EIA: U.S. NATURAL GAS IMPORTS ON UPWARD SPIRAL

Natural gas imports into the U.S. are at a record level and climbing.

U.S. Energy Information Administration figures show the country imported a record 2.35 tcf of gas in 1993, mostly from Canada. It's part of an active, integrated natural gas market that continues to develop in North America.

EIA said, "Although export trade with Mexico fell sharply, industry observers anticipate it will rebound eventually and Mexico may become a significant gas market for the U.S."

U.S. net imports of natural gas rose for the seventh straight year in 1993, reaching 11% of domestic consumption. Imports from Canada continued their steady growth to a record 2.267 tcf.

TRADE WITH CANADA

EIA reported the price of Canadian gas imports increased 10% to $2.02/Mcf in 1993, the highest since 1986.

Although the growth in Canadian imports has been steady, the pace slowed to 8% in 1993, compared with a 23% rise in 1992. Net imports amounted to 11% of U.S. natural gas consumption in 1993, indicating an increasing reliance on Canadian gas.

Part of the increase was due to the Iroquois pipeline system in the U.S. Northeast becoming fully operational and shipping Canadian gas. Strong economic growth in the Pacific Northwest pulled more Canadian gas into that region.

Gas import increases were modest in the Midwest, and future growth may depend on adding capacity to existing pipelines. Only Northern Border Pipeline Co. plans to expand capacity from Canada into the Midwest market.

EIA said, "The major natural gas market development in California was the resolution of differences between the California Public Utilities Commission and Canada's National Energy Board.

"A controversy was triggered by CPUC's adoption of new natural gas procurement rules, including a capacity release program on the facilities of the Pacific Gas Transmission Co. effective Aug. 1, 1991.

"The Canadian NEB responded by prohibiting exports to northern California except under long term contracts with Alberta & Southern Gas Corp. Ltd. NEB's prohibition was intended to prevent short term-and lower priced-exports from displacing the long term supplies already under contract."

After NEB revoked its ban on short term exports to California effective Nov. 1, 1993, those shipments rose markedly in November and December.

No totally new pipeline systems are planned to link the U.S. and Canada, but expansions to existing systems will continue. From 1987 to present, and with projections through 1996, available pipeline capacity between the two nations will have nearly doubled.

Exports of gas from the U.S. to Canada dropped sharply from 1992's unusually high level of 68 bcf to 45 bcf in 1993.

MEXICO, LNG

EIA figures show U.S. gas exports to Mexico were a record 96 bcf in 1992 but plunged to 40 bcf in 1993 due to higher gas prices and a slump in the Mexican economy.

EIA said, "With passage of the North American Free Trade Agreement and the reorganizing and downsizing of Petroleos Mexicanos, trade with Mexico has become very responsive to economic changes."

Pemex, mainly its petrochemical operations, accounted for about half of Mexico's gas demand in 1993. EIA predicted demand will rise as industrial markets expand and plants convert to gas for environmental reasons. But in the short term, there is little economic incentive to switch from high sulfur fuel oil.

For the first time since 1984, the U.S. imported gas from Mexico - 2 bcf in December 1993. Imports of Mexican gas have continued into first quarter 1994, totaling 4.3 bcf.

Southern California Gas Co. plans to lay a pipeline at the U.S.-Mexican border to export U.S. gas for power generation and other uses in Baja California Norte. It and other proposed pipeline projects between the two nations could add capacity of as much as 1.795 bcfd by 1998.

U.S. 1993 imports of 82 bcf of gas as LNG were nearly double the previous year's volume.

Demand for LNG rose during the severe winter of 1993-94, resulting in record volumes of LNG being delivered to the U.S. Northeast. EIA attributed the increase to Algeria's willingness to lower prices and the Federal Energy Regulatory Commission's granting of market responsive rates for LNG marketers.

EIA said 62% of LNG imports were delivered to a Distrigas Corp. terminal in Everett, Mass., and the rest to the Pan National Gas Sales Terminal in Lake Charles, La.

Phillips Alaska Natural Gas Corp. and Marathon Oil Co. shipped 56 bcf as LNG from the Kenai Peninsula to Japan in 1993. With the commissioning of two larger LNG tankers in 1993 and revised sales contracts, export volumes could reach 64 bcf/year, EIA said.