Industry Insider Tells Platts Energy Podium New LNG Terminals Unlikely in the United States Over Next 10 Years

Industry Insider Tells Platts Energy Podium New LNG Terminals Unlikely in the United States Over Next 10 Years

April 18, 2007

    WASHINGTON, April 18 /Xinhua-PRNewswire/ -- Hess LNG
CEO Gordon Shearer told the Platts Energy Podium here
Tuesday that construction of new liquefied natural gas
(LNG) import and processing terminals in the United States
is highly unlikely over the next ten years due to community
pushback and overly-restrictive laws at the state and local
level. Hess is familiar with construction constraints,
given the fact that one of its own LNG import projects in
the northeast United States is embattled.

    Shearer discussed the prospects for new projects by the
LNG industry at large, region by region. Referring to the
Energia Costa Azul project in Baja California, Mexico,
Shearer said: "I think that's it for the West Coast
within the next ten years." In the Gulf of Mexico, he
said no new terminals are likely beyond those already in
construction.

    As for the East Coast, Shearer said, "Boy that
one's tough; we've got one in Canada [The Canaport LNG
project in St. John's, New Brunswick] that's clearly in
construction, I struggle to see many more. The problem on
the East Coast is the opposition is going to be tremendous.
Who's got the patience, the time, the energy, and in the
end, the money to get through it?"

    As slim as the onshore prospects are, Shearer said the
outlook for offshore construction of new LNG facilities is
even slimmer.  And this could be a particular problem, he
explained, given the fact that US and global demand for gas
is outstripping supply and LNG will become increasingly
important. 

    Shearer has been the public face pressing for support
for building the controversial Weaver's Cove LNG project in
Fall River, Massachusetts. The proposed import terminal has
already secured a permit from the US Federal Energy
Regulatory Commission (FERC). But it continues to battle
opposition from local groups and members of Congress who
say LNG is too dangerous to be shipped into a port so close
to population centers.

    Still, Shearer said he expects the terminal will be
built and in operation by 2011. He expressed optimism that
a federal court will uphold FERC's permit, and said the
Coast Guard will support the developer's effort to use
smaller ships to pass beneath a bridge that would block
passage of larger tankers. All of that, he said, should
clear the way for the project, which would enable 800,000
thousand cubic feet per day (Mcf/D) peak sendout.

    Shearer also said the LNG industry is largely in flux
right now as supplies from Europe, the Middle East, Africa,
the Caribbean and South America continue to be uncertain,
the cost of building liquefaction capacity increases, and
political turmoil puts some projects at risk.

    From an import versus export perspective, price, demand
from Europe, and the size of the US market will keep United
States on the world LNG import stage. "What you'll see
in the US market is a surge-and-slump type of
scenario," the Hess executive told Podium attendees.
"But supply is definitely going to make it here,"
Shearer insisted.
 

    Sponsored by Platts, a division of The McGraw-Hill
Companies, Platts Energy Podium provides an ongoing forum
for prominent newsmakers and the press to address important
energy and environmental issues. Credentialed members of the
media may receive complementary registration for Energy
Podium events by contacting Nancy Covey at 202-942-8719,
[e-mail]. A recording of the Gordon Shearer
session is available via podcast at
http://www.energypodium.platts.com .
 
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