Tuesday, December 20, 2005

Natual Gas Imports may constrain prices

By creating the infrastructure to import natural gas from foreign countries, the U.S. may be able to keep natural gas prices in check.

Consumers facing high home heating bills due to natural gas prices that last week reached a record might wish Frederick were even busier. Once global gas trading becomes more commonplace, U.S. natural gas prices should sink.

"As we're able to bring more supply into this country ... prices will, in fact, be lower," says Stacy Nieuwoudt, an analyst at Pickering Energy Partners in Houston.

As the gap widens between surging demand for natural gas and plateauing production from domestic wells, the scene at Cove Point will be repeated around the USA. Imports of liquefied natural gas, or LNG, are expected to rise from about 1% of total gas usage in 2002 to 15% by 2015 and 21% by 2025, according to the Energy Information Administration (EIA). That year, total imports are expected to be almost seven times the current figure.

Energy companies have submitted dozens of proposals for new terminals along all three U.S. coastlines to receive the expected shipments, which will give the United States greater flexibility in meeting its energy needs. Dominion is awaiting government approval to almost double Cove Point's capacity by 2008.