Should US get 'hooked' on LNG?
Washington — Should the conservation-conscious United States abstain from an as yet little used foreign energy resource -- liquefied natural gas? Vast fields of gas underlie North Africa, Indonesia, the Soviet Union, the Persian Gulf, and other parts of the world. Current demand for it is relatively light. In fact, in areas where the "cash crop" is petroleum, gas is flared off or left untapped.
Since 1964, however, increasing quantities of natural gas have been liquefied through an expensive superchilling process and shipped aboard cryogenic tankers to Japan, Europe, and the US. When it arrives, it is returned to its gaseous state and fed into the pipeline system.
World trade in liquefied natural gas (LNG) is still in its infancy. Only 1. 75 trillion cubic feet are traded annually. Although the US currently produces enough gas domestically to satisfy its essential requirements, it already imports 0.8 trillion cubic feet of LNG -- an amount which could be expanded substantially in the coming decade.
Natural gas is clean, easy to use, and plentiful. Proved reserves worldwide as of 1978 were 2,557 trillion cubic feet. A small but substantial portion of that would be available for import if the US desired.
A new study by the congressional Office of Technology Assessment (OTA) estimates that the US could increase its imports of LNG by 0.54 to 1.13 trillion cubic feet a year in the next five to seven years.
This new natural gas would ease the pressure on the nation's fuel oil supply, cause less pollution than coal, and be less politically sensitive than nuclear power. Imported natural gas could be used, the OTA says, to fuel new economic growth of the US in the 1980s and beyond: new houses, manufacturing, and electricity generation.
The expense of LNG facilities would be bad news for US consumers, who would experience higher across-the-board prices for natural gas to help pay for the more costly LNG. But the LNG would help ensure the domestic gas supply and would be comparable in cost to Mexican natural gas.
Along with crude oil, LNG also could be part of a "portfolio" of imported energy supplies that would decrease US vulnerability if a single import, such as Persian Gulf crude, were halted.
"Not all potential LNG exporters are major oil producers or members of OPEC [ the Organization of Petroleum Exporting Countries]," the OTA report says, "so curtailments of foreign gas supplies are less likely to coincide with those of oil than they would be otherwise."
Potential US suppliers of LNG are limited because of instability in the Persian Gulf, lack of economic advantage in exporting gas for other Middle Eastern oil producers, shorter transportation distances to competing European and Japanese markets, and restrictions on trade with the Soviet Union. The most likely sources, therefore, would be Nigeria, Indonesia, Australia, Malaysia, Trinidad, Colombia, and Chile.
The OTA points out that LNG exporting nations also have greater financial incentives than oil producers to maintain uninterrupted shipments. Alternative purchasers with the proper terminal facilities would be difficult to find. And because of the expense of building liquefaction facilities, a continual flow of LNG revenue would be needed to pay off the debt.
But if the LNG supply were interrupted, the OTA says, the shortage of natural gas in the US could be managed under current priority reallocation guidelines.
A $3 billion southern California LNG project has been approved by the Department of Energy (DOE), although the department gives LNG development a low priority at this time. Alaskan and Indonesian LNG is to be shipped to Point Conception, adding 900 million cubic feet a day to the Pacific Gas & Electric Company's natural gas supply.
The Sierra Club and American Indian tribes in the area have been fighting the project for a variety of reasons, one of which is LNG safety -- an issue addressed earlier in a General Accounting Office study.
The most often cited danger of LNG is that a malfunction at sea or in port could cause the liquid to warm and expand so rapidly that it explodes. Current DOE policy steers the site selection of LNG facilities away from urban areas. The Point Conception project was relocated from near Los Angeles to the sparsely populated point because of this concern.
LNG tankers are being built with double hulls, computerized collision avoidance systems, special fire-fighting equipment, and backup navigation and communication ability.
The OTA study was not concerned with the issue of LNG safety, but emphasizes the economic advantages. Nations with undiscovered natural gas resources, the study says, would actively search for new reserves if they perceived the United States as an interested and reliable customer. The outflow of US dollars to pay for the gas, it says, could be balanced by greater US manufacturing capability.