This is an excerpt from EERE Network News, a weekly electronic newsletter.

July 16, 2003

Is LNG Part of the Solution to Tight Natural Gas Supplies?

While calling for Americans to save energy, Secretary of Energy Spencer Abraham has also called for a second natural gas summit, this time focusing on the use of liquefied natural gas (LNG). The Global Liquefied Natural Gas Summit, to be held in the United States later this year, will explore global natural gas resources, proposed LNG supply projects, and export and import terminals.

With growing demand for natural gas in the United States and limited supplies in the lower 48 states, natural gas imports from Alaska or other countries are likely to grow in importance in the future-although energy efficiency and renewable energy can help mitigate the need for such imports. Since natural gas is, of course, a gas, importing it requires either a pipeline (which means the exporting country must be nearby, such as Canada) or the use of LNG, which can be carried by ship. Currently, there are three import terminals in the United States, with a fourth expected to resume operations in late summer. See the DOE press release.

At present, LNG imports into the United States barely make a dent. According to the latest "Short-Term Energy Outlook" from DOE's Energy Information Administration (EIA), LNG imports reached 75 billion cubic feet (bcf) in the first quarter of 2003, compared to 26 bcf in 2002, but are unlikely to provide more than 10 percent of U.S. natural gas imports this year. That would be about 1.5 percent of the total supply of natural gas in the United States. See the report on the EIA Web site.

According to Alan Greenspan, Chairman of the Federal Reserve Board, increased LNG imports could act as a "safety valve" to help the U.S. natural gas markets respond to price spikes caused by imbalances of supply and demand within the United States. See Chairman Greenspan's July 10th testimony before a Senate committee.

Thus far, however, only one new LNG facility has gained preliminary approval from the Federal Energy Regulatory Commission. Sempra Energy LNG Corporation is planning an import facility in Hackberry, Louisiana, with a capacity of 1.5 bcf per day. The company expects to complete the project by early 2007 at a cost of $700 million. See the Sempra Energy press release.