Getting worthless gas to
Henry Hub's $5.15 buyers

Picture a world with vast quantities of gas in the ground that has negative value.
     It's worth less than nothing if you have to spend money to pump it back into the reservoir as the oil comes out.
     Meanwhile Kiplinger predicts today's $5.15/mmbtu will be the low for the year.
     Getting the locked-in, valueless gas to the US where it's worth $5.15 provides the excitement of the LNG market and infrastructure need.
     LNG imports -- about 1% of US demand -- have already begun to rise, panelists noted on a Restructuring Today conference call: Will LNG meet skyrocketing expectations?
     A lot more needs to be done here and overseas to meet growing gas needs.
     Darcel Hulse, Sempra Energy LNG CEO sees a North America hooked on gas.
     Consider the barriers to adding hydro, nuclear and coal generation, Hulse cited LNG as "the only plausible solution."
     He means maybe seven years and $60 billion to develop infrastructure here and overseas to meet demand.
     "We can't wait for all the questions to be answered," Hulse emphasized. "Market signals are there. We need to fill the gap."
     Sempra facilities -- often described here -- on the US Gulf coast and in Baja California are to function in 2007.
     Keith Meyer, president, Cheniere LNG stressed the damage to the gas industry if LNG doesn't kick into service citing the enormous demand destruction in earlier gas industry downturns.
     Cheniere is planning three LNG import facilities on the Gulf Coast, where demand is high (Texas and Louisiana use more gas than does Japan).
     Pipelines from the Gulf Coast can move gas all over America.
     Meyer predicted a trend back to long-term gas contracts, a trend that ended in the 1980s when producers realized how badly they'd suffered from them.
     Long-term supply -- and PUC approval of those accords -- is mandatory to get LNG facility financing, Meyers added.
     A banner year, 2003 has been the most successful year on record for the LNG industry and greater growth is on the horizon, predicted Pat Pope, vice president and associate general counsel of El Paso Energy Services.
     He reported more than 40 greenfield projects (starting from scratch) proposals have been announced and will compete with each other for final action.
     Pope favors expanding existing facilities (brownfield) over startups for cost reasons, noting El Paso's expanding its Elba Island, Ga, LNG facility.
     ICF Vice President Leonard Crook agreed the US has turned the corner on LNG and forecast rising gas prices are likely to bring exploration gains in the Gulf of Mexico and the Rockies and foster building of coal-fired plants.
     Colleen Taylor Sen, senior LNG adviser, Gas Technology Institute, agreed that long-term contracts are a must.
     Don't forget, she counseled, that the US faces competition from other markets for LNG supplies.
LNG imports doubled last year, she added, and may account for 15% of US supplies by the 2020s.
     A CD of the hour and a half panel and transcript including Q&A from those on the call is available for only $150 by calling 1-800-486-8201 or visiting http://www.restructuringtoday.com/audio/lng.htm

(Story originally published in Restructuring Today 3/11/04)