Liquefied Natural Gas (LNG) in U.S. Energy Policy: Infrastructure and Market Issues (CRS Report for Congress)
Premium Purchase PDF for $24.95 (26 pages)
add to cart or
subscribe for unlimited access
Pro Premium subscribers have free access to our full library of CRS reports.
Subscribe today, or
request a demo to learn more.
| Release Date |
Revised Jan. 31, 2006 |
| Report Number |
RL32386 |
| Report Type |
Report |
| Authors |
Paul W. Parfomak, Resources, Science, and Industry Division |
| Source Agency |
Congressional Research Service |
| Older Revisions |
-
Premium Revised Feb. 18, 2005 (28 pages, $24.95)
add
-
Premium May 24, 2004 (25 pages, $24.95)
add
|
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.
