North American natural gas crisis

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Many figures in North America have spoken publicly about a possible North American natural gas crisis including former Secretary of Energy Spencer Abraham^[1], former Chairman of the US Federal Reserve Alan Greenspan^[2], and Ontario Minister of Energy Dwight Duncan^{[citation needed]}.

The natural gas crisis is typically described by the increasing price of natural gas in North America over the last few years, due to the decline in indigenous supply and the increase in demand for electricity generation. Indigenous supply in the U.S. has fallen from 20,570,295 MMcf in 2001 to 18,950,734 MMcf in 2005.^[3] Because of the drop in production (exacerbated by the dramatic hit to production that came from Hurricanes Katrina and Rita) and the continuing growth in demand, the price has become so high that many industrial users, mainly in the petrochemical industry, have closed their plants causing loss of jobs. Former Federal Reserve Chairman Alan Greenspan has suggested that a solution to the natural gas crisis is the import of LNG.

This solution is both capital intensive and politically charged due to the public recognition that LNG terminals are explosive risks, especially in the wake of the 9/11 terrorist attacks in the United States. The U.S. Department of Homeland Security is responsible for maintaining their security.

New or expanded LNG terminals create tough infrastructure problems and require high capital spending. LNG terminals require a very spacious—at least 40 feet (12 m) deep^[4]—harbor, as well as being sheltered from wind and waves. These "suitable" sites are thus deep in well-populated seaports, which are also burdened with right-of-way concerns for LNG pipelines, or conversely, required to also host the LNG expansion plant facilities and end use (petrochemical) plants amidst the high population densities of major cities, with the associated fumes and multiple serious risks to safety.

Typically, to attain "well-sheltered" waters, suitable harbor sites are well up rivers or estuaries, which are unlikely to be dredged deep enough. Since these very large vessels must move slowly and ponderously in restricted waters, the transit times to and from the terminal become costly, as multiple tugboats and security boats shelter and safeguard the large vessels. Operationally, LNG tankers are (for example, in Boston) effectively given sole use of the harbor, forced to arrive and depart during non-peak hours, and precluded from occupying the same harbor until the first is well-departed. These factors increase operating costs and make capital investment less attractive.

To substantially increase the amount of LNG used to supply natural gas to North America, not only must "re-gasification" plants be built on North American shores—difficult for the reasons stated above—someone also must put substantial, new liquefication stations in Indonesia, the Middle East, and Africa, in order to concentrate the gas generally associated with oil production in those areas. A substantial expansion of the fleet of LNG carriers also must occur, to move the huge amount of fuel needed to make up for the coming shortfall in Northeast America.