Regional LNG: US Fed's Greenspan wants more LNG import facilities
Friday, July 11 2003 - 02:55 AM WIB
A sharp rise in natural gas prices and an unusually low stockpile of the fuel has grabbed the attention of the Bush administration and lawmakers. As a result Greenspan -- whose appearances on Capitol Hill usually feature discussion of broad economic trends -- was asked to testify at the Senate Energy Committee on the impact of high gas prices.
LNG is natural gas cooled to minus 259 degrees Fahrenheit, a process which converts it to liquid form for shipment. After arriving at a terminal, it is converted into gaseous form and moved into pipelines for shipment to users like industrial plants and electricity-generating utilities.
Greenspan's prepared testimony before the Senate Energy Committee was nearly identical to remarks he made last month before the House Energy and Commerce Committee. The central bank chief's testimony did not mention U.S. economic conditions or monetary policy.
"Access to world natural gas supplies will require a major expansion of LNG terminal import capacity and development of the newer offshore regasification technologies," Greenspan said.
"Without the flexibility such facilities will impart, imbalances in supply and demand must inevitably engender price volatility," he said, referring to LNG import terminals.
More LNG imports could provide a "price-pressure safety valve," Greenspan added. Algeria, Nigeria, Trinidad, Russia and Venezuela are among the current and potential exporters of LNG to the United States.
Natural gas prices in the wholesale spot market recently doubled from a year ago, rising to about $6 per million British thermal units (Btu). A cold winter left U.S. natural gas inventories well below historical levels.
U.S. demand for natural gas is forecast to top 35 trillion cubic feet (Tcf) by 2025, a jump of 52 percent from this year.
Some 14 new LNG projects have been proposed for the U.S. market in recent months, including the expansion of Georgia's Elba Island terminal and new facilities off Louisiana, Texas, California, the Bahamas and Mexico.
Three LNG terminals now exist in Cove Point, Maryland; Lake Charles, Louisiana; and outside Boston.
ChevronTexaco Corp., ConocoPhillips, Marathon Oil Corp., and Exxon Mobil Corp. have announced plans to make LNG a bigger part of operations.
On Wednesday, congressional sources said House Speaker Dennis Hastert will appoint a panel of 18 lawmakers to recommend legislation needed to avert looming shortages of natural gas supplies. The panel will issue a report by the end of September. (*)