US grants incentives for LNG terminals

Federal regulators moved to encourage construction of new marine terminals to handle LNG imports, at a time when natural gas is being counted on to play a major role in satisfying growing US hunger for energy. The Federal Energy Regulatory Commission granted preliminary approval of a proposed LNG terminal in Louisiana that, unlike other such projects, won't be required to charge cost-based rates or offer an open-access tariff.
"The commission expressed hope that eliminating such certain regulatory barriers will encourage more LNG site development, but warned that this will not affect its jurisdiction of the project," FERC said. FERC's responsibility is the regulatory maintenance of the pipelines and power lines that make up the nation's energy grid.
However, because it has jurisdiction over rates paid for the transportation of electricity and petroleum, it also has an increasingly important role in the White House's efforts to meet future US energy needs. LNG offers an intriguing option forthe United States, which is expected to see its annual consumption increase an average of 1.8 % per year from 22.7 tcf now to 34.9 tcf in 2025.

Most US gas travels in its natural state through pipelines from both domestic reserves and from Canada. LNG is super-cooled until it reaches a liquid state, and it can be shipped anywhere in the world aboard specially equipped tankers.
When it is unloaded at terminals -- such as the Hackberry project that was tentatively approved -- it is returned to its gaseous form and sent to consumers by pipeline. There are sizable gas reserves in nearby Venezuela, Trinidad and Alaska that could be exploited by the United States.
However, American LNG imports still trail the rest of the industrialized world. According to the US Energy Information Administration, the United States imported 226.46 bn cf of LNG in 2000, compared with 272 bn cf imported by Spain and the more than 2.6 tcf shipped to Japan.

The Hackberry project, which must still pass federal environmentalmuster, will be the United States' first new LNG terminal since the 1970s. It will initially handle 750 mm cfpd of LNG and could be expanded to a capacity of 1.5 bn cfpd.
FERC's action was meant to encourage development of the terminals and other infrastructure that will be needed to accommodate an increase in LNG imports. "The public interest is served through encouraging gas-on-gas competition by introducing new imported supplies of natural gas which will be accessible to all willing purchasers," FERC said in its order.
The order shifts the regulatory picture for LNG terminals from that of a pipeline, which (under open-access rules) is required to accept shipments of products from basically anyone who needs to ship them, to a gas processing plant or even an actual gas field, which is not under the rate control of FERC.

Energy industry executives had urged the change for foreign LNG producers to be certain that they could ship regularly to a US terminal and not have to compete for space with othershippers that would have FERC-mandated open access to the facilities. FERC said it wouldn't require open access "because its sponsors bear the full economic risk of the project and customers will not be adversely affected by the project's costs.”
"Viewing the proposed plant as similar to a production facility, the commission noted that sales of the natural gas from the LNG plant would be made in competition with other sales of natural gas in the Gulf Coast region in a deregulated competitive commodity market," FERC said.