Future Natural Gas Demand Forecasted To Exceed 30 Trillion Cubic Feet Per Year by The End Of The Decade

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The following is an advisory from Industrialinfo.com (Industrial Information Resources Inc.; Houston, Tx). Currently, the U.S. consumes over 22 trillion cubic feet per year of natural gas of which approximately 1.4 billion cubic feet per day is supplied from Liquefied Natural Gas (LNG) import terminals. Energy specialists forecast that the need for natural gas will exceed 30 trillion cubic feet per year by the end of the decade. According to the Department of Energy (DOE), demand for natural gas will increase by 4.4 percent in 2002 and 2.5 percent annually thereafter. The increase in future demand is being driven by construction of new natural gas fired power plants by Merchant Power Producers and Industrial Energy Producers (IEP). This is creating a grave concern for future natural gas supply.

Importing LNG is one part of the solution to help supply the expected 8 trillion cubic feet per year natural gas shortfall by 2010. Presently, there are not enough LNG terminals in operation to handle the import volume being considered. In the U.S. there are two LNG receiving terminals with a combined regasification capacity of 1.4 billion cubic feet per day. Two other facilities with a combined regasification capacity of 1.7 billion cubic feet per day are in the process of being reactivated on the east coast. This will bring the total regasification capacity to 3.1 billion cubic feet per day by the third quarter of 2002, still leaving a shortfall in capacity.

As of July 2001, four companies are presently evaluating the construction of seven new LNG terminals, and expanding one existing LNG terminal, all located in the U.S. If completed these terminals would provide a combined total regasification capacity of 7 billion cubic feet per day of natural gas. Two of these companies, El Paso Energy Corporation (Houston, Tx.) and CMS Energy Corporation (Dearborn, Mi.), are also evaluating the construction of four new LNG terminals in Mexico, two of which, due to their location, would be capable of supplying markets in California.

These LNG terminals in Mexico are worth an estimated $1.3 billion and will have a combined regasification capacity of 4 billion cubic feet per day if completed. Ultimately, these terminals could be expanded to supply up to 8 billion cubic feet per day of natural gas by 2008.

Ed Weatherly, Petroleum Terminals Group Manager with Industrialinfo.com stated, `LNG is a very economical way to transport natural gas. LNG has a regasification ratio of 618:1 and a specific gravity of 0.43. The average LNG Tanker carries 125,000 cubic meters of LNG, which equates to 53,879 metric tons. On regasification, each metric ton is converted into 50,500 cubic feet of natural gas so each tanker can carry the equivalent of 2.7 billion cubic feet of natural gas or a 3-day supply for an average LNG terminal. Another advantage for LNG terminals would be receiving preprocessed gas and hence would not have to invest in capital-intensive processing plants or lengthy pipelines from producing areas. In short, there is a vast interest in getting these terminals constructed and commissioned to take advantage of the growing demand for natural gas in the energy and commercial sectors`.

The U.S. will not be the first to use imported LNG to supplement domestic production. Japan for example imports 50 million metric tons per year of LNG and India has one operational LNG terminal and several in different stages of planning or construction. LNG is supplied from several sources as close as Trinidad and as far away as Australia's Northwest Shelf.