LNG is gaining momentum

May 04, 2004 02:00 AM

In a country where power is increasingly fuelled by natural gas, getting it to the United States in its liquid form is the business to embrace, oil and gas executives said. And several oil companies, from the majors down, are jumping into what they see as a "huge prize" of a growth industry in LNG, BP Global LNG President Douglas Rotenberg said at Houston's 35th annual Offshore Technology Conference.
The United States and the southern North Sea have declining supply and mature natural gas basins, but the fuel is plentiful elsewhere. Qatar, Indonesia, Algeria, Malaysia and Trinidad are the leading exporters, and Russia and Iran have high potential in that arena, according to the Federal Energy Regulatory Commission.

When chilled to minus 260 degrees Fahrenheit, natural gas turns into an odourless liquid, reducing the volume it occupies by more than 600 times. Large quantities of the liquid can then be shipped to onshore or offshore terminals, where the liquid is deposited and regasified. FourLNG plants exist in Massachusetts, Maryland, Georgia and Louisiana. Another 38 have been approved or are proposed along the East, West, Texas Gulf and Central American coasts and offshore, according to the FERC.
But of those 38, only five have received FERC approval -- two offshore, two in the Bahamas, and San Diego-based Sempra Energy's $ 700 mm project in Hackberry, Louisiana. That facility will be the nation's first new LNG plant in nearly a quarter century.

Rotenberg said the main constraint to getting terminals built in the US to receive and regasify LNG shipped from the world's natural gas-rich areas is the years-long process of getting necessary permits before construction can begin. Also, companies must consider opposition. Earlier plans for LNG terminals in Eureka, California, and Harpswell, Maine, died amid safety concerns in the aftermath of an explosion at an Algerian gas liquefaction plant that killed 27 people.
And in February Houston-based Marathon Oil scrapped plans to build a regional energy centre that would have included an LNG regasification terminal in Baja when the state government of Mexico's Baja California condemned the land targeted for the facility, effectively blocking its construction, Marathon spokesman Paul Weeditz said. So Rotenberg predicted that six to eight regasification terminals could be built toward the end of the current decade.

Rodney Schmidt, managing director of PFC Energy, called the drive to embrace LNG "very exciting times right now." "There is a great deal of competition to place this gas in the marketplace," Schmidt said.
Steve Baum, Sempra's chairman, president and CEO, said earlier that investors and government officials have been sceptical that there may be too much exuberance in chasing LNG, leading to overbuilding of regasification terminals. But such terminals aren't like power plants that can be built almost anywhere on the interior of the country, Baum said.
LNG terminals need to be on or very near coastlines where LNG tankers can reach them. They also need sparsely populated sites where they won't cause environmental damage or companies likely will face opposition, he said.

Source: The Associated Press
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