LNG terminal projects depend on complicated global factors -- The Quoddy Tides, Eastport, Maine

According to the U.S. Energy Information Administration, an agency of the U.S. Department of Energy, the market ultimately determines whether an approved liquefied natural gas (LNG) terminal is ever built. Even if an LNG terminal project receives all of the federal and state approvals, it still must meet complicated global issues surrounding financing, gas supply and market conditions. Many industry analysts predict that in the U.S. only 12 of the 40 LNG terminals being considered will ever be built.

Bill Hastings of Nova Atlantic LLC in Portland, who is a 27-year veteran of Marathon Oil Inc., says, "You need to look at the total number of terminals worldwide in relation to supply, especially the number of terminals in the United Kingdom and China. LNG can go anywhere instead of here [U.S.]." The decrease in the value of the dollar in relation to the value of other currency also plays a part in securing supply contracts. Hastings notes that there is plenty of capacity to import LNG; the difficult part is to develop LNG sources.

According to Hastings, China is having trouble signing up new suppliers for its terminals. Imports of LNG are projected to be about 77-billion cubic feet (Bcf) for 2008 or about the same amount in 2007. Trinidad and Tobago are expected to remain the primary source of U.S. supplies. World natural gas reserves are abundant; Russia, Iran and Qatar have abundant supplies but are located far from consuming markets.

Existing North American LNG terminals as of March 24 are Everett, Mass., Cove Point, Md., Kenai, Ala., Elba Island, Ga., Lake Charles, La., and Penuelas, Puerto Rico.

Lack of need in New England?

Quoddy Bay LNG's deputy project manager Adam Wilson recently stated that besides the LNG import terminal at Everett, Mass., New England needs only two additional terminals. Wilson says the overbuild for LNG terminals is true in the Gulf area of the U.S., but there are not a sufficient number of import terminals on the East Coast or West Coast.

Save Passamaquoddy Bay spokesperson Robert Godfrey observed, "It's refreshing that Wilson recognizes only two additional LNG terminals are needed in New England." Godfrey is surprised that Wilson doesn't know about the three new terminals that are all about to go into service supplying New England — Excelerate Energy's new Northeast Gateway LNG terminal offshore from Gloucester, Mass., is ready right now to accept its first cargo; the Suez Neptune terminal off Gloucester — already permitted — will be accepting its first cargo near the end of 2009; and the Canaport terminal at Saint John, N.B., that is over 60% complete and will be accepting its first cargo — most of which will be piped to the Northeast U.S. — near the end of 2008. These are three new terminals that will already be supplying New England. "One needs to keep in mind that former FERC Chairman Pat Wood stated in 2005 that only seven to nine new LNG terminals would be needed in the entire U.S., along with expansions and peak shaving facilities. There are now — including Broadwater in Long Island Sound — 31 projects already in service, under construction, or permitted by FERC. There is a vast surplus of LNG import capacity in relation to supply," says Godfrey.