Liquefied natural gas (LNG) in U.S. energy policy : infrastructure and market issues / Paul W. Parfomak, Library of Congress Congressional Research Service.

Format:

Book

Government document

Author/Creator:

Parfomak, Paul W., author.

Library of Congress Congressional Research Service, author.

Contributor:

Library of Congress Congressional Research Service, author.

Series:

CRS report for Congress ; RL32386.

CRS report for Congress ; RL32386

Language:

English

Subjects (All):

Energy policy.

Physical Description:

1 online resource (22 pages).

Place of Publication:

Washington, District of Columbia : Congressional Research Service, Library of Congress, 2006.

Summary:

Liquefied natural gas (LNG) imports to the United States are increasing to supplement domestic gas production. Recent actions by Congress and federal agencies have promoted greater LNG supplies by changing regulations, clarifying siting authorities, and streamlining the approval process for LNG import terminals. Were these policies to continue and gas demand to grow, LNG might account for as much as 21% of U.S. gas supply by 2025, up from 3% in 2005. Congress is examining the infrastructure and market implications of greater U.S. LNG demand. There are concerns about how LNG capacity additions would be integrated into the nation's gas infrastructure. Meeting projected U.S. LNG demand would require six to ten new import terminals in addition to expanding existing terminals. Twelve new terminals, most in the Gulf of Mexico, are approved, but public opposition has blocked many near-to-market terminals which might save billions of dollars in gas transportation costs. New LNG terminals can also require more regional pipeline capacity to transport their supply, although this capacity may not be available in key markets. Securing LNG infrastructure against accidents and terrorist attacks may also be a challenge to public agencies. Since import terminals process large volumes of LNG, a breakdown at any facility has the potential to bottleneck supply. LNG's effectiveness in moderating U.S. gas prices will be determined by global LNG supply, the development of a "spot" market, potential market concentration, and evolving trading relationships. There appears to be sufficient interest among LNG exporters to meet global demand projections, although some new export projects may not be built. An LNG spot market, which may help U.S. companies import LNG cost-effectively, is also growing. Although some analysts believe a cartel may influence the future LNG market, the potential effectiveness of a such a cartel is unclear. Whether exporters cooperate or not, an integrated global LNG market may change trading and political relationships. Individual country energy polices may affect LNG price and supply worldwide. Trade with LNG exporters perceived as unstable or inhospitable to U.S. interests may raise concerns about supply reliability. Recent measures before Congress seek to encourage both domestic gas supply and new LNG terminal construction. The Energy Policy Act of 2005 ( P.L. 109-58 ) includes incentives for domestic gas producers and grants the Federal Energy Regulatory Commission "exclusive" authority to approve onshore LNG terminal siting applications, among other provisions. Other proposals in the 109th Congress, including H.R. 4318 , H.R. 3918 , and H.R. 3811 would lift federal restrictions on natural gas development on the Outer Continental Shelf. As Congress debates U.S. natural gas policy, three questions emerge: (1) Is expanding LNG imports the best option for meeting natural gas demand in the United States? (2) What future role, if any, should the federal government play in facilitating the development of LNG infrastructure domestically and abroad? (3) How might Congress mitigate the risks of the global LNG trade within the context of national energy policy? This report will be updated as events warrant.

Notes:

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