Canada may export less natural gas to the United States than is now expected
Columbia Gas System's Millennium project ($700 million), which is to connect Canadian natural gas sources to New York and Pennsylvania, received FERC go-ahead on September 19, 2002. Current plans are for Phase I of the Millennium line to be in service by November 2006, although the project has yet to be approved by FERC in its revised form. The second phase is currently on hold until 2008 or later owing to increased competition and a changed market in the New York City metropolitan area.
If it is completed, Millennium will transport up to 714 MMcf/d of natural gas, providing an environmentally preferred option for generating electricity. According to the Millennium Pipeline consortium's web site, more than 90 percent of the pipeline's 425-mile overland route uses existing utility corridors, with about 224 miles of the project replacing and upgrading a 50-year-old pipeline system owned and operated by Columbia Gas Transmission Corp.
Growing U.S. demand for Canadian natural gas has been a dominant factor underlying many of the pipeline expansion projects this decade. The U.S. and Canadian natural gas grids are highly interconnected and Canadian natural gas has become an increasingly important component of the total natural gas supply for the United States.
This is especially true for certain U.S. regions such as the Northeast, Midwest, the Pacific Northwest and California, which depend on Canadian natural gas for significant amounts of their supply. Overall, the United States received about 3.6 Tcf of natural gas (gross) from Canada during 2004, up from 3.5 Tcf in 2003. Mexico is a small net importer of natural gas from the United States.
Considerable progress has occurred in recent years to connect Canadian natural gas supplies to U.S. consumers. The Northern Border Pipeline, an extension of the Nova Pipeline, came onstream in late 1999 and connects to Chicago through the upper Midwest.
A further extension to Indiana entered service in 2001. The Maritimes and Northeast Pipeline came onstream in January 2000, running from Sable Island to New England, with further extensions into the Boston area to be completed during 2003. The pipeline has a capacity of 400 MMcf/d.
The $2.5 billion Alliance Pipeline, at 1,875 miles, is the longest pipeline ever built in North America, and is designed to carry about 1.3 Bcf/d of gas from western Canada (Fort St. John, British Columbia) to the Chicago area. The pipeline began commercial service on December 1, 2000. The U.S. utility Pacific Gas & Electric imports natural gas from British Columbia via the Alliance pipeline.
Another possibility for future U.S. natural gas supplies lies in northern Canada, which contains around one third of that country's recoverable gas reserves. The Mackenzie Valley pipeline, for instance, could carry as much as 1.2 Bcf/d of gas from Canada's far north to southern Canada and the United States, possibly beginning in 2008 (assuming satisfactory completion of a regulatory and environmental review; currently, the project appears stalled).
Interest is growing in LNG as a source of natural gas for U.S. electric power generation
On balance, interest is growing in LNG as a source of natural gas for U.S. electric power generation and also as a source that would provide supply flexibility. EIA expects that net LNG imports to the United States will increase sharply in coming years, growing to 2.5 Tcf in 2010 and 6.4 Tcf in 2025. During 2004, the United States received about 652 Bcf of LNG, mainly from Trinidad and Tobago, Algeria, and Qatar.
Currently, about 55 LNG terminals are on the drawing board to serve North America (mainly the United States). The Sempra Energy Cameron LNG project in Hackenberry, LA, approved in September 2003 by the Federal Energy Regulatory Commission (FERC), marked the first new LNG plant granted approval in the United States in 25 years. Besides the Hackenberry facility, Sempra signed a deal with BP in December 2003 to supply Indonesian LNG to a proposed receiving terminal in Baja California.
The gas would then be piped to U.S. West Coast markets. Also, in December 2003, Shell announced plans to build a $700 million LNG receiving terminal, called Gulf Landing, 38 miles off the coast of Louisiana. The project is slated to handle 1 Bcf/d of LNG starting in 2008 or 2009. Other possible LNG projects include: an offshore LNG receiving terminal called Port Pelican, located 40 miles off the Louisiana coast (ChevronTexaco); a $600 million facility near Port Arthur, Texas (ExxonMobil); a terminal in Sabine Pass, LA (Cheniere LNG) approved by FERC in March 2005; and a $450 million terminal in eastern Mississippi (Gulf LNG Energy).
In December 2003, EIA issued a report, " The Global Liquefied Natural Gas Market: Status and Outlook ,” in conjunction with a Department of Energy LNG summit. At the summit, then-Energy Secretary Spencer Abraham pledged to make the process of licensing and building LNG receiving terminals easier. In March 2004, an agreement between FERC, the Coast Guard, and the Department of Transportation aims at streamlining the process regarding environmental, safety, and security reviews of proposed LNG projects.
Source: Energy Information Administration