Growing liquefied natural gas (LNG) supplies have been touted as the answer to averting an energy disaster in the U.S. But while the future LNG supply picture has a greater degree of certainty these days, short-lived, unforeseen events could significantly increase the predicted demand, says Ed Kelly, vice president of gas and power at U.K.-based research firm Wood Mackenzie. In 2005, U.S. LNG imports saw a year-on-year decline, Kelly told an audience at the American Association of Petroleum Geologists' annual convention in Houston. In the past, the U.S. had less certainty of supply compared with other markets due to the commercial arrangements in place, he added. "Although market prices in the U.S. were generally higher than in Europe and Asia, some key events affected the supply response. There was a gas shortfall in Spain during the first quarter; Japan and Korea sought spot volumes to compensate for undelivered Indonesian cargoes; Asian buyers wanted to replenish stocks for the winter season during the third and fourth quarters...and there were unscheduled supply disruptions from Nigeria, Qatar and Trinidad." The growth of the LNG industry during the last 12 months alone has been remarkable, and new supply contracts and terminals are under way that could account for billions of investment dollars, Kelly said. LNG supplies for the U.S. should be more certain now, Kelly said, although the playing field will be dominated by supply from the portfolios of the integrated majors and national oil companies, he added. For more on this, see the May issue of Oil and Gas Investor. For a subscription, call 713-260-6441.

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