Hay, Nelson E., Manager, Policy Analysis American Gas Association

Abstract

In recent months the desirability of providing increased gas supplies from importation of liquefied natural gas (LNG) has become a major focus of legislative and regulatory attention in Washington. As a relatively "new" energy source, at least in terms of public awareness, LNG has become the focal point for many of the larger issues of the energy policy debate.

This paper will, first, address the role and advantages of LNG importation, second, review the existing and proposed LNG import projects and, finally, summarize the proposed LNG import projects and, finally, summarize the current federal LNG legislative and policy situation.

Introduction

Natural gas currently provides a major contribution to U.S. energy supplies, accounting for almost 30% of all energy consumed in the U.S. in 1976. Gas is used in over half of the nation's residences and commercial establishments, serving over 44 million customers. American industry also depends heavily on gas, which accounts for over 40% of all domestic industrial energy consumption. Moreover, the nation has a major financial commitment to natural gas, with a total utility industry and consumer equipment investment estimated to exceed $100 billion. Half of this investment is represented by almost 1 million miles of underground gas pipeline and main throughout the U.S.

While there are at least 35 years of conventional U.S. natural gas supplies remaining at current levels of use, demand for gas is growing at the same time that gas is becoming more difficult to find and produce. More realistic federal regulatory policies allowing new gas price equivalency with alternative fuels would assure that U.S. natural gas production could be sustained at current levels for an additional 15 to 20 years, but it is clear that sometime after the early 1990's domestic production of conventional gas will begin to decline. This decline, coupled with continued growth in total U.S. energy demand in spite of vigorous conservation efforts, means new sources of gas will be needed to meet future U.S. needs.

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