Imports of liquid natural gas urged

Traditional North American natural gas supplies will not be enough to keep pace with expanding U.S. demand, according to one energy expert.

Richard Elliott, project manager for BP, the largest producer of natural gas in North America, told members of the National Conference of State Legislatures on Thursday that without imports of liquefied natural gas, North America remains a vulnerable market, subject to high natural gas prices that threaten U.S. economic growth.

Liquefied natural gas, or LNG, is natural gas that has been treated and cooled to minus 260 degrees Fahrenheit.

The three main sources of LNG are found in Qatar, Iran and Russia. The gas is transported by ship to large terminals, which convert the liquid back into a gas before it is introduced into the pipeline grid.

Today, less than 1 percent of the U.S. natural gas supply comes from LNG. But by 2010, LNG is expected to supply 10 percent of the nation's natural gas needs.

"Natural gas use is growing at about 2 percent per year," Elliott said at the conference at the Salt Palace. "That's a little bit faster than the total energy growth in the United States. It's primarily driven by switching from coal and oil to cleaner-burning gas."

With 96 percent of natural gas reserves outside North America, companies like BP are betting on LNG's long-term prospects.

Only four LNG terminals now exist in the country. Another four have been approved for construction, according to the Federal Energy Regulatory Commission, with 36 new terminals proposed.

"The country is in the midst of a shortage of natural gas," said Robert Fallon, a Washington, D.C., energy attorney. "We have declining domestic supplies of natural gas chasing higher demand. So if we're going to get the price down, we've got to get more supply."

Fallon said natural gas-fired electric generation plants are driving the demand.

According to a September study by the National Petroleum Council, of the 200,000 megawatts of new power-plant capacity recently constructed or about to be placed in operation, more than 90 percent are fueled with natural gas. One megawatt is enough electricity to power 500 to 750 homes.

Demand for natural gas by 2010 will be strongest in the Southeast, which will need 3.8 billion cubic feet a day of new reserves over 2000 levels, Elliott said. The Western states rank second in new growth, anticipated to require 3.4 bcf a day by 2010 over 2000 levels.

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