Numbering the future

Sept. 5, 2005
The future is, well, the future, known with any certainty only when it becomes the present.

The future is, well, the future, known with any certainty only when it becomes the present. Then we try to look at that present and figure out what the (next) future will be.

And so it goes.

Seeing the future of energy or any part of it is a game almost anyone-with time and a computer-can play. And many do.

You can safely bet (more future gazing) that most of those forecasts will land on the desk of an Oil & Gas Journal editor, their authors hoping OGJ will publish the results of their computerized crystal-ball gazing.

Fair enough. Everyone has to make a living.

But Journal editors learn quickly whom to trust and whom to ignore. We learn that because the industry we cover has learned that.

The trustworthy forecasters have been around for a while, have had a vision of the future (prices, supplies, markets, whatever) that has become the present frequently enough to earn industry’s trust.

Sometimes, however, we editors have to put some numbers together and try, less to predict the future than to see some paths into it.

Another study

Not too long ago, another look into the world’s natural gas future arrived from one of those crystal-ball gazers, the London-based Centre for Global Energy Studies. It was an executive summary for CGES’s “World Natural Gas: Demand, Supply and International Trade to 2030” with enough specifics to start this editor on some low-tech number crunching of his own, especially about LNG and the US.

As anyone who reads OGJ even infrequently knows, the energy markets of China and the US are behind much of the run-up in natural gas prices because demand in both countries is running ahead of production. Both countries have turned to imports, especially LNG, as an answer.

CGES believes that in 2030, the volume of natural gas circulating in world trade will reach about 62.5 tcf or some 171.3 bcfd. That’s the center’s reference (or most likely) case and represents growth from 2003, the study’s starting point, of 3.8%/year.

Of that amount, about 22.4 tcf (60 bcfd; 35.8%) will consist of LNG.

Currently, the leading importer of LNG is Japan. It’s been Japan’s demand that has mainly kept the LNG industry afloat through the 1980s and early 1990s while it lowered production costs and waited for the price of natural gas to climb.

By 2030, says the CGES, both the US and China will have moved past Japan in total natural gas imported, with the US more than doubling Japan’s demand, importing 10.2 tcf/year, nearly all of it in LNG.

In fact, US imports in 2030 will represent 45.6% of all LNG moving in the world’s market.


At present, by OGJ calculations, US LNG import capacity exceeds 6 bcfd, spread among five terminals. In 2006, expansions at Lake Charles, La., and Elba Island, Ga., will add 1.8 bcfd.

In 2008, however, US import capacity will leap by nearly 8.5 bcfd, starting with an expansion at Cove Point, Md., adding about 840 MMcfd. New terminals, if all proceeds according to proposals, will add nearly 7.7 bcfd in 2008.

These terminals to serve the US market will cover all three countries that comprise North America:

• Two terminals along Sabine Pass in Southeast Texas will add more than 5.5 bcfd.

• Sempra LNG’s Energía Costa Azul in Baja California, Mexico, will add more than 1 bcfd for the southwestern US market, primarily California. Groundbreaking took place in April of this year.

• Bear Head LNG’s Phase 1 on Cape Breton Island, NS, will add 1 bcfd for the US Northeast market.

And in 2009, more than 3 bcfd will come on stream with the opening of yet another terminal along the Sabine Pass and of Freeport LNG Development LP’s terminal southwest of Houston.

All told, more than 19.5 bcfd of regasification capacity in the US will be available when 2010 begins. That’s a jump of more than 13.5 bcfd (260%) over capacity in 2005 and a long way toward meeting the demand scenario in the CGES study.

With Canadian imports via pipeline set to begin a steady, irreversible decline shortly after 2010, US LNG imports will play a major role in driving electricity generation and keeping the US economy moving...for the future.