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o less an oracle than Alan Greenspan has decreed that liquefied natural gas terminals and storage capacity need to come to North America. And as of mid-January, no fewer than 53 proposals were alive and floating at the Federal Energy Regulatory Commission, with price tags falling between US$400 million and $600 million apiece.
      Given that level of investment, it comes as no surprise that even as new proposals like ConocoPhillips' offshore project south of the Louisiana-Texas border were being announced in January, deals between vying companies were also being completed. But they're all moving forward as cautiously as a ship entering an old port, given vociferous public resistance in places like Maine, Massachusetts and California. Meanwhile, accident and terrorism concerns about the projects have once again been stoked by risk reports published by Sandia and Det Norske Veritas.
      "We're relying on some of the information from the Sandia report, using it to justify certain things," says Mark Prescott, chief of the Deepwater Ports Standards Division for the U.S. Coast Guard. "In the case of the California project on Cabrillo Port, we asked for a risk assessment and some modeling to be done." That project is a 1.5-billion-cubic-ft.-per-day (bcfd) terminal from BHP Billiton.
      Risk assessment is what LNG terminal development is all about. Asked about siting criteria, Prescott says a lot of it has to do with access to existing onshore infrastructure and markets. At the same time, the offshore option could have an advantage when safety questions arise.
      "People have different opinions about protecting an offshore location," Prescott says. "There are access issues, but when it's that far offshore, if something were to occur, the impact is limited to people on board or in the immediate vicinity. Maybe for that reason it becomes a less desirable target too. I'm sure we're going to see a variety of both onshore and offshore facilities that will go into place and satisfy capacity." Appropriate water depth is another siting factor with offshore: Deep enough for transit is one criterion, but "any depth beyond it, you start costing yourself more money," says Prescott.
      "The cost differences are very site-specific," says Joe Naylor, vice president for strategy and planning at ChevronTexaco Global Gas. "Offshore tend to be more expensive. Having said that, the offshore facilities in some cases do have operational advantages — you can bring an LNG vessel onto either side of an offshore facility, whereas onshore might have a single berth. And there's the potential to be out of shipping traffic, so getting in and out of the terminal can be much easier. For ChevronTexaco, we've looked at the facilities around Baja California [Mexico], and the offshore looks to be quite attractive for us. In the Gulf of Mexico, there are plenty of opportunities for both types of development."

      At least one offshore project, in the works for several years by Chevron-Texaco, is currently offline, pending the resolution of upstream supply and scheduling issues.
      "Port Pelican had progressed to the point where the engineering was well understood, and the costs were well understood," says Naylor of the company's offshore Louisiana project. But an agreement reached with terminal developer Cheniere LNG in December 2004 — assuring ChevronTexaco of LNG capacity at the 2.6-bcfd terminal complex Cheniere is already constructing at Sabine Pass near Cameron Parish, La. — removed some of the project's urgency. Cheniere's project received its final Environmental Impact Statement from FERC in November 2004. Construction was to begin by the end of the first quarter of 2005. Meanwhile, also in November, the company secured an option on property for its fourth Gulf Coast terminal project, at the mouth of the Calcasieu Channel, also in Cameron Parish.
      Other ChevronTexaco projects are full steam ahead. The company is considering siting a terminal at its Pascagoula, Miss., refinery. "Interest-ing synergies might exist by bringing it in there," says Naylor. "It would enable a feed to the refinery, and access to some of the energy systems around it."
      Three critical permits have been received for its Baja California terminal in Mexico, says Naylor, including a concession agreement with the government enabling the company to use a specific offshore area. In 2004, Marathon Oil abandoned an LNG project in that Mexican state when it ran into property title issues. Another project, an Ensenada-based terminal from Sempra, looks promising, given the October 2004 supply agreement Sempra signed with BP and Indonesia's Tangguh LNG project, developed with Indonesia's executive agency for oil and gas, BPMIGAS.
      Meanwhile, the sorting continues: In a striking similarity to the negotiations between Cheniere and ChevronTexaco, Marathon in October 2004 signed a five-year agreement to receive LNG from BP, delivered to its existing Elba Island, Ga., facility.

      Now the pipeline infrastructure is looking to define some synergy of its own. Over the next few years, Duke Energy Gas Transmission alone could spend more than $1 billion to connect LNG-related and other infrastructure expansion projects to markets.
      According to a presentation in December 2004, Duke Energy Gas Transmission's areas of focus for LNG-related opportunities include the Canadian maritimes and northeast U.S., and the company's own "Gulfstream," centered around its distribution hub in Egan, La. As the presentation noted, "siting and supply are key drivers of success," as projections call for the country's LNG terminal send-out volume to nearly double between 2004 and 2010.
      Danny Gibbs, director of public affairs for Duke Energy Gas Transmission, says "we are interested in connecting regasification terminals to our infrastructure, and if that means increasing the capacity that's already there, or brand new pipeline, we're very interested in doing both of those. Where our strength lies is the strength of geography — large-diameter pipeline infrastructure already in the ground, all the way from offshore Canada to the Gulf Coast."
      While lucrative terminal projects have run into opposition or outright defeat from Maine to California, both of the areas Gibbs mentions are famously accustomed to the energy industry -Atlantic Canada is the proposed site of four of the proposed projects, with two others on the Québec side of the St. Lawrence.
      Many LNG projects hinge on upstream contracts in countries like Qatar or Nigeria. But the same questions hover over downstream issues. Gibbs says the LNG talk often stops at the terminal, without regard to where it goes from there.
      "As ships are offloaded and the LNG is re-gasified, there's no storage for re-gasified unless it's connected to existing infrastructure facilities," he says. But those systems are used to a fairly static stream of natural gas, and not necessarily ready for a large volume moving into the system all at once.
      "Where does it go?" asks Gibbs. "That's why we're trying to develop as many storage facilities as possible, parked somewhere along the system, for use wherever it's needed. Our vision is to have a large-diameter header connect to as many of those terminals as possible, and that ties directly to our Egan storage facility. The expansion there right now is taking it from 16 to 24 billion cubic feet, but we ultimately hope to take that up to 40 billion cu. ft., giving that re-gasified LNG a place to park."

      But "Where does it come from?" might still be the operative question. And that means question marks will linger over dozens of the proposed terminal projects. While the Coast Guard's Prescott projects that fewer than half of the continent's terminal proposals will come to fruition, ChevronTexaco's Naylor says it could be many fewer, for the short term.
      "There may be around six or so regasification terminals required above the four that are already in existence," he says, "at least for the next 10-15 years."
      Key to negotiations like these are not just the technical issues, but the diplomatic and political overtones that overshadow discussions with state-owned entities in places like Angola, Nigeria and Venezuela. But while bribery investigations hang over one such project in Nigeria, another, involving ExxonMobil and Nigeria's state-owned oil company, was announced in January.
      "In most of the countries, Nigeria and Angola specifically, the national oil company is our partner in the LNG projects," says Naylor. "We work very closely with the national company as well as the government in a broader sense, to support the host country, and to have a secure supply of energy for North America. The relationships we have with the government are vital part of successful development."