WEDNESDAY, AUGUST 31, 2005
The energy law signed by President George W. Bush this month contains an unusual provision: in places where companies want to build terminals to receive large shipments of liquefied natural gas, the government must hold forums to discuss the role of such gas in meeting energy demand.
Supporters of the terminals say the meetings will help address issues raised by importing the gas, which they expect to become a major source of energy in the coming years. But opponents call the meetings a taxpayer-financed method of drumming up support for a fuel that would increase U.S. reliance on foreign sources of energy and that could put coastal communities at risk of tanker accidents or explosions.
The debate over efforts to import more liquefied natural gas, or LNG, is expected to intensify in the wake of Hurricane Katrina.
Natural gas prices surged nearly 20 percent on Monday to $11.62 per million British thermal units in New York amid concern over a disruption of offshore natural gas production in the aftermath of the storm. Imports of natural gas to the United States, unlike those of oil, cannot easily be increased because there are only five terminals to receive and process LNG. At one point on Monday, natural gas futures touched $12.07, the highest since trading began on the New York Mercantile Exchange in 1990.
"These forums are insulting and laughable, given that we're dealing with an administration hellbent on placing these terminals wherever the industry sees fit," said Patrick Lynch, the attorney general of Rhode Island, who has been outspoken against plans for LNG terminals in Providence, Rhode Island, and nearby Fall River, Massachusetts.
Opponents of LNG projects are particularly worried because many officials in Washington have been pressing for greater support for LNG, arguing that the United States needs more of the fuel from abroad to offset rising natural gas prices, flat domestic production and lower imports from Canada. LNG is natural gas that has been condensed so it can be transported in tankers, as oil is.
Alan Greenspan, chairman of the Federal Reserve, has repeatedly called for increasing LNG imports over the past two years, saying high prices for natural gas could curb economic growth.
Some members of the Bush administration, including Samuel Bodman, the secretary of energy, have worked in the liquefied natural gas industry and support new terminals. During his previous job as chief executive of Cabot Corp. in Boston, Bodman oversaw the company's LNG importing terminal in Everett, Massachusetts, and its LNG production plant in Trinidad and Tobago.
"We are beginning to see the creation of a global market for LNG," Bodman said this month in a speech to the Commonwealth Club of California in San Francisco. "The construction of new terminals to receive natural gas from the far corners of the earth is precisely what is needed at a time when our own domestic production has run flat, yet demand continues to increase."
Similarly, Patrick Wood 3rd, who resigned in July as chairman of the Federal Energy Regulatory Commission, has told industry officials that he expects at least eight new terminals by the end of the decade. In a recent interview, Wood, responding to concern over the potential for LNG-related accidents, said he would welcome the construction of a terminal near where he grew up in Port Arthur, Texas.
John Grasser, spokesman for the Energy Department's office of fossil energy, which will organize the forums, said it was too early to determine where they would be held and what form they would take.