LNG imports key to retaining competitive edge

LNG imports key to retaining competitive edge: US manufacturers

Washington (Platts)--20Sep2004


US manufacturers, already hit hard by rising natural gas prices, will find
themselves at an growing competitive disadvantage if liquefied natural gas
imports do not increase over the next several years, according to a report
released Monday by the Manufacturers Alliance/MAPI. The study, "Liquefied
Natural Gas and the Future of Manufacturing," said that while the US has long
enjoyed a competitive advantage over other countries because of its low
natural gas prices, that edge is slowly being eroded as production from US
basins matures and regulatory policies prohibit new production from
under-explored areas. 

The report said that because of the regional constraints, US gas prices have
more than doubled in the past few years and are now 25% more expensive than in
Europe. "More ominously," the report added, "the inflation-adjusted price of
the marginal cost to produce North American natural gas could increase by as
much as 80% over the next 15 years."

Absent a "dramatic increase in the supply of natural gas in the near to medium
term," the report said, "energy-intensive manufacturers in the US will find
themselves at an increasing disadvantage compared to competitors in Europe,
Russia, the Middle East, Indonesia and parts of Latin America which enjoy
stable and inexpensive supplies" of gas. 

The report added that while some domestic options for increasing gas supplies
exist, including building a pipeline to transport Alaskan gas to the Lower-48
states, none are likely to be available for at least 10 years. The report
estimates that at if eight new LNG terminals are built, then LNG could meet
more than 22% of domestic consumption by 2010. Reaching this level of supply,
the study said, would reduce natural gas costs by 20-25% below current levels.

Please visit: www.platts.com

Their coverage of energy matters is extensive!!.