The Quoddy Tides

Eastport, Maine

2008 Dec 12

LNG terminal capacity appears overbuilt

by Marie Jones Holmes

The Fairplay Shipping News reports that the U.S. liquefied natural gas (LNG) terminal sector, once touted for its vast potentials, appears to have disastrously overbuilt capacity. The situation is so bleak that two newcomers are pleading for the U.S. government to allow imports of LNG that will then be re-exported to maintain continual operation status of now empty terminals.

Freeport LNG has asked for an allowance of its 1.5 billion cubic-feet-per-day terminal on Quintana Island, Texas. It is seeking to import up to 64 billion cubic feet of LNG over two years for re-export to Europe and Asia.

A similar application was filed by Cheniere's 2.6 billion cubic-feet-per-day Sabine Pass Terminal in Cameron, Louisiana. Cheniere wants to import up to 64 billion cubic feet of LNG over two years for re-export to Europe, Asia and South America.

The terminal operators claim that re-exports will allow purchases of spot cargoes to compensate for absent U.S. imports. A continuous supply is needed to keep the facilities cool and to maintain and operate them.

Terry Ruder, Natural Gas Supply Association (NGSA) vice chairman, believes shale gas could supply 25% of U.S. demand within 10 years. He believes U.S. natural gas production could double in the next 10 years. "What we've seen so far from shale fields is just the tip of the iceberg," stated Ruder at a recent Federal Energy Regulatory Commission (FERC) hearing, which was examining U.S. natural gas infrastructure. He said current production from shale clays is estimated at about 10 to 12 percent of the projected 2008 U.S. demand. NGSA states there are about 20 major shale fields across the U.S. that could or currently produce gas. While more difficult and costly to extract, shale has become a big factor in growing gas supplies as conventional wells decline.

U.S. gas production is expanding to nearly 60 billion cubic feet per day, due mainly to shale gas or gas trapped in sedimentary shale beds found across North America. 


© 2008 The Quoddy Tides
Eastport, Maine
Article republished on Save Passamaquoddy Bay website with permission.