LNG Rising

Despite development challenges, LNG capacity is destined to play a bigger role in the U.S. energy mix.

When MidAmerican Energy announced its plans to build a pipeline to bring stranded Alaskan natural gas into the lower-48 states, the U.S. energy industry stood up and took notice. If successful, the project will bring the largest infusion of gas that this country has seen in many years-and not a moment too soon.

U.S. gas demand continues rising, even as production at North American gas fields has plateaued. Bridging the supply-demand gap will require an estimated 10 billion cubic feet (bcf) of new gas supplies per day by 2010.¹ The Alaskan pipeline could meet nearly half of that demand.

But gas won't begin flowing through that pipe until 2010 at earliest, and U.S. customers can't wait that long. Without significant new gas sources opening up, demand will begin to exceed the available supply sometime between 2006 and 2007. In the worst-case scenario, prices would skyrocket, forcing industrial gas users out of business, threatening the economy, and fueling a political firestorm. It's an ugly picture, no matter how you look at it.

Fortunately, significant new gas sources-and not just from Alaska-are opening up. The catch, of course, is that most of these sources are much further away than Alaska's North Slope. They're in places like Indonesia, Qatar, and Russia. And the only practical way to transport gas across such distances is to liquefy it, ship it in LNG tankers, and offload it at regasification terminals.