Foreign sites sought for natural gas ports

As U.S. natural gas reserves remain tight, some energy companies are looking to Mexico, Canada, even the Bahamas for sites such as Puerto Libertad, Mexico, where they can receive the mammoth boats carrying liquefied natural gas, or LNG.

As a port of call, Puerto Libertad doesn't offer much. There's no public dock, no cargo cranes — not much at all except sand and shrubs and the unbroken horizon of the Gulf of California.

But for the huge tankers that carry natural gas around the world, this Mexican village is perfect: close enough to the United States to pump their volatile cargo over the border but remote enough that a leak, explosion or terrorist attack wouldn't pose a threat to the USA.

The companies say that their decision to go over the border has nothing to do with safety and that they are mainly drawn by the ability to sell gas in two countries at once. But the foreign sites are also a way of bypassing opponents in American cities who are jittery about the prospect of gas tanker ships on their shores.

"Everyone is concerned that LNG is a combustible material, and they don't want it anywhere near them," said Alex Steis, managing editor of Natural Gas Intelligence, a trade publication.

"It's the same stigma, or nearly the same stigma, as a nuclear facility, whether that (fear) is founded or not."

Gas to fuel the Southwest

About 60% of the gas imported at Puerto Libertad will be piped over the border near Sasabe to be sold throughout the American Southwest. The two partners in the $1 billion project, El Paso Corp. ep and DKRW Energy of Houston, are seeking contracts with gas shippers and could have the terminal operating by 2011, El Paso spokesman Richard Wheatley said.

"It's going to be a very big deal," said Fernando Garcia de León, a representative for the project in Sonora state, as he looked out at the azure water lapping at the desert. "Both Mexico and the United States will benefit."

Gas terminals are increasingly important as companies struggle to meet the USA's energy demands. Much of the United States' remaining gas reserves are off-limits to drillers because they're in protected areas off the Florida coast, in Alaska or the Rocky Mountains.

As a result, U.S. imports of natural gas rose 42% from 1996 to 2006, to nearly 4.2 trillion cubic feet — about 16% of all natural gas consumed in the USA.

Most of that gas was piped over the border from Canada, not shipped as LNG. The percentage has been increasing every year since the early 1990s.

To bring gas from fields around the globe, energy companies chill it to a liquid form and put it on ships.

The gas is transported, then turned back into vapor at the United States' four existing gas terminals: in Everett, Mass.; Cove Point, Md.; Elba Island, Ga.; and Lake Charles, La.

The Federal Energy Regulatory Commission predicts LNG imports will increase nearly 16% a year in the next two decades, meaning the country will need seven to nine new terminals.

That has set off a race among gas companies to build terminals, with some 45 projects announced for the USA, Canada and Mexico.

In the long term, increased imports should help keep a lid on prices, the Department of Energy and industry officials say.

"We would expect that adding new supplies would put downward pressure on prices and mitigate some of the volatility in the market," said Art Larson, a spokesman for Sempra Energy. sre

Safety fears

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