Regional LNG: Australia may become big LNG supplier: US Energy Secretary

U.S. Energy Secretary Spencer Abraham said Australia could become a ``major'' supplier of liquefied natural gas to the U.S. as the world's biggest energy consumer seeks a range of suppliers to meet surging demand, Bloomberg reported.

Gas demand is ``skyrocketing'' in the U.S., which will work more closely with Australia on supply, Abraham told reporters in Melbourne amid talks with Australian Resources Minister Ian Macfarlane and local gas suppliers. The U.S. could become Australia's largest export market for LNG, buying more than A$50 billion ($38.8 billion) over 30 years from 2010, Macfarlane said.

Demand for gas in the U.S. is forecast to increase by 50 percent in the next 20 years, outpacing domestic production and driving companies to seek LNG imports. Australia's LNG ventures are competing against projects in Indonesia, Malaysia, Russia and elsewhere to supply customers on the U.S. West coast.

``We want to see a diverse marketplace, we don't want to see only a few countries playing a role in the world gas market,'' Abraham said. ``I'm hopeful Australia will be a major source. We have plenty of demand to satisfy.''

By 2010, the U.S. will need to be importing 2.2 trillion cubic feet of gas, up from 0.2 trillion cubic feet at present, Abraham said. More than $100 billion needs to be invested in LNG import projects in the U.S. to meet the nation's energy needs by 2025, he said last month.

Corp.'s proposed A$11 billion Gorgon LNG venture and the Woodside Petroleum Ltd.-operated North West Shelf venture, Australia's only operating LNG producer, have both said they are seeking gas customers on the U.S. West coast. Woodside's Sunrise gas project and its Browse Basin venture, also off northwestern Australia, are also seeking customers in Asia and the U.S. for LNG, which is gas cooled and compressed to liquid form and transported by tanker.

Gorgon could see ``initially two to four million tons of LNG per year potentially moving to the U.S. West Coast,'' Jay Johnson, managing director of ChevronTexaco in Australia, told reporters. The venture agreed last August initial sale contracts for LNG to be exported to import terminals being proposed by ChevronTexaco, the second-largest U.S. oil company, and Royal Dutch/Shell Group on the North American West coast.

Australian LNG suppliers and the government have agreed to help the U.S. in setting up import terminals and assist companies get permits, Macfarlane said. Abraham said he's confident that objections against terminals on the West Coast could be overcome. These safety, environmental and security ``concerns exist in any place in America where there might be LNG terminals,'' he said.

BHP Billiton, a one-sixth partner in the North West Shelf venture, has said it plans to spend as much as $600 million to build an LNG import terminal off the Californian coast. None of the U.S.'s four LNG import terminals is on the West coast.

``Australian suppliers have to date faced a significant barrier in that all four U.S. LNG import terminals are located on the east coast,'' Macfarlane said in a faxed statement. ``2008 would be optimistic but certainly by 2010 they'd be looking to place gas'' in the U.S. West coast market, he said.

Last month, BP Plc, Europe's largest oil company, agreed to supply 500 million cubic feet of Indonesian natural gas a day to a Sempra Energy LNG terminal to be built on Mexico's Pacific coast.

Australia could potentially capture half of the LNG market on the U.S. West coast, where about a quarter of all the U.S. LNG imports may arrive, Macfarlane said.

``Australia is the world's fifth-largest exporter of LNG and we have the reserves to expand that significantly,'' Macfarlane said. ``New capacity now under construction will see our LNG exports double over the next four years.''(*)