|The LNG import facility at Cove Point, MD
WASHINGTON, DC - With the nation facing potential natural gas shortages
in the short term, and increasing demand for gas in the
longer term, the U.S. Department of Energy's Office of
Fossil Energy has selected the National Association of
Regulatory Utility Commissioners (NARUC) to help educate
critical energy decision makers about liquefied natural
The project stems from an
emergency natural gas summit held in June in Washington,
DC. It was there that Secretary of Energy Spencer
Abraham told energy leaders that low levels of natural
gas in storage could lead to huge price increases for
consumers this winter.
"This is not just about
low reserves or supply and demand imbalances," Abraham
said at the time. "This is about real people and the
real problems they confront when gas prices soar. It's
about senior citizens, living on fixed incomes, being
forced to choose between skyrocketing heating bills or
some other of life's necessities."
At the time of the
summit, natural gas storage was 32 percent below 2002
levels. By the end of July the outlook had improved, but
working gas in storage was still 17 percent below
end-of-July 2002 levels. In addition to short-term
supply issues, the energy industry is concerned about
stable, affordable supplies of natural gas in the longer
term, since U.S. consumption of natural gas is expected
to increase by more than 50 percent by 2025.
Liquefied natural gas, or
LNG, has been touted as a possible solution to longer
term supply and demand issues. "LNG is the same natural
gas used in homes for cooking and heating, but it has
been cooled, and slightly compressed above atmospheric
pressure into a liquid for transport and storage," says
Tony Zammerilli of the Gas Supply Projects Division at
the National Energy Technology Laboratory which will
manage the NARUC project.
"The liquefied gas is
transported in double-hulled ships specially designed
and insulated to prevent leakage or rupture in an
accident," explains Zammerilli. Worldwide, there are 17
LNG export terminals, 40 LNG import terminals, and 136
specially-designed LNG ships. LNG facilities liquefy and
store domestic natural gas production during the summer
for re-gasification during the winter heating season.
Although the LNG industry
in the United States has, until recently, occupied a
small niche in the domestic natural gas market, LNG
imports are expected to help fill a growing gap between
domestic gas production and consumption. In the past two
years, the United States has imported LNG from Trinidad,
Algeria, Australia, Nigeria, Oman, Qatar, Indonesia, and
the United Arab Emirates. Other countries with
significant quantities of natural gas are developing LNG
The United States has the
largest number of LNG facilities in the world; 113
facilities are active, including four import terminals.
Two of the import terminals, in Elba Island, GA, and
Cove Point, MD closed in 1980 but were recently reopened
and are now are receiving LNG on a regular basis.
Terminals in Everett, MA, and Lake Charles, LA, have
continued to receive LNG imports.
The new Office of Fossil
Energy-funded project aims to enhance communication
between critical energy stakeholders to ensure the
responsible development and deployment of LNG. In the
first phase of the project, NARUC will begin a series of
regional and national dialogues that will lead to the
production of three documents:
- A comprehensive LNG
white paper for state public utility commissions.
- A draft LNG
communication plan for a "case study" state which
could be adapted to other states.
- A comprehensive LNG
primer for state energy and environmental officials.
Both the regulatory
community and industry are important to the accelerated
development of LNG. To make more LNG available, energy
companies must invest in the "LNG value chain" - the
terminals, ships, storage tanks, trucks, and pipelines
that carry and store LNG. Without the support of the
regulatory community, it will be difficult to encourage
private sector investments in new or mothballed
State legislators and the
public are equally important. Concerns about safety,
security, and environmental protection are shared by
all. To support LNG as a reliable and affordable
resource, legislators must develop public policies that
ensure safe operation of LNG facilities, protect them
from terrorist activities or accidents, and preserve the
partnership is providing essential outreach," says
NETL's Zammerilli. "By communicating, addressing
concerns, and pulling together we can meet the increased
demand for natural gas in general, and LNG in
The project coincides
with Secretary Abraham's call for a second natural gas
summit, which will convene later this year and focus
exclusively on liquefied natural gas.
"The Global LNG Summit
will provide another forum through which we can examine
additional options to increase our liquefied natural gas
supplies," Abraham said in July when announcing the
second summit. "We must focus on smart uses of energy,
along with using our natural gas resources to our own
best benefit and expanding those resources to better
meet our energy needs."