Focus on LNG Siting: A State Perspective

Deck: 

Congress revamps LNG and storage, giving broad new powers to FERC. Why the Feds still must consult with local authorities.

Fortnightly Magazine - November 2005
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A major objective of the Energy Policy Act of 2005 (EPACT) is to counter the worsened conditions in the natural-gas market that began in 2000 and are expected to continue over the next several years—namely, tight natural-gas supplies and high, volatile gas prices caused by a distinct shift in the supply-demand balance. The current quagmire assumes that the gap between U.S. demand for gas and supplies from traditional supply sources will grow continuously over the next 20 years.

According to the latest Energy Information Administration forecasts from the Department of Energy, the demand for natural gas in the United States will grow by 40 percent from 2005 to 2025, with domestic gas supplies projected to increase by only 15 percent over the same period. This translates to an increased gap of 5.9 trillion cubic feet (Tcf) by 2025, or about 15 percent of current consumption. Additional foreign supply sources—Canadian gas and liquefied natural gas (LNG)—will be required to serve the U.S. market.

Most industry observers now see the changed post-1999 market conditions as structural, rather than cyclical in nature, with long-lasting effects. In contrast, price spikes experienced in the 1990s were short-lived, caused mainly by brief periods of unusually cold weather or regional pipeline bottlenecks.

A corollary to this perception is the urgency for a package of major initiatives, affecting both the supply and demand sides of the gas market, to be implemented in the shortest possible time. EPACT closely reflects such a course of action.

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