UH IELE Issues Briefing Paper on "Role of LNG in North American Natural Gas Supply and Demand"

The potential consequences of demand and supply imbalances surrounding natural gas are the central finding in a new study released by the Center for Energy Economics at the Bureau of Economic Geology of the University of Texas at Austin. The report completes a three-part series of briefing papers on natural gas that is available at http://www.beg.utexas.edu/energyecon/lng.

The IELE report explores the history behind today's gap between natural gas demand and supplies. Highlights from its findings include:

From the early 1970s to the late 1980s, falling natural gas prices encouraged consumption but discouraged investment in exploration and production.

In the U.S. policy has been muddled at best with consumers encouraged to switch to natural gas to help clean the air at the same time that public lands are closed to energy exploration. Mexico and Canada both face challenges with respect to future domestic natural gas production. Mexico, in particular, faces the potential of sharp supply shortfalls and the need for continued imports from the U.S. at a time when U.S. supplies are dear.

Established natural gas basins are not only maturing, but they also are being rapidly depleted by advanced exploration and production technologies.

With natural gas fueling a growing number electrical power generators, strong seasonal demands for power can create far-reaching effects on natural gas supplies and prices.

"Natural gas represents a powerful wild card in the energy mix of North America. If we play the card improperly, we risk substantial setbacks to our economy. Our report concludes that LNG must be appreciated for the critical role it can play", Dr. Foss adds.

LNG is a natural gas cooled to a liquid state. Impurities such as water, carbon dioxide, sulfur, and some of the heavier hydrocarbons, are removed, resulting in about 1/600th of the volume of natural gas at a stove burner tip. LNG is odorless, colorless, non-corrosive and non-toxic.

The Institute's LNG reports are undertaken through Commercial Frameworks for LNG in North America, a research and public education consortium, which is sponsored by 12 business organizations: BG LNG Services, BP Global LNG, Cheniere Energy, ChevronTexaco Worldwide LNG, ConocoPhillips Worldwide LNG, Dominion Energy, El Paso Corporation, ExxonMobil Gas and Power, Freeport Energy, Sempra Energy Global Enterprises, Shell Gas and Power, and Tractabel/Distrigas North America. The U.S. Department of Energy and the Ministry of Energy and Energy Industries of Trinidad and Tobago also participate.

All reports produced by the IELE are peer reviewed by industry and outside experts in LNG development, energy and environment. For a copy of the report as well as access to other resources, go to http://www.beg.utexas.edu/energyecon/lng.