations. Large expansions are underway in all areas. At least 40 proposed terminals have been announced for the United States in recent years, but not all will be built. A lesser number have actually applied for the necessary state and federal permits.