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Clean Energy Coalition Applauds Bursting of LNG Bubble

2008-12-22T11:45:00.000-08:00

San Francisco, CA – New energy projections from Federal and California agencies show the LNG speculative bubble is over, according to a West Coast-wide coalition of organizations opposing dependence on foreign Liquefied Natural Gas (LNG).

The coalition, Ratepayers for Affordable Clean Energy (RACE), is responding to two new government reports. According to the U.S. Energy Information Administration, natural gas imports will decline rapidly from 16 percent today to only 3 percent in 2030. The difference will be made up in increased domestic natural gas production. According to a staff presentation from the California Public Utilities and Energy Commissions, California’s natural gas demand will remain flat until 2030, while the one LNG import terminal serving California, located in Mexico, will not receive “significant deliveries.”

"These projections make clear that the West Coast does not need LNG,” said Rory Cox, California Program Director at Pacific Environment and coordinator for RACE. “LNG was an inappropriate choice to begin with, and it remains so. We’re ready to put this debate behind us, and join the new Administration in building a truly clean and sustainable energy future.”

“What a difference a year makes,” said Dan Serres, conservation director at Columbia Riverkeeper. “These new projections are a game changer. LNG is now off the table as a wise investment choice. The current LNG proposals are now just moving forward under nothing but their own momentum.”

Since 2004, RACE has opposed LNG as it will increase California’s contribution to greenhouse gases, undercut development of clean energy, and endanger the health and safety of West Coast communities. The coalition has maintained that despite the media and investment hype, imported LNG has never been necessary on the West Coast of North America. The coalition’s conclusions were based on trends in the domestic natural gas industry, on steadily declining natural gas consumption in California since 2000, and on new laws and initiatives in California such as mandated energy efficiency programs, the renewable portfolio standard, and the Global Warming Solutions Act (AB32). RACE has also pointed out that natural gas demand in Baja and the Pacific Northwest is quite small, making it clear that these regions were being used as “back doors” into California’s energy market.

The 2009 Annual Energy Outlook from the U.S. Department of Energy is here: http://www.eia.doe.gov/oiaf/aeo/index.html

A copy of the presentation from the California Public Utilities and Energy Commissions detailing new projections for natural gas usage in California are available by request at rcox@pacificenvironment.org or dserres@gmail.com.

More information about RACE: www.RaceForCleanEnergy.org

###

Contact:
Rory Cox, California Program Director, Pacific Environment. (510) 459-0933
Dan Serres, Columbia Riverkeeper, (503) 890-2441
Tom Ford, Executive Director, Santa Monica Baykeeper, (310) 738-6915
Jody McCaffree, Executive Director, Citizens Against LNG (Coos Bay), (541) 756-0759

Liquefied Natural Gas and Fossil Capitalism

2008-12-05T00:26:00.000-08:00

Anna Zalik, Monthly Review, November 2008

The contemporary ecological crisis places a new spin on the notion of the “resource curse,” evoking widespread concerns regarding hydrocarbon dependency. Whether environmental, in the form of global warming, or socio-political, through wars over oil, “fossil capitalism” is now understood as a global problem.1 The development of a global market in natural gas, heavily dependent on the development of the Liquefied Natural Gas (LNG) industry, offers an example of a corporate-endorsed solution to the simultaneous ecological and economic “crises” associated with fossil capitalism. Yet, since 2004 a cross-continental mobilization against the development of LNG terminals in North America has successfully challenged the installation of some LNG infrastructure on the West Coast.2 These movements stress that the investment required to build the global gas industry displaces investment in renewables.

A key limitation on natural gas usage is the difficulty of transportation, particularly across oceans and over long distances. LNG is natural gas that has been cooled for purposes of transportation to approximately –163°C (–260°F), changing it from a gas to a liquid 1/600th its original volume. It is shipped in double-hulled seagoing vessels known as LNG carriers designed specifically to handle the low temperature of LNG. There are currently now more than 130 such ocean carriers in operation worldwide. Receiving or gasification terminals take the form of specially constructed ports devoted exclusively to the importing and exporting of LNG. Once it reaches its destination it is stored in insulated tanks built specifically to hold LNG. When there is demand for fuel the LNG is heated to return it to its gaseous state and delivered via pipelines as natural gas to customers. LNG is exported by countries with large natural gas reserves such as Algeria, Australia, Brunei, Indonesia, Libya, Malaysia, Nigeria, Oman, Qatar, and Trinidad and Tobago. There are some sixty LNG receiving terminals worldwide, mainly in high-income consuming nations such as Japan, Korea, the United States, and some European countries.

As the “cleaner” hydrocarbon, natural gas has been promoted as a partial solution to the problem of global warming. As the ecological critique of carbon-based fuel consumption grows louder, with supply concerns prompting energy price increases and OPEC members claiming greater sovereignty over petroleum assets, natural gas appears increasingly attractive both financially and environmentally. Multinationals displace lost oil reserves with gas, while they market themselves as greener energy companies (the most notable being BP’s new moniker: Beyond Petroleum). Daniel Yergin, Pulitzer-winning author of the book The Prize on the oil industry, referred to natural gas as “The Next Prize” in a 2004 article in Foreign Affairs. Making it prize-worthy, however, depends on LNG development that is high-risk, costly, and inefficient.

David Harvey’s theorization of the “spatial fix” provides insight into the formation of the global LNG market, since it is by nature a global industry, associated with overseas transport of fossil fuel. Although technically difficult, LNG development helps the oil and gas industry address some of fossil capitalism’s contradictions while creating others. The investment of surplus in LNG infrastructure allows for the use of excess capital in specific sites. Concurrently, certain social contradictions of the “state-tied” resource curse are avoided, transferring the product out of relatively insecure settings and into more profitable ones. Given rising criticism of the oil and gas industry, however, the promotion and connection of LNG to the North American power grid must be accomplished. So industry aims to persuade legislators and the public that LNG has some intrinsic value in terms of conservation, the environment, and energy security. But providing a convincing argument for LNG could become increasingly difficult with recent assertions that drilling for shale gas in the United States could preclude the need for these imports.

The analysis below examines how the LNG industry is commonly conceived as a partial, stop-gap solution to the ecological and economic crises arising from fossil-fuel dependence. By looking at the overseas transfer of LNG from Nigeria to Mexico in order to power the U.S. energy grid, this article seeks to explain ongoing spatial transfers associated with “ecological imperialism.” Mexico’s first LNG terminal, operational since 2006, is a Shell project in Tamaulipas State, which borders Texas, sourcing gas from its Nigerian LNG facility in Bonny Island. LNG development in the two sites in Nigeria and Mexico has interfaced with varying social conflicts and positions in the global political economy of oil — in the Nigerian case, highly volatile, in the Mexican relatively stable. Fostered by corporate subsidies, the gas ultimately enters the more lucrative U.S. market, servicing that country’s hydrocarbon-accumulation model.3

The Resource Curse

Although the term “resource curse” seems an apt descriptor for the global pitfalls of hydrocarbon dependency, in its original usage it had a decidedly state-centered focus. The curse describes how exporters of high-valued natural resources become tied to a single major source of revenue in a form that stymies their domestic economic growth. Classic examples of this dynamic in the oil sector include Nigeria, and Venezuela up until the late 1990s. Sometimes called the “paradox of plenty,” this condition is associated with the accumulation of high-value natural-resource based capital in a particular state. The rapid accumulation of surplus through exports of this resource erodes social cohesion, encouraging spending on conspicuous consumption and imported goods rather than industrialization. Socially, this leads to magnified inequality as powerful elites claim “rents,” or kickbacks, in a cash-flooded national economy.4

The state socio-economic erosion associated with the “curse” includes deteriorating public services and infrastructure. Often, due to the consumption culture that the curse is said to foster, poor services are attributed to corrupt actors in commercial and governmental institutions. But the deterioration of infrastructure cannot be attributed merely to acquisitive values or—as often implicit in contemporary charges of corruption against developing countries—to “laziness” (a stigma laden with colonizing stereotypes). In fact, the concept of Dutch Disease, often equated with the resource curse, was coined to describe the deterioration of the Netherlands following the gas boom of the 1960s. And a similar curse has been used to explain the centuries-earlier deterioration of the Spanish economy as a result of rampant extraction of silver and natural wealth from the Americas. The rising exchange rate that results from accumulation during a boom period prompts de-industrialization, as manufacturing and agricultural sectors become less competitive on the global market, and even domestically. In various third world oil exporters, this phenomenon has encouraged divestment from these sectors, leading to “underdevelopment.”

Interestingly, those oil producers commonly identified as having “escaped the curse” include Mexico, where oil came under national control after the expropriation of foreign oil holdings in 1938.5 Mexican petroleum production after the expropriation was initially intended to be directed toward national industrial development in accordance with an import substitution model, although this was later to break down as a result of U.S. economic dominance, creeping privatization, and neoliberalism.

In contrast to the explicitly developmentalist and import-substitution model that prevailed in Mexico, advancing de-industrialization, associated with high-value resource extraction and the related export dependency, makes most resource-cursed countries less attractive sites for reinvestment of the energy and capital surplus extracted.6 In Nigeria, despite considerable need for domestic gas as a cooking fuel, gas associated with the oil extraction is primarily being liquefied for export. The transformation of Nigerian gas into LNG makes it a globally tradable substance—serving European and North American markets far afield. Contemporary military advances into West Africa through the expansion of the U.S. Africa Command, and the UK’s recent offering of policing support to assuage the Niger Delta crisis, echo the imperial histories of these regions. Indeed, historical and contemporary extraction of natural resources from these regions and the socio-political strategies that facilitate it may well be explained as ecological imperialism.7

Harnessing Gas

The construction of a global gas market, complete with dedicated LNG terminals, requires that legislators and a public wary of energy companies must first be convinced of its economic and environmental benefits. Moreover, particular technology must be put into place to move it trans-oceanically. As described by Gavin Bridge, the properties of gas as an ethereal substance shape a “stubbornly anachronistic geography of commodity supply.” Where terrestrial pipelines cannot be installed, overseas shipment demands liquefaction at extremely cold temperatures, allowing its transport on special tankers to distant terminals. Once it arrives at its destination, the substance is regasified and linked into domestic power grids.

Whether piped or shipped, this is an expensive undertaking and, until the recent upsurge in energy prices, much gas was considered “stranded” since the process was considered too costly to be viable.8 Today the context has changed, with concerns regarding a global fuel shortage prompting rising prices on gas futures markets that are beneficial for the promotion of LNG development. In the last ten years the international oil industry has placed a major emphasis on the development of LNG terminals and infrastructural connections in North America. Although there is widespread consensus that natural gas is preferable to coal burning for electricity generation, LNG is a doubtful candidate for an overall reduction in carbon emissions. Recent studies suggest that the carbon footprint of LNG transported long distances may be substantial.9 Building a North American domestic LNG infrastructure will also shape a set of commercial and worker interests tied to this industry, which may further postpone and/or create obstacles to non-hydrocarbon sources as a substitute.

Although LNG currently accounts for only about 30 percent of the inter-regional trade in gas, the International Energy Agency estimates that the figure may rise to 50 percent by 2030. National oil companies play a large role in gas liquefaction, with Indonesian and Brazilian parastatals among the most important. But Shell also figures in the top three for liquefaction capacity, and private energy companies primarily run LNG receiving terminals.10

LNG in Nigeria and Mexico and Capital’s Spatial Fix

The Nigerian LNG project at Bonny Island—a joint venture between the Nigerian National Petroleum Company, Shell, ENI (Agip) Italy, and Total—was first proposed in 1989, and became operational a decade later. The liquefaction and export of natural gas is the Nigerian oil industry’s external solution to the problem of flaring in the Niger Delta—where 70–80 percent of gas extracted alongside petroleum (known as associated gas) is burned, the highest rate in the world—leading to acid rain and erosion that effects fishing and local wildlife. Huge surface flares light up the night sky. Since the Ogoni mobilization and Ken Saro-Wiwa’s execution in the 1990s, these flares have become symbolic of the impunity with which environmental and human rights norms are disregarded by the global oil industry in Nigeria.11 Flaring occurs at a rate of at least 2.5 billion cubic feet per day with many riverine villages “never knowing a dark night.”12 Shell Nigeria is the largest single flarer.

Unsurprisingly, after fifty years of ongoing flaring, this industrial form of waste elimination is an indelible part of the region’s socio-ecology. Condemned by the Ogoni, Ijaw, and other Nigerian “oil minorities” as a violation of indigenous rights, flaring in the Delta is seen as a clear manifestation of environmental racism, or “global apartheid,” as applied to the exploitation of natural resources. In protest against oil extraction in the Delta in 1999, Ijaw youth initiated “Operation Climate Change” whose aim was to “extinguish the flares.” In the context of a history of harsh repression of protests and blockades, and the increased presence of militia groups acting as both security and threat to the oil industry, resistance in the Delta has been radicalized. In the last two years media reports on precarious oil supplies include references to the violent Deltan “crisis.”13

In addition to the release of toxic chemicals into the atmosphere, attention to global climate change makes flaring practices in the Delta a further target of criticism: The World Bank estimates that, due to flaring, Nigeria had contributed more greenhouse gases to the atmosphere than all other Sub-Saharan African countries combined by 2002. Environmental advocates inside and outside Nigeria have condemned the possibility of using flaring elimination to gain carbon credits (i.e., World Bank Clean Development Mechanism financing) under Kyoto, employing a recent Nigerian High Court ruling defining flaring as a violation of human/environmental rights and illegal on that basis.

The actual site of the LNG plant, Bonny Island, was a key port for the Trans-Atlantic slave trade—the lasting impact of which some theorists believe helps explain the salience of tribal divisions in the contemporary Nigerian state.14 On Bonny Island itself, an ecologically protected area at Finima was established as a requirement of the Nigerian LNG Environmental Impact Assessment. This protected area is administered by a Nigerian environmental NGO.15 The Nigerian LNG project and the public affairs programs it has advanced are today deployed as industry-community models, departing from divisive “host-community” policies which stoked inter-communal violence, and promoting improved social and environmental performance.

However, the harsh reality is that competitive violence over oil industry access payments and “piracy” (or contraband oil trade) in the Bonny region has continued, including kidnappings of Nigerian and expatriate oil workers. The marketing of the product elsewhere allows it to escape a region marked as too risky for domestic infrastructural investment. Concurrently the transfer of LNG allows capital an opportunity to engage in a kind of “spatial fix,” overcoming an over-exploited “socio-nature”/resource base, and a regime of overaccumulation of capital through the sale of LNG abroad.

The shipment overseas of LNG from Nigeria to Mexico allows the oil industry to benefit from the latter’s stability as well as its proximity to the largest domestic market in the world. Shell’s Altamira terminal in Tamaulipas State, of which it holds 50 percent—with Total and Mitsubishi holding another 25 percent each—is Mexico’s first regasification plant, operational prior to the Sempra/Shell terminal at Costa Azul. The port at Tampico, just South of Altamira, is a historical pivot in Mexican oil extraction. The broader Huasteca region of which it forms a part became famous for its “gushers” and was at once a “huge source of wealth and environmental destruction.” Its workers were central to the push for the 1938 expropriation of the former Shell and Standard Oil subsidiary companies—El Aguila and Huasteca.

Building on article 27 of Mexico’s revolutionary 1917 constitution, the 1938 oil expropriation put into practice the national exploitation of sub-soil resources. Through worker mobilization, and spurring major conflicts with the U.S. and UK governments, this expropriation was finally accepted, as it served U.S. financial interests. It provided Mexico the collateral to take out loans for industrial and infrastructural development. Not only did the expropriation express labor control over the means of production but, as Myrna Santiago demonstrates, it gave rise to an important conservationist sensibility—aiming to protect the resource for use by future generations of Mexicans.16

The Mexican expropriation marked a global turning point, the first case of a Southern oil exporter expelling multinational oil companies from its territory, over three decades prior to the creation of OPEC. But where OPEC would seek to control global prices of the commodity, Mexico’s expropriation expressed what would become a key tenet of Latin American import-substitution industrialization, the use of primary resources for national development rather than foreign exchange.

As LNG terminals are a prime strategic investment for foreign industry, they are also a target for contemporary protests against the denationalization of the Mexican oil industry. Since the Salinas de Gortari presidency, portions of the Mexican national oil company have been decentralized and in some cases privatized. These shifts occurred in a general economic climate that committed Mexican energy sources to rapid development, a condition of the U.S. financial bailout to the country following the 1994 peso crash that trailed the implementation of NAFTA and the Zapatista uprising. The marketization of LNG as “non-extractive” is in fact an important arena in the current debate concerning the creeping denationalization and privatization of the Mexican oil and gas sector—which has deepened in the aftermath of the highly contentious 2006 presidential elections taken by the conservative PAN in dubious circumstances. The Mexican Constitution continues to prohibit foreign or private firms from extraction and production of energy although not marketing. Thus the legality of LNG projects in Mexico has been challenged by various national groups, including coalitions of professional staff and democratic workers associations of the Mexican national oil company (Pemex), as a threat to energy sovereignty.17

The movement of LNG from Nigeria to a terminal in Mexico provides us with a window on the socio-ecological crises of hydrocarbon consumption and the industry’s contradictory attempt to resolve these crises. In Nigeria, industry and government frames LNG as a solution to social and ecological ills more easily than in the North American context. The infrastructural and social marginalization of the Delta region and the country as a whole makes its domestic energy sector unappealing for investors—despite a considerably underserved domestic market in natural gas. The violence that has become an indelible part of the Nigerian operating environment, attributable in part to the community affairs practices of the oil industry, is avoided while the outcry associated with the flaring of the region’s gas is discursively countered. Shipping the gas out of Nigeria and into Mexico is clearly a more lucrative option for an industry that purports to address the curse associated with hydrocarbon dependency nationally and globally.

LNG and its Discontents

Yet, the shifting of LNG to terminals in North America, where it will be available for the North American market and distributed under relatively stable conditions, has run into opposition. Over the last two years, a series of proposed LNG terminals in California and Baja California have been defeated due to sustained citizen protest—not a single terminal has been approved in California. Recently LNG terminals have been cancelled near Long Island, New York, in Oxnard, California, and near Ensenada, Baja California, and deferred in Canada. Active opposition to proposed terminals in Maine has spurred a regional coalition that includes the Canadian province of New Brunswick.18In 2008, the Clintons and Barack Obama acknowledged popular campaigns against planned LNG terminals in Oregon.19 Public opposition to the terminals has revolved around negative environmental impacts, the risk of accidents, and the threat of terrorist attacks on them. Mother Jones referred to them as “floating targets” in 2007.20

According to official U.S. sources, ten serious LNG accidents have occurred since the 1940s worldwide but with few fatalities. As such, Congress gave LNG land terminals a relatively safe rating in a 2003 report. In 2005 a Washington state-based public interest group took issue with the U.S. Federal Energy Regulatory Commission’s LNG safety approval. The report for the Pipeline Safety Trust counters that “for a variety of significant reasons, past operating records do not provide an appropriate perspective for the analysis of LNG risks. Overemphasis on past operations to predict future failures is a characteristic of poor risk management techniques, particularly for such complex systems.”21

While proponents of LNG portray it as “methane that is colorless, odorless and non-toxic,” environmental groups marshal contrary data.22 Not only does LNG include additional hydrocarbons like ethane, propane, and other contaminants, the receiving facilities bring together four major risks: high-energy density, huge inventories, unusual release dynamics associated with extreme cold (cryogenic temperatures), and very large impact zones of potential explosions.23 Official U.S. regulatory discourse describes LNG as “non-explosive” in its liquid state, a trait that does not differentiate it from other flammable liquids. But critics point out that LNG varies since it is held at unnaturally cool temperatures. A major LNG spill in Cleveland in 1944 resulted in a fire that killed 128 people. In its opposition to projects in Baja California, Greenpeace Mexico cited accidents at Staten Island in 1975 with a death toll of 45; a gas cloud in Boston in 1988, and an accident in Algeria—the second largest exporter of LNG globally—that killed 23.

Alongside socio-environmental risks, the West Coast coalition under the Ratepayers for Affordable Clean Energy (RACE) banner highlights how LNG projects largely serve to guarantee profits for crony energy companies. A former member of the California Public Utilities Commission called LNG development the “single largest change in the state’s energy infrastructure” since the 1950s.24 Were these projects to proceed, capital investment would tie the West Coast to gas rather than renewables, under the thumb of an energy sector already tarnished by price and supply manipulation during California’s 2000–01 energy crisis. Crucially, the role of the state regulators in pushing through LNG at the behest of key industry actors is openly condemned by the RACE coalition. They point to a California Public Utilities Commission ruling allowing utilities “the right to not renew contracts for domestic natural gas so these utilities can enter into LNG supply contracts, in essence favoring LNG from abroad over supplies from the Western United States and Canada.”25 The correct policy choice, argues RACE, is the continued usage of domestic gas sources that are more easily monitored for environmental impacts, less costly, and less hazardous than LNG receiving terminals. Concurrently, the demand for natural gas should be reduced via implementation of California’s clean energy laws and policies.

Though proposed LNG sources vary, many are typical extractive areas: economically and spatially isolated locations, communities socio-historically marginalized in racial/cultural and class terms, which may be ecologically rich but in which environmental regulations are relatively weak or minimally enforced. Among the early ecologically controversial LNG projects was a Royal Dutch Shell project on Russia’s Sakhalin Island marked as a threat to the Western Gray Whale. The Sakhalin II project prompted opposition in California from the organization Pacific Environment, which eventually spearheaded the establishment of the RACE coalition.

In the case of North American LNG, marginality is similarly desirable for terminal sites, especially in the midst of the “terror-target” hype. Accordingly, this makes Mexico a relatively attractive terminal site. In addition to lower labor and construction costs, certain industrial practices are tolerated that would be prohibited on the other side of the border. For instance, in Mexico LNG terminals may employ sea-water to warm the gas to normal temperature. Greenpeace Mexico’s campaign against LNG terminals, launched in 2004, employed a discourse of resource sovereignty as well as ecology, merging environmental movements with nationalist branches of the energy sector.26

To date, on the West Coast, only one LNG terminal has proceeded in the state of Baja California but not without a struggle. This is the Sempra facility that became functional in April 2008. Initiated by Shell Mexico, the company began to distance itself from the project in 2005, following opposition from a coalition that included both a Tijuana housewives association and a San Diego surfer’s club.27 Sempra then took it over, with Shell purchasing 50 percent of Sempra’s interests, but Shell’s name is not publicly associated with the terminal.28 Another proposed LNG terminal nearby in Puerto Libertad, Sonora has received support from the Sonora state government. According to the U.S. Department of Energy the latter has signed an agreement for a pipeline system to distribute the gas in both Mexico and the United States.

In Baja California, as in California, opposition to terminals is buttressed by the relatively advantaged sectors that oppose its development. On both sides of this border, these include tourism and real estate as well as the environmental movement which holds historical weight on the U.S. West Coast. In Baja California press attention was successfully harnessed, and a major Mexican television network produced a twenty-minute documentary critical of the LNG projects complete with ominous music. Following protest by a cross-border group of ecologists, NGOs, and fishing cooperatives, a proposed Chevron LNG terminal at the Islas Coronados, Baja California was cancelled in April 2007. The islands provide a habitat for a vulnerable marine bird, the Xantus, on which basis a case was taken to NAFTA’s Committee on Environmental Cooperation in 2005.29

California and Baja California resistance differs quite markedly from that on the Gulf Coast. Nine of the ten existing North American LNG terminals are located in the Gulf region and the northeast. Five are sited in Texas and Louisiana, one in Georgia, and two in New England. Louisiana and Texas share a long history of petroleum industry presence reflected in the relative amenability of those sites to receiving terminals.30 Of the ten, two are Mexican terminals: the aforementioned Sempra Costa Azul terminal between Ensenada and Tijuana and the one at Altamira, Tamaulipas. Tamaulipas shares the U.S. Gulf Coast’s long oil industry history, and its Huasteca region saw severe environmental degradation through the first half of the twentieth century.31 Over time the presence of the oil industry and a powerful national petroleum workers’ union has tied generations of Mexico’s Gulf State inhabitants to hydrocarbon production.

The Shell Tamaulipas LNG was initially to be supplied by Venezuela. But this project was cancelled in 2005, as Venezuela’s PDVSA (oil parastatal) took an increasingly sovereigntist stance regarding extraction, and removed both Shell and Mistubishi from its Mariscal-Sucre LNG project. It was under these circumstances that Shell Mexico moved to supply the plant from further afield—the Nigerian LNG project. The Nigerian-Mexican LNG relationship under the aegis of U.S. capital is thus partly a response of North American capitalism to limits imposed by Venezuelan resistance to foreign capital and embrace of regional energy sovereignty.

In the face of such resource sovereignty movements in the Global South, the movement of LNG from Nigeria to a terminal in Mexico—for U.S. consumption—is an example of the industry’s attempt to resolve the crises associated with on-going hydrocarbon extraction. It also manifests the ongoing transfer of “natural capital” that has been central to the development of global capitalism.32 In Mexico, LNG terminals face weaker environmental regulations and a (somewhat) less oppositional public than in the United States toward which the gas is ultimately destined. Yet the privatized nature of LNG development in Mexico is hotly debated, and figures prominently in struggles over the future of the Mexican energy sector and the national economy. As a global “band-aid” for fossil capitalism, the costs and complications associated with LNG thus attract increasing public scrutiny and critique.

Notes

Elmar Altvater, “The Social and Natural Environment of Fossil Capitalism,” in Leo Panitch and Colin Leys, ed., Socialist Register 2007 (New York: Monthly Review Press, 2006).
See http://www.LNGpollutes.org.
John Bellamy Foster and Brett Clark, “Ecological Imperialism: The Curse of Capitalism,” in Leo Panitch and Colin Leys, ed., Socialist Register 2004 (New York: Monthly Review Press, 2003), 186–201. David Harvey, The New Imperialism (New York: Oxford University Press, 2003), and Spaces of Hope (Berkeley: University of Califonria Press, 2000). Lorenzo Meyer, Mexico and the United States in the Oil Controversy 1917–42 (Austin: University of Texas Press, 1972).
Texts include Richard Auty, Sustaining Development in Mineral Economies (London: Routledge, 1993); Terry Lynn Karl, The Paradox of Plenty (Berkeley: University of California Press, 1997); and M. Ross, “Does Oil Hinder Democracy?” World Politics 53, no. 3 (2001): 325–61. See M. Watts, “Resource curse?” Geopolitics 9, 1 (50–80) for critique of some conventional approaches to the oil-conflict nexus and K. Omeje, ed., Extractive Economies and Conflicts in the Global South (Aldershot, Ashgate, 2008).
See for instance Lorenzo Meyer and Isidro Morales, Petróleo y nación (Mexico D.F.: Colegio de Mexico, 1990).
A problem that became more pronounced in the period following the debt crisis, a crisis that in fact resulted from the need for Northern banks to recycle the petro-dollars which Southern oil exporters deposited there during the oil shocks of the 1970s.
Foster and Clark, “Ecological Imperialism”; Jason W. Moore, “Environmental Crises and the Metabolic Rift in World-Historical Perspective,” Organization & Environment 13, no. 2 (2000): 123–57.
Gavin Bridge, “Gas, and How to Get It,” Geoforum 35 (2005): 395–97.
See Paulina Jaramillo, W. M. Griffin, and H. S. Matthews “Comparative Life-Cycle Air Emissions of Coal, Domestic Natural Gas, LNG, and SNG for Electricity Generation.” Environmental Science and Technology 41, no. 17 (2007): 6290–96.
Faith Birol, “LNG in the World Energy Outlook,” International Energy Agency Presentation to “Making Gas Market Global Workshop,” Paris, 2005.
See Ike Okonta, When Citizens Revolt (Trenton: Africa World Press, 2008); Don Pedro, Ibiba, Oil in the Water (Lagos, Foreword Communications,2006); Cyril Obi, The Changing Forms of Iden Nordiska Afrikainstitutet, Uppsala, 2001).
For detailed statistics see Environmental Rights Action Nigeria, (Friends of the Earth), Gas Flaring in Nigeria, 2005.
Ukoha Ukiwo, “From ‘pirates’ to ‘militants,’” African Affairs 2007 106, no. 425: 587–610; Peterside and Zalik “The Commodification of Violence in the Niger Delta” in Leo Panitch and Colin Leys, eds., Socialist Register 2009. (New York: Monthly Review Press, 2008).
Peter P. Ekeh, “Colonialism and the Two Publics in Africa,” Comparative Studies in Society and History 17 (1975): 91–112.
At Finima, the administering NGO often finds discarded pipes and other industrial waste on the protected site (author’s fieldwork 2003, 2006).
For further details on ecological destruction in this period see Myrna Santiago, The Ecology of Oil (Cambridge: Cambridge University Press, 2006), 133.
See http://UNTCIP.net.
See Tyler Hamilton, “Is LNG Flame Burning Out?” Toronto Star, April 12, 2008. Also See http://www.savepassamaquoddybay.org.
See The Daily Astorian, May 13, 2008. On visiting Astoria, Bill Clinton referred to Hilary’s opposition to the 2005 Energy Policy Act that placed approbatory power for LNG terminals with the Federal Energy Regulatory Commission. This is partially contested, see http://www.energycurrent.com/?id=3&storyid=9628.
James Ridgeway, “Homeland Security: Floating Targets,” Sept. 6, 2007.
Richard Kuprewicz, et al., Public Safety and FERC’s LNG (Bellingham, WA: Pipeline Safety Trust, 2005). The Pipeline Safety Trust was formed in 1999 following the Olympic Pipeline explosion near Bellingham.
http://www.ferc.gov/o12faqpro/default.asp?Action=Q&ID=464.
Kuprewicz, et al., Public Safety and FERC’s LNG. Various forms of LNG hazards are identified in the report—pool fires, flammable vapor clouds, and flameless explosions. In the case of pool fires the ignition of evaporating gas would lead to an increase in the “pool size” as LNG expanded away from its source. Due to inability to extinguish such a fire prior to the consumption of all the LNG at source, thermal radiation could injure people and property at considerable distance. If a similar spill does not ignite, it could drift some distance away where it might encounter a source of ignition and burn at varying degrees in various parts—dependent on concentration.
Loretta Lynch, formerly California Public Utilities Commissioner, http://pacificenvironment.org/article.php?id=2074.
The California Public Utilities Commission denied the RACE coalition’s demand for public hearings on LNG in the state. See Rory Cox and Robert Freehling, “Collision Course,” 24.
Greenpeace Mexico, Press Release, May 29, 2004. “To accept the Transnationals Liquefied Natural Gas project implies energy dependence, high risks and that we accept being the United States backyard.”
See http://www.surfrider.org.
See U.S. Energy Information Administration/Department of Energy, Mexico Country Analysis Brief, January 2007.
In a 2004 briefing on Mexican Gas projects, a business source highlighted Mexican Congressional opposition to the Chevron Islas Coronado project, twenty miles off the coast “under the argument that foreign multinational companies will end up having control of Mexican sovereign waters.” Haynes and Boone LLP, “Mexico’s Gas Markets.” Available at http://www.hg.org/articles/article_410.html.
William Freudenburg and Robert Gramling, Oil in Troubled Waters (Albany: SUNY, 2004).
On this point see Santiago, The Ecology of Oil.
Jason W. Moore, “Environmental Crises and the Metabolic Rift in World-Historical Perspective,” Organization & Environment 13, no. 2 (2000): 123–57; John Bellamy Foster, “Marx’s Theory of Metabolic Rift: Classical Foundations for Environmental Sociology,” American Journal of Sociology 2 (1999): 366–405.

KLNG puts call out for potential clients

2008-12-04T21:39:00.000-08:00

By Cameron Orr, Kitimat Northern Sentinel, December 03, 2008

Kitimat Liquid Natural Gas (KLNG) expects strong natural gas reserves in Western Canada. low geopolitical risks and the flexibility of its proposed LNG plant in Kitimat will be major factors in attracting potential users and investors.

Last Tuesday the company issued a call for formal expressions of interest from potential users of the liquefaction facility.

Ilene Schmaltz, vice-president of supply marketing for KLNG, said the move is to ensure fairness and that it hears from all possible candidates.

She said that when the company announced in September it was switching from import to an export, “we got a lot of calls from interested parties wondering as to the availability of terminal capacity or off-take or potential equity.”

As a result, Schmaltz explained. “What we thought we would do is make it more of a formal process to ensure we contacted any potential party that may be interested in our facility.”

A terminal capacity deal would see a party get the rights of a certain amount of LNG processing capacity while off-take refers to the LNG exports.

Schmaltz couldn’t discuss how many parties they have already talked to, but noted, “we have had several companies already tell us they intend to submit responses to our request for expressions of interest.”

Although KLNG hasn’t talked about what capacity they need buttoned down to make the project a go, she said the bulk of their capacity would have to be contracted before they would proceed.

“I would say that we would more than likely be able to go ahead with our project if we had at least 80 per cent of the capacity contracted for,” she said.

While global economic woes are dominating the headlines these days, KLNG is not greatly concerned that will affect the overseas customer base for their product.

“We’ve found over the last few weeks...is that most of these companies that are looking for LNG - the Asian buyers in particular - are long-term thinkers,” said Schmaltz.

“In the long-term they know they are going to continue to need LNG on an ongoing basis well into the future.”

When she attended a Kitimat city council meeting in September, Schmaltz had noted the ‘icing on the cake’ for changing the terminal from a regasification facility to a liquefaction plant was the prospect of numerous natural gas reserves going online in the near future.

Last week she told the Sentinel that in informal discussions with the producers she had been assured that these reserves are still going to be developed.

“Will there be a delay? We’re not sure, but a lot of producers are still actively drilling and exploring,” Schmaltz said. “It still looks very positive.”

The company is still waiting for federal regulatory approval on their facility, but she said the process is going very well and KLNG expects the approval early in 2009.

They are also waiting to receive an amendment for their already granted provincial approval (required since they changed the terminals function) and waiting to hear from the BC Environmental Assessement Office if any further steps need to be taken.

“We’re hoping to be able to finalize our commercial arrangements and get re-permitted in 2009,” said Schmaltz. “If we’re able to do that by the end of 2009 we could start construction as early as late next year or early 2010.”

On that timeline, the 36-40 month construction phase would put them online in early 2013.

Interested parties wanting to fill out an expression of interest have only a limited time as KLNG hopes to have all EOIs in by mid-December.

“Then we’ll take a look at them and decide who we want to proceed with,” she said. Those decisions will likely be made early in the New Year.

KLNG still expects to export five million tonnes of LNG annually.

Kitimat LNG Request for Expressions of Interest

KLNG says project timetable still intact

2008-10-16T00:48:00.000-07:00

By Cameron Orr, Kitimat Northern Sentinel, October 15, 2008

The Kitimat LNG liquefaction terminal - a recent turnaround from the originally proposed regasification facility - is still on track for a late 2009 or early 2010 groundbreaking.

So says Ilene Schmaltz, vice president of supply marketing with KLNG, who gave an update on the project to city council.

“Prices in Asia are quite a bit higher [for natural gas] than North America and we expect that to be a long term situation,” she said, noting Asia’s heavy reliance on imported fossil fuels because of their own lack of domestic supply.

Schmaltz said the largest buyers of liquefied natural gas (LNG) in the world are the Asian markets, including South Korea and Japan.

European countries, which rely on the gas heavily in the winter months, are also significant buyers of LNG,

The “icing on the cake” as far as the decision to change the LNG direction was talk of world scale natural gas reserves - in the form of shale or unconventional gas plates - in Northeastern BC and Alberta which will be coming onstream over the next few years.

That spike in supply is a good thing for natural gas exports, especially as KLNG may now be competing for supply against another operation, LNG Partners LLC.

The LNG Partners venture would use excess capacity in western BC’s pipeline system to take natural gas to a liquefaction vessel which would be owned and operated by Maverick LNG Holdings.

Councillor Mario Feldhoff asked if this operation would affect the KLNG plans.

“No, we don’t believe that really affects us at all,” said Schmaltz. “We believe there will be lots of gas for our project.”

Feldhoff also noted oil sands projects themselves had a high demand for natural gas.

But Schmaltz responded that her company has talked with oil sands producers which had been interested in KLNG’s import facility, and “with the changes in development of natural gas reserves not only in Canada but in the US, they are much more comfortable that there is going to be lots of natural gas for everybody.”

Schmaltz said the liquefaction facility, to be located at Beese Cove, will occupy the same footprint as the regasification plant but will actually have lower air emissions and ocean disposal.

The number of vessels using the port will be the same, or potentially slightly fewer.

They will be exporting approximately 3.5 to 5 million tonnes annually, and the Pacific Trails Pipeline, a partnership between KLNG parent company Galveston LNG, and PNG, will still be built.

That will be a 470 kilometre, 36-inch diameter pipe.

Provincial approval for the pipe was given in June - the pipe was permitted as bi-directional - and federal approval is expected at the end of the year, although Schmaltz said a slight delay may be expected due to the current election.

Mayor Rick Wozney wished KLNG the best after Schmaltz’s presentation.

“Construction will certainly be a welcome aspect in our community,” he said. “One-hundred jobs will certainly go a long ways to trying to recoup our economy in our community.”

Another LNG player emerges

2008-10-16T00:45:00.000-07:00

By Malcolm Baxter, Kitimat Northern Sentinel

KLNG is not the only company looking at exporting liquefied natural gas through Kitimat.

KLNG announced last month (Sentinel, September 24) it was reversing direction on its planned Kitimat plant, looking at exporting rather than importing.

Now an outfit called LNG Partners LLC is looking to do the same thing.

And as part of that it is seeking an arrangement with Pacific Northern Gas to use its existing pipeline to transport the gas here.

Greg Weeres, PNG vice-president of operations and engineering, told the Sentinel his company had made application to the BC Utilities Commission to approve that arrangement.

What it involves is LNG Partners paying PNG a non-refundable fee of $1.5 million in exchange for an exclusive six-month option to book the currently unused capacity in the PNG line to Kitimat.

That excess capacity exists because of the 2005 closure of the Methanex methanol plant - it had been PNG's biggest customer.

"The purpose of the option period is to allow them to evaluate whether they can make their proposed project work," said Weeres.

But if they cannot nail down all the numbers within that six months, LNG Partners has the option of purchasing a further six month option, again for $1.5 million.

And if they conclude they can make a go of it, LNG Partners would then negotiate a deal with PNG that would see the former's exclusive rights to use the spare capacity continue for between three and five years.

The arrangement is potential good news for PNG's existing customers even if the LNG Partners never get into production - at least in the short term.

That's because PNG proposes two-thirds of the option fee be used to reduce delivery rates - the amount the utility charges to deliver the gas to your door.

That rate has been hiked substantially over the past three years, in the main to make up for the loss of the Methanex revenue, but also to cover lost revenue resulting from a rate decrease for Eurocan and reduced usage by commercial and residential customers.

At the moment the delivery charge is almost one half of the cost per gigajoule of natural gas PNG charges.

But the company cannot yet say how much of a break customers might get. Weeres explained because this is very early in the process, PNG hasn't yet crunched the numbers.

However, he added, "Clearly there will be a benefit, you bet."

That benefit would rise dramatically should the LNG Partners project go-ahead - PNG calculates having its pipeline run at 100 per cent capacity would generate close to $15 million in extra annual revenue, $3 million more than it was getting from Methanex.

As for what an LNG Partners deal would mean for the proposed KLNG-PNG Pacific Trail pipeline project, Weeres emphasized it would have no impact on the Kitimat-Summit Lake line.

"It is certainly our intention to continue development of the KSL project regardless of what happens with LNG Partners," he said.

That position is echoed by KLNG - see story: KLNG says project timetable still intact

Lineup for LNG project adds a competitor

2008-10-15T10:44:00.000-07:00

by Ted Sickinger, The Oregonian

Steven Nehl/The Oregonian
Peter Hansen, chief executive of Oregon LNG, has spent nearly
five years pushing a proposal to build a liquefied natural gas
terminal on the Skipanon peninsula, just west of Astoria
(in background). His company filed a formal application
Friday with federal energy regulators.

Most controversy over liquefied natural gas in Oregon has focused on proposals to build an import terminal 20 miles east of Astoria on the Columbia River and on a competing project in Coos Bay.

With little fanfare Friday, however, backers of a third LNG project delivered 21 binders to federal energy regulators containing their application to build a terminal on a spit of sand and blackberry brambles that juts into the Columbia River from Warrenton.

Oregon LNG, as the company is called, isn't exactly new. The project was launched in 2004 by Calpine Corp., which went into bankruptcy a year later. Managers of the project kept pushing local land-use approvals for the terminal, and later bought out Calpine with backing from a New York-based holding company, Leucadia National Corp., that specializes in distressed investments. Their plan is to erect three mammoth gas-storage tanks on the Skipanon peninsula, each 17 stories tall, almost as wide as a football field and highly visible from Astoria, which is directly across Young's Bay from the project site.

The gas-receiving terminal would be coupled to a pier sticking 2,100 feet into the Columbia, where a new generation of LNG supertankers would dock in a dredged basin to unload their cargoes.

Click map to enlarge

The $1 billion terminal would be capable of importing a billion cubic feet of natural gas a day - almost twice Oregon's daily consumption. The gas would be shipped to markets throughout the Northwest and California via "the Oregon pipeline." The 36-inch, high-pressure line is slated to arc through 121 miles of farm- and forestland in Clatsop, Tillamook, Washington, Yamhill, Marion and Clackamas counties to a gas hub in Molalla.

Oregon LNG's application comes as the U.S. market for gas appears to have temporarily collapsed. Domestically produced gas is cheap and abundant. Asian countries are willing to pay such eye-popping premiums for LNG cargoes that many industry experts doubt it makes sense to import LNG to the United States.

Industry giants are sending the same message. British Petroleum recently backed out of a proposed terminal on the Delaware River, citing lousy industry conditions, while several terminals are applying for permission to export U.S. and Canadian gas to take advantage of the Asian bonanza.

Moreover, just as the Houston-based backers of the Bradwood Landing LNG proposal have met vehement opposition, local landowners, environmentalists and tribal groups could put up a stiff fight against Oregon LNG.

"We're opposed," said Brent Foster, executive director of Columbia Riverkeeper. "It would have a massive impact on the Columbia estuary. It comes with a significant pipeline that would impact farms, forestlands and rivers. And it's right in the middle of the flight path to the Astoria airport.

"There's no way you can call this a good site."

Oregon LNG executives obviously disagree. They figure their chances of commercial success are good enough to justify investing tens of millions of dollars in a labyrinthine permitting process.

Oregon LNG Chief Executive Peter Hansen said his aim is to build collaborative relationships and open dialogues - even with his opponents. The approach has built credibility and some good will among state regulators, tribal groups and environmental opponents.

Julie Carter, a lawyer with the Columbia River Intertribal Fish Commission, said the jury is still out on how the tribes will react to the project, which they still consider a huge industrial development on the river. But she said the company's approach has been refreshing.

"We've been pleased with the way they've been treating our interests and concerns, and how they've carried on this process," Carter said.

Hansen said Oregon LNG has spent $20 million and will continue spending $1.5 million a month to resolve myriad environmental, engineering and safety questions. This summer, for example, the company had biologists in the Tillamook forest hooting like spotted owls to determine whether its pipeline would harm owl habitat. It has done similar surveys for marbled murrelets and rare native plants.

"You can give agencies what they want today or fight them for two years, then give them what they want," Hansen said. "In the end, the issues are what they are, and you're the only one in any kind of a hurry."

As far as gas supply goes, Hansen says producers will more than double the supply of LNG on world markets by 2015, freeing up cargoes to come to the United States at competitive prices.

"There's a lot of interest in having a bridgehead to the U.S. market on the West Coast," he said. "From a producer's perspective, this is a pretty cheap option."

Hansen, a Dane who has traipsed around the globe as an energy industry engineer, has spent the past five years on the Oregon LNG project, first as an executive with Calpine Corp. When that company went bankrupt, he continued pursuing the project and later led a management buyout from Calpine.

Lately, his quest has become something of a knife fight with the backers of the Bradwood Landing LNG project, upriver from Astoria. Backers of the projects always have been competitive, but that competition has become more hostile recently, with each trying to scuttle or at least slow the other's regulatory approvals.

Hansen contends his Warrenton site is far superior to Bradwood. From an environmental standpoint, there's simply far less fish habitat to harm off the Skipanon peninsula, he contends. And he pulls no punches in discussing what he perceives as Bradwood's major flaw.

"Why would you bring an LNG tanker under the Astoria bridge?" Hansen said. "A pool fire is like a nuclear meltdown. The likelihood of such an accident is remote, but the consequence is enormous. ... It would burn Astoria."

If it's OK to bring LNG to Bradwood, Hansen asked, then why not put a terminal much farther upriver - say, in Kalama or Portland? The answer, he said, is plain common sense: "Let's not take that risk," he said.

Bradwood's backer, Houston-based NorthernStar Natural Gas Inc., counters that Oregon LNG sits on an unstable sand spit in the middle of earthquake and tsunami zones. The site is too close to Astoria's airport, NorthernStar executives say — one reason they rejected it in their early research.

Moreover, NorthernStar contends it has acquired an ownership interest in the Skipanon peninsula site. It has asked regulators to stop processing Oregon LNG's application and has indicated that it intends to take a spoiler role in any land-use changes that Oregon LNG seeks.

The back and forth between the companies is likely to continue. Both have invested heavily in their projects, and both say only one terminal ever will be built. Though NorthernStar already has federal approval and is seeking to win state permits sometime in early 2009, Hansen said that's wildly optimistic and that he still thinks he can beat his rival to the regulatory finish line.

Ted Sickinger; tedsickinger@news.oregonian.com

LNG opponents to intervene in Oregon LNG Project

2008-10-14T01:06:00.000-07:00

The Hillsboro Argus

ASTORIA - The Oregon LNG project, a proposed liquefied natural gas and pipeline development that would involve a terminal in Warrenton and a 118-mile pipeline through the Willamette Valley, drew a swift reaction from its opponents after Oregon LNG filed its official application with FERC. A coalition of farmers, foresters, businesses and conservationists will intervene in the Federal Energy Regulatory Commission process to challenge the project.

Dan Serres, with Columbia Riverkeeper, challenged the alleged need for the Oregon LNG project. "Oregon LNG's project is wrong for Oregon. They are proposing to tear up the Columbia River to import LNG at a time when North American LNG and gas companies are actively seeking to export LNG, and when global LNG prices are several times higher than domestic gas supplies. We will intervene to protect the Columbia River and to block this newly proposed foreign fossil fuel addiction."

Steve Wick, chair of the Yamhill County LNG Citizens Advisory Committee and a Gaston landowner whose property could be impacted by the project's proposed high-pressure, non-odorized pipeline, anticipated strong resistance coming from landowners along the route. "The Oregon LNG pipeline represents another blatant attempt of a private company to take our private land for an ill-advised energy scheme through the use of eminent domain. Our own Oregon Department of Energy has said there is no need for this pipeline, so this project should not be forced on unwilling communities."

Oregon LNG also faces stiff opposition from local activists and businesses near Astoria, where Cheryl Johnson, a retired school librarian, expressed her disgust with the proposal. "It's outrageous that Oregonians have to waste their time fighting terrible ideas like this one, proposals that put our public safety, our river and our future in renewable energy at risk. Make no mistake, though - we will fight them every step of the way."

Don West, president of the Columbia River Business Alliance, added, "There are real risks associated with this project for the public and for our economy. Oregon LNG is trying to build an LNG facility near the Astoria Airport. Their three proposed storage tanks are 17 stories tall and almost a football field in width, and they want to put these in the flight path of our airport? If we ever want to expand the airport we cannot allow this type of obstruction and threat to our continued growth on the north coast of Oregon."

By filing to intervene, individuals and groups such as Columbia Riverkeeper will retain the right to appeal FERC's decision on the project.

Kitimat LNG plans liquefied natural gas EXPORT terminal

2008-09-19T17:16:00.000-07:00

Irony: Just want to point out before you get too far, that for years, and up until a few minutes ago, Kitimat LNG has been planning to import LNG to North America. But as of today, it is planning to export gas from North America. Subtle difference.

How the world turns. It was only ten years ago that the PAC-RIM LNG Project was pitching an LNG export facility from Kitimat. And in the late 1970s a group including Dome Petroleum proposed Kitimat's first LNG export facility. That project collapsed along with world energy prices in the 1980s.
http://tinyurl.com/4yf8mv
http://tinyurl.com/46s28y

Investors in LNG schemes in British Columbia might be well advised to think about shell games before laying out any more cash. Just sayin'.

Investors can find the pea under the shell in the paragraph below that begins,"The decision was made in part because Kitimat LNG couldn't secure import supplies" Right so far. The rest of the paragraph is corporate spin - "... what the company believes ..."

Facts vs Faith. What are you going to invest in, folks?

Note carefully Ms. Bolton's statement that "The change will quadruple the capital cost to over $3 billion." Actually, the cost filed with the BC Environmental Assessment Office was $500 million - so, six times the cost, right?

And how convincing are these statements from Ms. Bolton: "We've certainly done our homework on this. We wouldn't go into this without a solid base of information.”?

Import. Export. Not a challenging distinction, if you've done your homework. You'd think you'd get that not-so-tiny detail resolved at the get-go.

What's the difference between a LNG tanker going west and a LNG tanker going east? Either is still an unacceptable risk. No homework required.

Kitimat LNG plans liquefied natural gas export terminal to meet growing demand in Asia
Expanding supplies of natural gas in Western Canada drive proposal

News Release, Kitimat LNG
CALGARY, September 19, 2008

Kitimat LNG Inc. announced today that it plans to develop an LNG export terminal near Kitimat, B.C. on its existing site at Bish Cove.

Rising natural gas demand in Asia and recent increases in supply throughout North America – including in the U.S., Canada’s traditional export market – have led to significantly higher natural gas prices in Asia than North America. These market and pricing conditions provide a compelling opportunity for companies looking to export LNG from North America to Asia.

“Kitimat continues to be a viable and advantageous location to build a West Coast LNG terminal,” said Rosemary Boulton, President of Kitimat LNG. “The growing economies of the Pacific Rim and rapidly increasing demand for LNG make Asia a natural market for B.C.’s plentiful and expanding supplies of natural gas. Kitimat is close to Asian markets and an extensive pipeline network already connects B.C. gas suppliers to the Kitimat area.”

The fundamental changes altering the global natural gas market have made Kitimat LNG’s proposal to export LNG more viable than an earlier proposal to import LNG to North America through a regasification terminal located in Bish Cove.

“Delays and cancellations of several LNG liquefaction terminals have caused major LNG shortfalls globally. Regasification terminals in North America are underutilized. At the same time, the trend away from coal is accelerating and demand for clean burning gas has never been stronger,” said Ilene Schmaltz, Vice President, Supply Marketing, Kitimat LNG. “These long-term trends create opportunities for stable sources of natural gas supply to take advantage of high demand in Pacific Rim markets."

The export plan provides a number of benefits for the Province of B.C., the Haisla First Nation, the District of Kitimat, and the local region:

* The project will create direct and indirect economic benefits for northern B.C.
* Construction jobs under this proposal will increase to 1,500 from 700 in the import proposal, and permanent jobs will increase to 100 from 50.
* The project will help diversify the regional economy and increase the use of local personnel, goods and services.
* First Nations will gain jobs, training and capacity-building for their communities.

“The Haisla First Nation offers its full support to Kitimat LNG and its new LNG export proposal,” said Haisla Chief Counsellor Steve Wilson. “Our community has much to offer to the proposed terminal, and we look forward to the employment and skills training a new LNG terminal would provide.”

Kitimat has entered into a memorandum of understanding with a leading multinational corporation that is currently conducting a feasibility study to participate in the project.

Kitimat LNG’s previous import proposal received all regulatory, environmental and government approvals, and the company will work with all levels of government on approvals, processes and permitting for the export proposal.

There are no additional environmental impacts resulting from a change in use to a liquefaction terminal from a regasification terminal. The amount of space the terminal would require remains constant, and the number of vessels moving in and out of the terminal also remains the same.

-30-

For more information or to arrange interviews, contact Ian Noble at 604-623-3007 (office) or 604-809-9650 (cell), or call Kitimat LNG at 250-279-0224 or 604-999-9058.

http://www.kitimatlng.com/code/navigate.asp?Id=32

LNG plant would tap Asian market

Dan Healing
Calgary Herald
Saturday, September 20, 2008

The Calgary developer of an oft-postponed liquid natural gas import terminal at Kitimat, B.C., has reversed course and now plans to build a $3-billion LNG export facility to take advantage of high demand in Asia.

The terminal would give natural gas producers in Western Canada a market outside of North America for the first time and fulfil a dream touted by politicians and developers alike for decades.

"The market really did change in two different ways," said Kitimat LNG Inc. president Rosemary Boulton, explaining the company's 180-degree change of direction in a phone interview from Vancouver on Friday.

"The LNG market, there have been delays in some liquefaction projects on a global basis . . . and also there's been quite a resurgence of natural gas within the Western Canadian Sedimentary Basin."

The change will quadruple the capital cost to over $3 billion for a 3.5-million to five-million-
tonne per year liquefaction terminal from the previous $700-million, seven-million-tonne per year regasification import terminal proposal.

The terminal would liquefy natural gas from the Western Canada market by cooling it to -160 C, reducing the volume by more than 600 times and allowing it to be transported by ship to markets all over the world.

Commodities analyst Martin King of FirstEnergy Capital Corp. said LNG is commanding a premium over the New York price of at least $10 per million British thermal units in Asia.

"On a global scale there is a view that LNG prices are going to remain very attractive," he said. "The best prices are being found in Asia. . . . on some deals the differentials have been as high as $15."

He said some delayed LNG projects internationally will come on-stream in the next year or so but growth in demand will likely still outstrip growth in supply.

Boulton said Kitimat LNG, owned by privately held Galveston LNG Inc., will spend the next year seeking commitments from producers and consumers as a condition for approving the project. If construction started in early 2010, it could open by 2013, she said.

Greg Stringham, vice-president with the Canadian Association of Petroleum Producers, said obtaining producer commitments has been a problem with previous gas export proposals.

"Export LNG facilities were looked at back in the '70s and looked at again in the '80s. The challenge has always been the capital costs are relatively high," he said.

Stringham said shale gas projects in northeastern B.C. and the United States are offsetting a steady decline in conventional North American natural gas production. He said studies suggest output will remain flat for the next decade or so.

EnCana Corp. spokesman Alan Boras said that, as Canada's largest natural gas producer, the company is always looking for new markets. But he could not say whether it would support the Kitimat LNG proposal.

The terminal would be built on the same footprint as the original proposal at Bish Cove, 15 kilometres north of the Port of Kitimat, and would include docking facilities.

The terminal is not the only stalled project involving Kitimat to recently be resurrected -- Calgary-based Enbridge Inc. has recently been seeking shipper commitments for its delayed $4.2-billion Gateway oil pipeline from Edmonton to Kitimat.

That project, too, would be aimed at Asian markets.

dhealing@theherald.canwest.com

© The Calgary Herald 2008

Kitimat LNG plans gas export facility
DAVID EBNER
Globe and Mail
September 19, 2008

VANCOUVER — Kitimat LNG Inc. wants to build a $3-billion facility to export natural gas to Asia, a reversal of its plans to construct a $700-million operation to import liquefied natural gas.

The decision was made in part because Kitimat LNG couldn't secure import supplies and also because the company believes Canadian gas production will increase because of large new discoveries in northeastern British Columbia.

While this is not a widely held prediction, some analysts do say Canadian producers would be interested in a second market for their product, especially because gas prices in places such as Japan are more than double than here.

“We've certainly done our homework on this,” said Rosemary Boulton, president of Kitimat LNG. “We wouldn't go into this without a solid base of information.”

The immediate outlook is negative for supply. In a report this week, brokerage FirstEnergy Capital Corp. said “the current pace of drilling is simply insufficient to prevent more production declines from occurring” in Western Canada.

The Kitimat LNG project would be located near Kitimat, B.C., and open in 2013 if all goes well.

Liquid Natural Gas plant proposed for Kitimat

Gordon Hamilton
Vancouver Sun
Friday, September 19, 2008

British Columbia's expanding natural gas supplies, coupled with growing demand for gas in Asia, prompted Kitimat LNG to announce Friday it plans to build a liquid natural gas export terminal at Kitimat, dropping previous plans for an import terminal.

The global natural gas market has changed fundamentally, the Calgary-based company said in announcing its reversal. The export proposal is now more viable than importing liquid natural gas.

"Kitimat continues to be a viable and advantageous location to build a West Coast LNG terminal," Rosemary Boulton, president of Kitimat LNG, said in a news release. "The growing economies of the Pacific Rim and rapidly increasing demand for LNG make Asia a natural market for B.C.'s plentiful and expanding supplies of natural gas.

"Kitimat is close to Asian markets and an extensive pipeline network already connects B.C. gas suppliers to the Kitimat area."

The import proposal has already received all regulatory, environmental and government approvals, the company said, adding there are no additional environmental impacts associated with building a liquefaction terminal rather than a regasification terminal.

The proposed plant will cool natural gas to -160 degrees Celsius so it can be transported by ship to Asian markets.

LNG terminals are controversial. A plan by another Calgary company, WestPac LNG Corp., for a liquid natural gas plant on Texada Island has run into opposition from community and environmental groups who do not want LNG being shipped through Georgia Strait.

Kitimat LNG is one of four pipeline and port expansion projects that have been announced for the north by gas and pipeline companies.

The Kitimat proposal has the support of the Prince Rupert and Kitimat mayors as well as the chief of the Haisla First Nation.

ghamilton@vancouversun.com

© Vancouver Sun 2008

Two US LNG importers seek permission to export LNG

2008-09-10T09:08:00.000-07:00

Two filings with the Department of Energy reveal important information: two LNG import terminal companies (Cheniere Energy & Freeport) are seeking permission to EXPORT LNG, because, as the Cheniere Energy filing points out, "due to global LNG market conditions, U.S. natural gas demand and prices do not currently support the importation of LNG into the U.S."

http://edocket.access.gpo.gov/2008/pdf/E8-21059.pdf
http://edocket.access.gpo.gov/2008/pdf/E8-20991.pdf

Gotta love it. But investors in WestPac LNG may not sleep so well at night!

Natural gas surge fuels worries about glut

2008-08-19T09:41:00.000-07:00

Consider Freeport LNG, which in June opened its $850 million terminal south of Houston. Freeport is the result of an eight-year plan to build a terminal to import liquefied natural gas .... On Aug. 1, however, Freeport LNG asked the Energy Department for permission to export LNG that it previously imported. The company said in its application that with increased shale gas production and lower prices in the United States, it was unlikely to import significant quantities in the near future, according to Platts LNG Daily, an industry news service./

By Jim Fuquay
Fort Worth Star-Telegram

If the United States continues to produce as much natural gas as it has in the year’s first five months, the country will see a 35-year high in annual production in 2008.

Is that too much of a good thing, at least from a producer’s point of view?

Thanks in large part to the drilling boom in the Barnett Shale and other new natural gas fields, U.S. natural gas production is up nearly 9 percent through May. At that rate, output this year will rise to nearly 22 trillion cubic feet, the highest since 1973’s 22.6 trillion cubic feet, the all-time record.

Meanwhile, there are more active U.S. drilling rigs than at any time since 1985, according to the Baker Hughes rig count. There were 1,967 rigs working across the country and offshore, up 88 rigs, or 5 percent, from a year earlier, the Houston-based oilfield supplier said.

And four out of five of those are looking for natural gas.

Last week, the Energy Information Administration released its latest short-term outlook for natural gas, which predicted an 8 percent gain in production for 2008. And in 2009, EIA said, "production is expected to increase by 3.7 percent," enough to roughly match the 1973 peak.

Good for consumers

From a consumer’s perspective, it could continue a recent break from the sharply higher natural gas prices seen in the first half of the year. After peaking at more than $13.50 per 1,000 cubic feet in early July, natural gas futures plunged, closing Friday at $8.10.

That coincided with crude oil’s fall from record highs during the same period. While the spike in crude oil has led Americans to cut their gasoline consumption, natural gas demand is expected to grow.

The EIA predicted a 3 percent increase in use nationally this year and 1.7 percent next year. Still, that’s less than half the supply growth, and that’s a shift from recent history.

"We hadn’t shown a growth mode for years. It’s been like a treadmill," George Hopley, natural gas analyst with Barclays Capital, said of U.S. natural gas production. There were changes in the market, he said, but "as fast as we lost industrial demand, we gained power demand" to generate electricity with natural gas.

"It worked out pretty well. Now we’re in a growth mode, and the question is: How do we balance this growth mode that seems to have some legs?"

So far, various industry players have recommended broad policy changes to increase demand. For example, Texas investor T. Boone Pickens has urged Congress to support a wholesale conversion of the country’s transportation fleet from gasoline and diesel to compressed natural gas. Others tout natural gas — a major component in electricity generation — as a replacement for electricity plants now fueled by coal, which is under fire for its heavy emissions of carbon dioxide, a greenhouse gas implicated in global warming.

Those, however, are years-long initiatives. Higher natural gas supply is here today and will be larger tomorrow.

Bad for producers

The combination has some financial analysts raising the issue with producers. For example, Chesapeake Energy Chairman Aubrey McClendon, after extolling the virtues of the company’s emerging prospects in Louisiana’s Haynesville Shale, brought up the subject during the company’s latest earnings conference call even before he was asked.

"Now before you become concerned about longer-term natural gas prices as a result of the sheer size of the Haynesville, please remember some likely natural constraints to the play’s growth," McClendon cautioned.

It’s likely to take several years to build the pipeline capacity to move gas out of the field, which itself should take decades to fully develop.

Constraints on new production and declines in older fields, "plus increasing demand from the U.S. power sector should be sufficient, in our view, to prevent a U.S. gas glut from developing."

EOG Chairman Mark Papa takes a similar view.

"We see the overall total Barnett field gas production peaking in 2009" at about 5 billion cubic feet per day, he told financial analysts on EOG’s second-quarter conference call. "Therefore, new resource plays will have to be the growth driver after 2009," he said, and he doesn’t foresee new EOG sources, such as its play in Canada’s Horn River Basin, filling that gap until 2011 or later.

"When you view supply growth in this context, the possible emergence of new domestic resource play is more digestible," Papa said.

Devon Energy, the largest producer of natural gas in the Barnett Shale, acknowledges the growing supply, but two weeks ago announced it was increasing its exploration and development budget.

"We maintain a business strategy and production plan based on a long-term view. We don’t let short-term variations in the market dictate our plans," said Chip Minty, a spokesman for the Oklahoma City-based producer.

The short term can present its own problems, however. Consider Freeport LNG, which in June opened its $850 million terminal south of Houston. Freeport is the result of an eight-year plan to build a terminal to import liquefied natural gas — natural gas that has been chilled to about 260 degrees below zero — from overseas producers.

On Aug. 1, however, Freeport LNG asked the Energy Department for permission to export LNG that it previously imported. The company said in its application that with increased shale gas production and lower prices in the United States, it was unlikely to import significant quantities in the near future, according to Platts LNG Daily, an industry news service.

LNG backers have invested an estimated $7 billion in LNG terminals around the Gulf of Mexico and the East Coast. LNG imports have fallen by over half from a year ago, and more U.S. terminals are scheduled to open this year.

Demand and prices for LNG overseas remains high, however, leading some U.S. producers to mention the possibility of exporting LNG.

Chesapeake’s McClendon briefly discussed the LNG market for U.S. gas during his Aug. 5 earnings call with analysts. Noting that natural gas was selling in Europe for roughly double its U.S. price, he said that "we’re trying to get it on a boat and get it to some overseas markets."

JIM FUQUAY, 817-390-7552

Patrick signs law that would ban LNG terminal for Fall River

2008-08-08T15:18:00.001-07:00

By DAVID KIBBE, New Bedford Standard-Times

BOSTON - Gov. Deval Patrick has signed legislation that in effect bans an LNG terminal from being located in Fall River.

The law, filed by Rep. David B. Sullivan, D-Fall River, does not allow liquefied natural gas storage tanks to be within 5,000 feet of homes, elderly housing, schools, hospitals, health care facilities or businesses. It also bars LNG tankers from coming within 1,500 feet of those same areas.

The law applies to LNG terminals built after Jan. 1, 2007.

Weaver's Cove Energy has insisted in the past that such state laws would not supersede federal reviews of its proposed terminal. But the city could use it as another weapon in its legal fight to block the terminal.

The Coast Guard rejected Weaver's Cove's original proposal to bring LNG to Fall River by tanker, citing safety and navigational concerns.

Weaver's Cove is focusing on an alternate plan involving an offshore berth for LNG tankers in Mount Hope Bay. The tankers would unload via an underwater pipeline that would take it 4 miles to a terminal in Fall River.

The offshore proposal was immediately opposed by the city's lawmakers and congressmen.

"Liquefied natural gas continues to be an important part of the commonwealth's statewide energy plan, but there are also serious potential health and safety risks posed by LNG terminals and tankers," said Rebecca Deusser, a spokeswoman for the governor. "Governor Patrick questions the wisdom of siting new LNG terminals in close proximity to densely populated areas, and he is particularly concerned about the project proposed in Fall River."

Link to article

Terasen awards contract for Mt. Hayes LNG facility

2008-04-18T01:35:00.000-07:00

COMMENT: This construction contract is a sign that Terasen isn't holding its breath for Westpac to build LNG facilities on Texada...

CB&I Awarded Contract for LNG Peak Shaving Facility

THE WOODLANDS, Texas - April 16, 2008 -- Horton CBI, a subsidiary of CB&I (NYSE: CBI), has been awarded a contract valued at approximately US$150 million for a liquefied natural gas (LNG) peak shaving project on Vancouver Island, British Columbia. The facility, to be owned and operated by Terasen Gas (Vancouver Island) Inc., a subsidiary of Terasen Inc., is designed to provide additional seasonal peaking capacity for the benefit of natural gas customers on Vancouver Island and the mainland of British Columbia (or use throughout the service territory.)

CB&I's work scope includes the engineering, procurement and construction of a 434,000 barrel (1.5 billion cubic feet gas equivalent) LNG storage tank, the liquefaction and regasification systems and all related plant structures and systems. CB&I designed and built the first LNG peak shaving plant in the U.S. in 1965.

About CB&I

CB&I combines proven process technology with global capabilities in engineering, procurement and construction to deliver comprehensive solutions to customers in the energy and natural resource industries. With more than 70 proprietary licensed technologies and 1,500 patents and patent applications, CB&I is uniquely positioned to take projects from conceptual design, through technology licensing, engineering and construction and final commissioning. Drawing upon the global expertise and local knowledge of approximately 17,000 employees in more than 80 locations, CB&I safely and reliably executes projects worldwide. For more information, visit www.CBI.com.

# # #

CB&I-2008-16

For Further Information Contact:
Media: Jan Sieving +1 832 513 1111
Analysts: Marty Spake +1 832 513 1245

http://www.cbi.com/ir/release.aspx?releaseid=304867

Terasen Gas receives final BCUC approval for Mt. Hayes storage facility

April 2, 2008

Printable version

Vancouver, B.C. – Terasen Gas (Vancouver Island) Inc. has received final approval from the B.C. Utilities Commission (BCUC) to begin construction of the Mt. Hayes natural gas storage facility on Vancouver Island.

“With this final approval, we can now move forward on an important investment in B.C.’s energy infrastructure – one that will provide benefits to our natural gas customers on Vancouver Island and the mainland,” said Randy Jespersen, Terasen Inc. president and CEO.

The storage facility, supplied by the company’s existing pipeline systems, will allow Terasen Gas to meet current and future gas demands on Vancouver Island and throughout our service territory. It will do this by storing liquefied natural gas during the summer months, which will then be regasified and used to serve high demand periods during the winter.

Terasen Gas expects it will mean more efficient use of the company’s existing pipeline systems and result in improved reliability and security of supply during planned or unplanned system interruptions.

The 20 hectare project site, known as Mt. Hayes, is located approximately six kilometres northwest of Ladysmith. The storage tank itself will hold 1.5 billion cubic feet of liquefied natural gas, with the structure measuring approximately 60 metres in diameter and about 50 metres high.

The BCUC’s approval builds upon the local community and regional support shown for the project.

“During the approval process, Terasen Gas worked diligently with the local community to address social, environmental and safety concerns,” said Mary Marcotte, director, Area H, Cowichan Valley Regional District. “The benefits of the facility will extend beyond the boundaries of the immediate area. Congratulations to Terasen Gas on receiving the final approvals necessary to move forward with the project.”

The facility will create substantial mid-Island economic and employment benefits, including:

local construction expenditures - $50 million

local, direct employment - approximately 120 person years

nine full-time operations jobs at the facility

opportunities for involvement of Chemainus First Nation people and businesses in the project

The company has been developing this project since 2004. In November 2007, Terasen Gas received conditional approval from the BCUC, of which the requirements have been met. Construction will begin this month with the facility coming into service by late 2011.

Terasen Gas is mainly composed of the operations of Terasen Gas Inc. and Terasen Gas (Vancouver Island) Inc., both indirect wholly owned subsidiaries of Fortis Inc. Fortis Inc., the largest investor-owned distribution utility in Canada, serves two million gas and electric customers and has more than $10 billion of assets. Its regulated holdings include Terasen Gas and electric utilities in five Canadian provinces and three Caribbean countries. Fortis Inc. owns non-regulated hydroelectric generation assets across Canada and in Belize and upper New York State. It also owns hotels and commercial real estate in Canada. Fortis Inc. shares are listed on the Toronto Stock Exchange and trade under the symbol FTS. Additional information can be accessed at www.fortisinc.com or www.sedar.com.

Terasen Gas may include forward-looking statements in this media release which reflect management’s expectations regarding the Company’s future growth, results of operations, performance, business prospects and opportunities. Wherever possible, words such as “anticipate,” “believe,” “expects,” “intend” and similar expressions have been used to identify the forward-looking statements. These statements reflect management’s current beliefs and are based on information currently available to the Company’s management. Certain material factors or assumptions have been applied in drawing the conclusions contained in the forward-looking statements. These factors or assumptions are subject to inherent risks and uncertainties surrounding future expectations generally. Such risk factors or assumptions include, but are not limited to, regulation, natural gas prices and supply, operational risks, general economic conditions, weather, capital resources, loss of service area, licences and permits, environment, insurance, labour relations and human resources. Terasen Gas cautions readers that a number of factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements. These factors should be considered carefully and undue reliance should not be placed on the forward-looking statements. For additional information with respect to certain of these risks or factors, reference should be made to the Company’s continuous disclosure materials filed from time to time with Canadian securities regulatory authorities. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Media contact:
Carol Greaves, Community Relations Manager
Terasen Gas
Phone: (250) 380-5764
E-mail: carol.greaves@terasengas.com

Scott Thomson, Vice President, Regulatory Affairs & Chief Financial Officer
Terasen Inc. and Terasen Gas
Phone: (604) 592-7784
E-mail: scott.thomson@terasengas.com

http://www.terasengas.com/_AboutUs/News/FinalBCUCApprovalMtHayes.htm

Forest Grove passes resolution against LNG terminals

2008-03-12T00:15:00.000-07:00

Jill Rehkopf Smith
The Oregonian
March 11, 2008

FOREST GROVE -- Forest Grove has became the first Oregon city to pass a resolution opposing construction of liquefied natural gas terminals near the mouth of the Columbia River and pipelines to Central Oregon.

City councilors on Monday unanimously supported the resolution, which cited the project's potential danger to the ecological balance of the Columbia, to the natural resources along the pipeline route and to the water supply of Forest Grove.

"It's not a case of 'Not In My Back Yard,'" said Councilor Pete Truax, who drafted the resolution. "This is 'in nobody's back yard.'"

Out-of-state companies have proposed building several LNG terminals in the state, including two on the Columbia River.

Proponents argue natural gas provides cleaner energy than coal and the projects will provide good jobs in Oregon. The gas would be extracted from other countries and shipped to a Columbia River terminal, then sent through underground pipelines to far-off distribution points, including California.

Two of the proposed pipelines, Palomar -- a joint venture between Northwest Natural Gas Co. and TransCanada Pipelines Ltd. -- and Oregon LNG, would pass near Gales Creek and Gaston and through Forest Grove's watershed.

Councilor Tom Johnston said that growing up in Gales Creek he lived through earthquakes and landslides and worries about damage to a pipeline located there.

Councilor Victoria Lowe pointed out that it's not just Forest Grove's water supply that might be affected because the pipeline would pass near Hagg Lake, which serves Beaverton, Hillsboro and other cities.

In addition to local testimony, Brent Foster, executive director of Columbia Riverkeeper, drove in from Hood River for Monday's hearing.

Foster cited damage from construction of a Coos County natural gas pipeline, a project approved by voters in 1999, such as erosion, landslides, stream pollution and tainted or blocked water supplies.

Foster also invited councilors to type "gas pipeline accidents" into the Google search engine on their computers to see all the references that come up.

Gov. Ted Kulongoski and key state agencies share Forest Grove's concerns, said Patty Wentz, a Kulongoski spokesperson.

The pipelines and terminals need state permits before they can be built, and state attorneys are looking into the extent of Kulongoski's authority to hold up those permits, Wentz said.

Kulongoski is also concerned that a 2005 law that took siting authority for such facilities away from the state and put it into federal hands also limited citizen involvement.

"People are trying to be involved in this process," Wentz said of the Forest Grove resolution. "It's not a hollow gesture. The governor is paying attention."

Liquefied natural gas poised to surpass oil as energy source

2007-12-25T21:25:00.000-08:00

Oil may be the energy source on everyone's mind right now, but
there is a good chance that liquefied natural gas (LNG) will surpass it as oil
prices remain astronomical./

By Leah Bower, Special to Gulf News (Dubai)
Published: December 24, 2007, 22:58
http://archive.gulfnews.com/articles/07/12/25/10177107.html

Oil may be the energy source on everyone's mind right now, but there is a good chance that liquefied natural gas (LNG) will surpass it as oil prices remain astronomical.

Once a bit of a backwater in the energy field, demand for LNG has been on a steady rise because it is relatively clean burning and because its liquefied state allows for transport to remote locations without construction of elaborate and expensive pipeline networks.

And while it can't hold a candle to oil's price, quite a few analysts seem to see it as the bandwagon of choice to jump on to.

Worldwide demand for LNG during the first half of 2007 was pegged at roughly 115 billion cubic metres (bcm), roughly nine per cent growth over the same period in 2006, and demand in East Asia has been growing even faster.

Calgary-based Ziff Energy says it expects demand for natural gas in North America will rise by 1.8 per cent a year through 2015, and US Energy Department data backs up that claim, reporting that they expect imported LNG to increase from three per cent of total gas consumption to 14 per cent by 2020.

Currently, Japan is the world's largest LNG consumer, importing 81.86 bcm of natural gas as LNG in 2006. South Korea is second and the US currently ranks as the fourth-largest consumer.

LNG is natural gas, but it is reduced to a liquid state by cooling it to about minus 160° Centigrade, which reduces the volume of the gas by about 600:1 and makes transportation far simpler. Before it can be used, LNG must be returned to its gaseous state at a regasification plant. For countries like Qatar, which is sitting on the world's largest natural gas reserves - 25 trillion cubic metres - the renewed interest in LNG is a boon, since there is no need for pesky pipelines that travel through neighbouring countries before reaching their destinations.

Just ask the Europeans, who saw their natural gas get cut off in early 2006. Russia, where the pipeline originated, and Ukraine, which hosted part of the pipeline, had a price dispute. The two countries disagreed and so did the Europe's energy supply. The dispute even resurfaced in 2007, although the gas continued to flow this time.

So LNG, with its ability to be shipped by sea or land, is slowly building a power base. And people like Qatar's Energy Minister, who once said it was "bad news" that the country only had gas reserves and no oil, are starting to change their tune.

The International Energy Agency (IEA) reported that by 2010 Qatar could own 20 per cent of the global LNG market.

Other countries with reserves are hopping on board as well.

The Australian government expects energy production growth down under will be led by LNG, with exports of the fuel set to grow by more than seven per cent yearly, through 2030. That would have LNG output rise from less than 16 million metric tonnes in 2007, to 24 million by 2012, and possibly reaching as high as 76 million by 2030 as new projects come online.

Without the ability to ship liquefied natural gas, this type of growth would have been almost inconceivable. Already the $16 billion) North West Shelf venture is expanding LNG capacity, while Perth-based Woodside is building the Pluto project, also in Western Australia.

Chevron is planning to expand its $10 billion liquefied natural gas project known as Gorgon, which now calls for three liquefaction production lines, instead of two. Inpex Holdings and BHP Billiton are also proposing new plants.

Get on board while the year is new.

The writer is a freelance journalist based in Alaska, USA.