US vulnerable to foreign LNG by 2030 - study

20 November 2007 23:35  [Source: ICIS news]

WASHINGTON (ICIS news)--The US will become increasingly dependent on imported liquefied natural gas (LNG), making the nation as vulnerable to foreign suppliers by 2030 as it is now to foreign oil, a university research group said on Tuesday.

 

The Baker Institute for Public Policy’s Energy Forum at Rice University in Houston, Texas, said that unless US policymakers open restricted federal lands to energy development, American industrial and residential consumers of gas could be relying on LNG imports for as much as 30% of total US gas requirements by 2030.

 

LNG imports accounted for only 3% of US gas consumption in 2006, according to the Baker Institute study authored chiefly by Kenneth Medlock.

 

US imports of LNG were virtually nil as recently as 1986.

 

The US chemicals industry is heavily dependent on natural gas as both a feedstock and an energy source.  While the chemical industry cannot use LNG supplies for feedstock - because they lack natural gas liquids - LNG imports ease demand pressure on domestically produced gas.

 

Increasing dependence on foreign suppliers of LNG “has strong implications for security of natural gas supply”, Medlock said.

 

“In the short term, the net impacts on US supply security are not all that worrisome,” he said.  “But long term, as our demand grows, we will have to worry more about security of supply.”

 

Medlock said that even if US policymakers were soon to open restricted federal lands to energy development, it would not reduce US dependence on LNG imports until after 2015. 

 

“But longer term, an opening of restricted areas to drilling and the contribution of expanded OCS [outer continental shelf] and Rockies [Rocky Mountains] natural gas production could be geopolitically important in combating the rise of a cartel in the international natural gas market, a so-called GasOPEC,” the study said.

 

The US Congress has maintained bans on drilling in 85% of resource-rich US offshore areas and some onshore regions, fearing environmental damage from development.  Prior to the congressional bans, 75% of federal lads were available for private energy leasing but the amount of federal property open to energy development has fallen to around 17%, the study said.

 

Efforts by chemical producers and other gas-dependent US manufacturing sectors to persuade Congress to lift broad offshore drilling bans have thus far failed.  Energy bills now pending in Congress focus on conservation, energy efficiency and alternative energy sources but contain no new provisions to boost domestic hydrocarbons production.

By: Joe Kamalick
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