Power Engineering - U.S. Energy Department enlists NARUC to educate states, public on LNG

DOE project to promote responsible development and deployment of LNG infrastructure in the U.S.

WASHINGTON, DC, Sept. 17, 2003 -- With the nation facing potential price increases in natural gas due to the expanding economy and lower than average storage rates, the U.S. Department of Energy (DOE) has selected the National Association of Regulatory Utility Commissioners (NARUC) to help educate critical energy decision-makers about liquefied natural gas (LNG).

The project stems from DOE's natural gas summit held in June in Washington, D.C., where Secretary of Energy Spencer Abraham told energy leaders that low storage levels of natural gas could lead to significant price increases for consumers this winter.

"This is not just about low reserves or supply and demand imbalances," Secretary Abraham said. "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 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 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 export capability.

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 are in Elba Island, Ga., and Cove Point, Md., which closed in 1980. Recently reopened, they are receiving LNG on a regular basis. Imports terminals in Everett, Mass., and Lake Charles, La., are as strong as ever.

The new DOE-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:

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 terminals, ships, storage tanks, trucks, and pipelines -- known as the "value chain" -- 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 facilities.

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 environment.

The project coincides with Secretary Abraham's call for a global natural gas summit that 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," Secretary Abraham said in July. "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."

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