about Tractebel LNG N.America / Distrigas
LNG importer to the New England region is Tractebel LNG North America LLC, based in Boston. It acquired Cabot LNG Sept. 2000. Its subsidiary is Distrigas of Massachusetts.
The region's import facility is the Distrigas of Massachusetts facility in Everett, MA. It has storage of 3.5 billion cubic feet (Bcf). It has sendout capability of 450,000 MMBtu/day by vapor and 100,000 MMBtu/day by truck. It is connected to the region's 2 main interstate pipeline systems, Algonquin & Tennessee.

Co. LNG shipments to U.S. ports grew by almost 50% during the first 6 months of 2001 over the same period in 2000. Construction is underway to increase the LNG vaporization capacity at the Everett terminal to over one billion cubic ft per day. This upgrade will enable Tractebel LNG America to fuel a 1,550 megawatt power plant currently under construction near the Everett terminal.
In addition, Tractebel LNG North America recently secured long-term charters for 2 brand-new 138,000 cubic meter LNG carriers to significantly bolster its transportation capabilities for many years to come. May 1999, Distrigas received its first shipments of LNG from the Atlantic LNG Project, from Trinidad & Tobago. Distrigas holds a 20-year contract for 60% of the plant's design capacity of approximately 400 million cubic feet per day. Further finds in this Caribbean region indicate substantial reserves (perhaps as much as 65-70 Tcf).

Year 2001 LNG imports to New England
According to preliminary data from U.S. Energy Dept Office of Natural Gas Import & Export Activities ¹, in 2001 Trinidad provided 74 Bcf or 82% of Distrigas's imports at Everett. Distrigas also imported 16.4 Bcf from Algeria.
LNG imports into New England have risen substantially in recent years: 90 Bcf in 2001 compared to 37 Bcf in 1998.

future potential of LNG
U.S. Energy Information Administration Dec. 2001 report on U.S. natural gas markets included the following observations about LNG:

Gas tanker to pass within miles of Calvert nuclear power plant
First such trip in 20 years to test Bay anti-terror measures
4.1.03   Raymond McCaffrey Wash.Post

For the first time in 2 decades, a foreign tanker carrying liquefied natural gas will enter the Chesapeake Bay sometime later this year, passing within 3 miles of the Calvert Cliffs Nuclear Power Plant and, in the process, triggering the most intensive maritime security operation ever in the region. It will begin 4 days before the tanker reaches bay waters, when the Coast Guard is notified of its impending arrival and begins cross-checking crew members & passengers against terrorist watch lists. As the tanker approaches the bay from the Atlantic Ocean at Cape Henry, it will be stopped by an armed Coast Guard team that will inspect the mammoth vessel, the length of more than 3 football fields.
Once the ship is cleared for its 8 to 10-hour journey to the reactivated Cove Point liquefied natural gas facility in southern Calvert County, "a moving safety security zone" will form around it, ensuring that no other vessels get closer than a prescribed distance. The web of security, which probably will include air surveillance, will be drawn tighter as the tanker approaches the Calvert shoreline.

Lt. Cmdr. Brendon McPherson said the operation, which will continue until the tanker finishes unloading and returns to sea, will be typical of the Coast Guard's "unprecedented" security measures. Neighbors of the facility say they are not so sure the security be enough, unprecedented or not. Months before 9.11.01, residents told federal regulators that they feared that terrorists could commandeer a LNG tanker. Should its massive storage tanks be breached, either by grounding or explosion, the gas would vaporize on contact with the air and could, if ignited, send a giant fireball hurtling toward the nuclear plant and their community.
"We were afraid of terrorists before and 9.11.01 came," said Lusby resident Mary Robinson, whose home is within several miles of the Cove Point LNG plant. Sen. Barbara A. Mikulski D-MD said she has concerns, despite expressing confidence in the Coast Guard when, in Dec. 2002, it judged the bay to be suitable and safe for LNG traffic. "We're in a war against terrorism," Mikulski said in a recent interview. "I continue to be concerned and therefore I don't believe any nautical operation is risk-free."

Debate over the merits of resuming LNG tanker traffic has gone on for 3 years, ever since the Williams Co. proposed a $120 million plan to reactivate the Cove Point facility. It closed in Dec. 1980 because of falling domestic natural gas prices and a dispute with exporters from Algeria, then the prime source of the product. But increased domestic demand and the economic advantages of shipping natural gas in liquefied form (it takes up 1/600th the space of gas in its vapor form) have made the terminal financially viable again.
Officials with Williams & Dominion Power, which bought the Cove Point plant last year, have said that reactivating the plant would pose no danger to the surrounding community. Dominion spokesman Dan Donovan said LNG importation is "the safest way to transport natural gas." Federal Energy Regulatory Commission concurred Oct. 2001 when it approved the plan to reactivate and expand Cove Point. But the timing of that decision, one month after 9.11.01, drew criticism from Mikulski, who called it "cavalier." Days after Mikulski's comments, the commission hastily convened a conference to take another look at the possible security risks. The approval was affirmed, although the Coast Guard has final say on shipping safety measures.

Mikulski did not drop the matter, sending a letter to then Coast Guard commandant Adm. James M. Loy saying that Maryland residents "need to know that LNG shipping to the Cove Point terminal will not be permitted if this would create a new vulnerability to terrorism." Mikulski also wrote that she was "gravely concerned that the U.S. Coast Guard, already stretched to perform added homeland security missions, simply does not have the vessels necessary to take on the added burden LNG shipping would impose."

Shell warns of explosion as Nigerian villagers scoop oil from spill   12.4.02   Glenn McKenzie AP

LAGOS, Nigeria   Shell Oil warned Tuesday of a "potential disaster" as hundreds of slum-dwellers scooped crude oil spilling from a ruptured pipeline that the company said could explode at any time. A spokesman for the Nigerian subsidiary of Royal Dutch-Shell, speaking on customary condition of anonymity, said large numbers of residents were scooping oil into buckets & barrels from the spill in the heavily populated slum of Maroko on the outskirts of the southern port city of Warri.

It was not known when or how the spill began. Breaking pipelines to siphon off fuel, a practice known as "scooping", is common in Nigeria despite the risk of a deadly fire or punishment, including being shot on sight by police.

The size of the latest spill was impossible to immediately determine, the spokesman said. The company shut off the pipeline but residual oil continued to gush from the pipe. Authorities of the multinational oil co. feared the pipeline could catch fire as a result of the villagers' actions, the spokesman warned. Several pipeline spills in Nigeria have exploded in recent years, killing thousands of villagers.
"We are making efforts to prevent any loss of lives," the spokesman said. A team of company officials, local govt employees, and residents' representatives had been dispatched to try to "isolate the danger," he said, without giving details. The pipeline transports crude oil from wells in the Niger Delta to a refinery in Warri.

In Dec. 1998, a pipeline blast in the Niger Delta village of Jesse killed more than 700 people. Since then, the govt has tried to educate villagers about the danger of scavenging pipeline fuel. But poverty and residents' anger at the govt & oil industry for allegedly polluting the environment and neglecting the Niger Delta, an area with few roads and little electricity or running water despite its immense petroleum wealth, have kept the illegal practice alive. Victims often include young children who scoop the fuel into containers to sell along the roadside.
Nigeria is the world's sixth-largest oil exporter.

Shell, El Paso may invest in Indonesia's 4th LNG plant   7.17.02   PetroMin

Bloomberg reported July 8 that Indonesia said Royal Dutch/Shell Group & El Paso Corp. have expressed interest in investing in what may be the Southeast Asian country's fourth liquefied natural gas plant. Indonesia, world's top LNG exporter with 2 plants in production and a third planned, may build another after state- owned oil co. Pertamina & PT Medco Energi Internasional doubled the gas reserves of the Donggi field in Central Sulawesi.

Indonesia & BP Plc are bidding to win contracts to sell LNG to China before building the country's third LNG plant in Papua province. "We've been approached by Shell, El Paso,'' said Pertamina's upstream affairs vp Iin Arifin Takhyan. "This year we hope to be able to certify that Donggi has 9 trillion cubic ft of proven reserves instead of 5 trillion.'' The reserves in Donggi may reach as much as 20 trillion cubic feet, Iin said.
The latest natural gas find adds to Indonesia's reserves, already Asia's biggest. Indonesia expects to earn 66 trillion rupiah ($7.4 billion) from the oil & gas industry this year, making up one-fifth of the country's budget revenue. Pertamina has signed an initial agreement with Marathon Oil Corp., Iin said. While he declined to elaborate, in May, Pertamina said Marathon may want to market natural gas from the Donggi field in the U.S.

Marathon, fourth biggest U.S. oil co., will build a $900 million receiving terminal in Baja California, Mexico, to turn liquefied fuel back into gas. Pertamina & Golar LNG Ltd., a Bermuda-based shipping co., are partners in the project that is expected to start operation in 2005.
Indonesia and its rivals including Malaysia are looking toward the U.S. as a potential market for their LNG after demand from Japan, which buys almost 60%#37; of the world's LNG, slowed.

B00-099   correction: The Maritime Administration has given approval to Wilmington Trust Co., as owner trustee, Wilmington, DE, to transfer to Marshall Islands registry and flag the eight LNG carriers LIBRA, AQUARIUS, ARIES, CAPRICORN, GEMINI, LEO, TARUS, and VIRGO, without change in the ownership of the vessels.

7.24.00     U.S. DoT Maritime Admin press book

B99-128   The Maritime Administrator has denied a request by District No. 1, Pacific Coast Dist., Marine Engineers' Beneficial Association, for a stay of MARAD's 11.3.99 Order conditionally granting approval to transfer registry from the United States to the Republic of the Marshall Islands of 8 LNG vessels . MARAD believes that its Nov.3 Order approving the transfer of the vessels is lawful and that a stay of the Order is not warranted.
MARAD also noted MEBA has not provided any new information that was not considered during the extensive evaluation of the transfer applications and the preparation of its (MARAD's) Nov.3 Order, has not demonstrated a strong likelihood that it would prevail on the merits of its claim, and has not demonstrated that it would suffer irreparable hard.

12.23.99   U.S. DoT Maritime Admin press book

Turning towards South America, Mexico has had preliminary talks outlining an economic agreement with Bolivia that would allow the Pacific LNG consortium (Respol-YPF, British Gas, and British Petroleum), to use Mexico's pipelines and plants to process LNG from Bolivia to be exported to the U.S. for use in southern California. The arrangement would also provide Mexico with Bolivian gas for its own use.

Mexico is also struggling to restructure its natural gas industry in order to develop its vast natural gas resources. Two factors that hinder more rapid expansion of the gas market in Mexico are the complete control of the exploration & production sector of the market by Petroleos Mexicanos (Pemex), the state oil & gas co., and lack of infrastructure to move gas from the main producing areas in the south to the major consuming regions in the north.

While the distribution segment of the industry has been open to private investment since 1995 and has seen significant growth in recent years, exploration & production continue to be controlled by Pemex. Mexican govt feels it is imperative that progress be made in opening the natural gas production sector, because the govt does not have the financial resources to fully develop the country's reserves.
To this end, Pemex is working to develop a multiple-service contract that can be used to get foreign investors to help develop Mexico's natural gas. According to Pemex technology & professional development first vp Dominguez Vargas, the initial emphasis would be on getting contracts in place for development efforts in the Burgos basin in northeastern Mexico, where the largest production increase could be achieved.

The situation is a difficult one for Mexican Pres. Fox, who took office 12.1.00. Most of Mexico's current natural gas production is associated with light crude oil production; the declining ratio of light crude to total crude production yields a corresponding decline in associated gas production.
According to Energy Minister Ernesto Martens, Mexico will need to increase its gas production from the current 5 billion cubic ft per day to 12 billion cubic ft per day by 2006. The Fox administration favors restructuring Mexico's energy markets, but it will be difficult to implement any sweeping reform, because the party lacks a majority in both of the Mexican govt's legislative bodies. At a minimum, Fox has indicated that he intends to open up exploration & development of nonassociated gas to private investment.

W. Europe
Greece began importing LNG from Algeria late 1999 into the Revithoussa LNG terminal near Athens. The terminal is small, with a receiving capacity of 23 billion cubic ft per year. It is possible that the terminal could be expanded, or that an additional terminal could be built: however, an undersea natural gas pipeline from Italy to Greece is currently in the feasibility study phase

Spain currently has 3 LNG receiving terminals, all operated by Enagas, located in Barcelona, Huelva, and Cartagena, with combined capacity of 500 billion cubic ft per year, which became operational in 1969, 1988, and 1999.
There is also considerable growth in LNG receiving capacity on the horizon, with 2 new terminals currently under construction and a third in the planning stage. The first of those under construction is scheduled to come online in 2003 in the port of Bilboa in the northern Basque region and be operated by Bahia de Bizkaia Gas. The second is expected to come online in 2005 in Valencia and be operated by Union Fenosa.
The proposed terminal, to be located in Murgardos, will be operated by Union Fenosa, Endesa, and Sonartrach, in addition to local companies

Central/South America
Trinidad & Tobago is currently supplying gas to the EcoElectrica facility in Puerto Rico and has also signed an agreement to send LNG to a new import terminal in the Dominican Republic as early as late 2002. This highlights the potential for increased use of imported LNG in smaller markets. Asia
While China is promoting expansion of domestic gas supplies, development of an LNG import facility in Guangdong province is also proceeding. BP Amoco won the right to build the terminal but not necessarily the right to supply LNG to the facility.
In addition to the Guangdong facility, CNOOC signed an agreement with the Fujian provincial govt to build a 2 million metric ton LNG receiving terminal. CNOOC would take responsibility for the terminal and an attached trunk pipeline; Fujian govt would take care of the provincial distribution network. A detailed study must be done and submitted to the State Development Planning Commission for approval, but CNOOC would like to begin operation by 2005 or 2006. Fujian province is located on the south China coast between the LNG facility planned for Guangdong and the West-East pipeline that is intended to extend to Shanghai.

Enron's Dabhol project in India had collapsed long before the company itself. The Maharashtra State Electricity Board accused Enron of overcharging and refused to pay for the power from Dabhol. Enron-controlled Dabhol Power Co. then defaulted on interest payments to international lenders on the gas-fired 1,440MW second phase of the project, which was 90% complete.
A 2.5 million ton LNG receiving terminal was said to be roughly 85% complete. Indian financial institutions are laying claim to the Enron assets, but their success at taking over the assets remains unclear. Petronet LNG, which is planning to begin importing gas at its 5 million ton LNG facility at Dahej in Gujarat Dec. 2003, is also preparing to select a contractor to build a 2.5 million ton per year terminal at Kochi in Southern India.

LNG policy confusion & backpedaling on market liberalization could complicate LNG projects. Policy differences among ministries are delaying the adoption of an integrated policy on importing, consuming, and transporting LNG.
Another measure under consideration would require 26% Indian ownership in any venture shipping LNG to India, gradually rising to 50% in 5 years. In order to ensure domestic control, the govt is also likely to insist on free-on-board (f.o.b.) contracts that obligate the buyer to arrange for transporting the product.

Malaysia is expanding its Bintulu LNG facility without the long-term contracts in place that normally accompany an LNG project. The 6.8 million ton per year expansion will increase total capacity to 23 million metric tons per year, making Bintulu the largest LNG producing facility in the world. Jointly developed by Petronas & Royal Dutch/Shell, The project had a letter of intent for 2.6 million tons per year from Enron's subsidiary in India, but that is highly unlikely at this point.. That leaves a firm contract for only 0.9 million tons per year with Tohoku Electric. Malaysia is desperately seeking Japanese & South Korean customers to absorb the gas and could be a large contributor to the nascent LNG spot market.

NYC   Royal Dutch/Shell Group plans to grow its natural gas business relative to its oil assets and intends to supply gas to U.S., Wall St Journal reported Tue. Demand for gas may overtake demand for oil in the next 2 decades, Sir Philip Watts, Anglo-Dutch co.'s committee of managing directors' chair told the Journal.
Watts listed U.S. & Asia Pacific region, incl India & China, as places where demand will rise. "We've taken the view that the relative growth of gas to oil leads to the clear possibility that gas will overtake oil," Watts told the newspaper. Watts also told the newspaper that he expects an increasing need for U.S. to import gas. "The reality is that gradually basins get more mature, return on effort (diminishes); inexorably, as more oil is being imported into U.S., more will need to be imported," he said, according to the newspaper's report.

Shell is world's #2 publicly traded oil co. Watts told the newspaper that while the company may take advantage of a good opportunity to acquire gas-producing assets in U.S., the company intends for now to focus on importing into the country. Shell spokesman told the Journal that sales of natural gas were about 41% of its total hydrocarbon output last year.

A number of additional projects have been proposed and may proceed if the trend of increased trade with Mexico continues. Current plans include 2 El Paso Natural Gas projects, one that will add 130 million cubic ft per day of capacity at the Arizona/Mexico border and the other a project to increase compression on the Samalyuca pipeline, which will add 60 million cubic ft per day at the Texas/Mexico border.

Although North America accounted for 5% of the world's total natural gas proved reserves at the end of 1999, it accounted for 31.8% of the world's total production, most consumed internally. U.S. accounted for 23.2% of world's total production, second only to Russia's 23.7%. Canada was the world's third largest natural gas producer, accounting for 7.0% of the total.
Mexico produced only slightly more gas than it consumed in 1999, whereas Canada produced more than twice as much as it consumed. Almost all the excess production in both Canada & Mexico was exported to the U.S. to fill the widening gap between U.S. production & consumption.

U.S. exports to Canada from the U.S. were negligible, but exports to Mexico, primarily to satisfy demand in areas where Mexico did not have the infrastructure to get its own domestic supplies to market, exceeded imports by 12.5%. In 1999, U.S. net imports of natural gas represented 15.8% of consumption; imports are projected to make up 16.7% of U.S. consumption in 2020.
Canada, which supplied 95% of U.S. natural gas imports in 1999, is expected to continue to be the primary source of U.S. imports.

A growing source of U.S. imports is liquefied natural gas (LNG). 4 LNG receiving terminals exist in the U.S., but two (Cove Point, Maryland, and Elba Island, Georgia) have been mothballed for many years. Higher natural gas prices, reductions in the costs of producing & transporting LNG, and development of new sources have caused renewed interest in LNG, and there are plans to reopen both the Cove Point and Elba Island facilities by 2002.
In conjunction with the reopening Cove Point facility owner Willams has announced plans to add a fifth storage tank to the 4 existing tanks. When it is open, Cove Point will be the largest of the 4 U.S. terminals.

Algeria was once the only source of LNG supply for the U.S., but Trinidad & Tobago has now become the primary source of supply, with cargos coming also from Qatar, Nigeria, Australia, Oman, and UAE. In addition, spot market sales are now becoming routine. For the first 9 months of 2000, 36 out of 74 cargoes received were spot sales, with long-term contract sales only with Trinidad & Tobago and Algeria.

All indications are that LNG imports will grow in the future. Aggregate existing sustainable capacity of the 4 U.S. facilities is 840 billion cubic ft per year, and their capacity could be expanded. Lake Charles LA facility owner CMS Trunkline LNG Co. is considering expanding the facility to add 110 billion cubic ft per year of deliverability. CMS is currently conducting an open season through 2.15.01 to assess interest in long-term contracts starting in early 2002, and will base its decision on the outcome.
Although LNG is not expected to become a major source of U.S. gas supply, it does play an important role in regional markets, including New England. Gross LNG imports are projected to grow from 90 billion cubic ft in 1998 to 810 billion cubic ft in 2020.

Although Mexico has the resource base needed to become a source of increasing future imports for the U.S., the country's own consumption is rapidly increasing, and its indigenous production is not expected to increase sufficiently to meet the growing demand. Pemex is anticipating demand growth of approximately 9% per year over the next 10 years. To meet rising demand, Pemex is actively promoting the expansion of cross-border capacity to allow increased imports.
Over the longer term, Pemex hopes to develop more of its own resources, both to reduce Mexico's dependence on imports and to increase its exports to the U.S. It is unclear, however, whether Mexico will be able to increase production significantly, and it is likely that Mexico will remain a net importer of natural gas for the foreseeable future.

Driving behind the growth in N.America is increased consumption of natural gas for electric power generation. In the U.S., natural gas consumption for electricity generation (excluding cogenerators) is projected in to triple from 3.8 trillion cubic ft in 1999 to 11.3 trillion cubic ft in 2020.
Partly as a result of increasing demand for natural gas with new gas-fired power plants coming on line, and partly due to the decline in drilling that resulted from low natural gas prices over the past few years, natural gas prices rose sharply in 2000 in all of N.America, with prices at the U.S. Henry Hub more than quadrupling from those seen just a year earlier. Consumers have seen, and will most likely continue to see, substantial increases in natural gas costs.

In California, where insufficient pipeline capacity both at the border and within the State has severely limited the availability of supply to meet rapidly growing demand, border prices that exceed the New York Mercantile Exchange (NYMEX) price more than sixfold have been seen.
Several manufacturers that have hedged their gas supplies have found that it is more profitable to either shut down or cut back and sell the gas at considerable profit margins. High prices that have caused problems for natural gas consumers also spurred considerable interest & investment in exploration & development.
  [ That VP Cheney & Pres. select Shrub directly participated in engineering energy industry collusion in manufacturing these gross artificial shortages of course is unmentioned in this govt report. ]

Projected domestic natural gas production in 2001 will exceed 2000 level by about 5.4%. U.S. natural gas rig count grew from 371 in April 1999 to 840 as of 11.10.00. Thus, although wellhead prices are projected to rise from an estimated $3.73 (nominal dollars) per thousand cubic ft in 2000 to $4.95 in 2001, they are expected to retreat in 2002 to $4.52.

Mexico
In Mexico, where the price of natural gas is set by Pemex based on U.S. benchmarks (specifically, Houston ship channel prices plus transport costs to Mexico), industrial consumers are facing similar problems. Mexico's second largest steel manufacturer Hylsa announced 9.21.00 partial suspension of operations at 3 iron mines & related ore-processing plants, stating high gas prices had made them uneconomical.

Facing additional layoffs, production cutbacks, and possible closings, many industrialists, particularly in the glass, mining, and steel industries in northern Mexico's Monterrey, have been pressuring Pemex to revise the pricing mechanism or provide some other form of relief.
While Pemex did announce plans to develop resources more aggressively and increase cross-border pipeline capacity, the only immediate relief it has offered major consumers has been a willingness to finance a portion of their natural gas costs.

Mexico's Energy Regulatory Commission (CRE) took steps in August to ameliorate the situation in the longer term by announcing plans to begin a restructuring of the gas industry in order to reduce the effects of price volatility. The initiative, which will allow private investors to participate in the development of transportation, storage, and distribution infrastructure, has resulted in commitments of $2.2 billion to build about 24,000 miles of pipeline.

CRE issued a call 10.4.00 for public consultation to solicit proposals on how to open the market to more private sector suppliers. Proposals relating to the public consultation were due in November, and they are scheduled to be published Jan. 2001, followed by an issuance in March of the CRE's proposals based on the suggestions.
  [ Hopefully for Mexican citizens, this pgm will have a speedy quiet death, since it was "private investors" (i.e. world record setting corporate welfare speculators) "participation in development" that intentionally skewed markets to grossly inflate energy costs during the period mentioned. ]