Expert Tells Houston Conference to Expect Slow Going on Natural-Gas Ports
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By Dan Piller, Fort Worth Star-Telegram, Texas Knight Ridder/Tribune Business News
Jan. 27--HOUSTON - Although 40 terminals to receive liquefied natural gas have been proposed for U.S. seaports, including five along the Texas Gulf Coast, only a fraction of those are likely to be built this decade, an energy consultant told a conference on liquefied natural gas here Monday.
"The permitting process is so long and the likelihood of objections from communities so high that we are likely to see no more than five or six LNG terminals actually built through 2010," said Sara Banaszak, director of the gas and power group at PFC Energy, a consulting group based in Washington, D.C.
U.S. domestic natural gas production has been flat since 2000, and rising demand has led to supply shortfalls, Banaszak said.
The threat of shortages has been blamed for spiking natural gas prices for the past two years. They jumped above $7 per thousand cubic feet more than once this winter on the spot market after years of hovering around $3.
Liquefied natural gas from foreign sources, chilled to liquid form for shipment in tankers and then warmed back to vapor before going into U.S. pipelines, has emerged as a major solution to the looming shortage and volatile prices.
Houston-based Cheniere LNG has received federal approval for a terminal at Freeport and has two applications pending for other facilities on the Gulf Coast. ExxonMobil has also proposed two terminals along the Gulf Coast to receive liquefied natural gas it expects to begin receiving later this decade from its multibillion-dollar project in the Middle Eastern kingdom of Qatar.
Cheniere's chief financial officer, Don Torkelson, said each terminal will take up to three years to build and cost $400 million or more. The Texas Gulf Coast is considered a prime market for imported liquefied natural gas to supply feedstock for the petrochemical industry.
In contrast to crude oil, natural gas is almost entirely a product of the Western Hemisphere. Just 1 percent of U.S. consumption comes from sources elsewhere.
"There is no reason to believe that the gap between production and consumption will close anytime in the future," said Michelle Foss, director of the University of Houston's Institute for Energy, Law and Enterprise. "We're at the stage of growing liquefied natural gas."
Foss said that one factor that could retard the growth of liquefied natural gas would be an uptick in exports of natural gas from Mexico to the United States. But he said he doubts that will happen.
"Mexico will need 25 years to develop its energy resource base to be a big player in natural gas," she said.
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