Industry officials generally agree that 2008 will be a very slow year for U.S. LNG imports. Looking to 2009 and beyond, though, experts are presenting different characterizations of LNG import activity.

Speaking at a U.S. Energy Information Administration conference in Washington on April 7, industry expert Andy Flower said most of the spare LNG on the global market is headed to Asia, where suppliers can get higher prices. Because of the strong demand for LNG in Asia and Europe, the outlook for U.S. LNG imports over the next decade is "very uncertain," he said.

Flower, the president of Andy Flower LNG Associates and a former official at BP plc, where he was involved with the company's LNG and natural gas business activities, noted that approximately 10 Bcf/d to 11 Bcf/d of regasification capacity is scheduled to come online in North America during the next two years. He predicted that a large portion of this new regasification capacity in the United States and Canada will remain idle as LNG gets shipped to markets where prices are more attractive.

Flower said the U.S. market has been important in developing a short-term global market for LNG in recent years but now Asia has emerged as the leading short-term trader for LNG. He said he remains "much more sanguine" about the global LNG market beyond 2013 based on uncertainty surrounding supplies.

Betsy Spomer, senior vice president, business development Americas and global LNG, for BG Group Plc, told the audience that her company's outlook for LNG imports into the United States is "quite bullish" starting in 2009. The projected huge growth in global LNG supplies will contribute to larger volumes of supplies getting shipped to U.S. import terminals, she said.

Spomer said global liquefaction capacity is expected to increase by 50% over the next four years. Demand in Asia and Europe will not be strong enough to attract all of this new supply, which will create favorable conditions for larger amounts of LNG import to enter the United States. By 2014, the United States will surpass Japan as the largest market for LNG, Spomer said.

Looking back, U.S. LNG import activity was on a record pace during the first half of 2007 as gas prices collapsed in Europe, sending supplies to higher-priced markets. Beginning in mid-summer 2007, however, the United States saw a dramatic drop-off in the level of LNG imports, partly in response to increased demand in Japan following a major nuclear plant outage.

BG, which controls 100% of the capacity and throughput rights at Trunkline LNG Co. LLC's import terminal at Lake Charles, La., has not seen a cargo arrive at the facility since Oct. 4, 2007, Spomer said. BG has witnessed LNG cargoes traveling to U.S. LNG import facilities change direction at the last minute, deciding instead to head for higher-priced markets in Asia or Europe, she said.

Despite a lackluster second half of the year, U.S. LNG imports reached a record 781 Bcf in 2007, according to EIA data. In the March update to its Short-Term Energy Outlook, EIA said LNG imports are projected to total about 770 Bcf in 2008.

Kathleen Eisbrenner, executive vice president of LNG at Royal Dutch Shell plc, said there are currently 17 LNG importing countries, a number that is expected to grow to 29 by 2012. The number of LNG exporting countries is expected to increase from 15 today to only 18 in 2012. LNG demand has the potential to outpace supplies in the coming decade, she said.

In the United States, Eisbrenner said FERC's recent approval of the Broadwater Energy LNG import terminal is a "significant step" in the project's development. The Broadwater project is a joint venture between subsidiaries of TransCanada Corp. and Shell Oil Co.

The Broadwater facility is expected to be operated as a baseload facility, Eisbrenner said, adding that LNG shipments could get diverted to the facility when spot prices are higher in the New York region than other North American trading hubs.