Oil Change International

Exposing the true costs of fossil fuels

US Builds LNG Terminals for Imported Gas

A quiet revolution is taking place in Louisiana, courtesy of company you have probably never heard of: Cheniere Energy. With help from Exxon Mobil and others, Cheniere are building three new liquefied natural gas terminals that will double America’s capacity to import natural gas by 2011.

It has been a long time coming. It is over 24 years since a new liquefied natural gas terminal was built in the US. Charif Souki, the chairman of Cheniere, is convinced America will soon be importing more gas because North American production is declining. In 2003, Souki changed its stock to LNG and started buying up real estate in uninhabited harbors close to existing pipelines and gas-thirsty refineries and petrochemical plants.

“People were actually amused that we would be thinking about importing natural gas,” says Souki. “Nobody took us very seriously.” But when completed, 6 huge storage tanks will be big enough to handle 400 cargo ships a year will help the Sabine Pass terminal in Louisiana process more gas than any existing terminal in the United States.

Souki could be on to a financial winner. Although liquefied natural gas currently represents only a 3 percent of total American natural gas consumption, analysts believe that imported liquefied natural gas will account for 10 percent of American use by 2010, and potentially as much as 25 percent by 2020.

“The concern is for the potential for supply interruptions,” said Robert Ineson, director for North American natural gas at Cambridge Energy Research Associates, noting that a major storm like Hurricane Katrina or Rita could move a seabed or sink a ship that would block the way into a liquefied natural gas terminal.

The terminals themselves are highly durable and most pipelines onshore are underground, he said, but the control operations above ground are vulnerable when storms hit. Moreover, skilled workers would have to navigate washed-out roads and other obstacles to reach damaged areas and make repairs.

Industry insiders largely dismiss the threat, noting that Hurricane Rita last year directly hit an existing liquefied natural gas terminal in Lake Charles, La., which was largely unscathed. They say the growing number of terminals in the coming years will increase storage supplies to help minimize disruptions.

Opponents argue that liquefied natural gas terminals are prone to accident or terrorist attacks, they produce air pollution, they damage ocean ecosystems and they harm indigenous peoples in countries that pump the gas in the first place.

And one of the countries where the gas will be coming from is Nigeria, hardly a stable or trouble-free zone.

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