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The Future of Offshore Liquefied Natural Gas Policy – Is This the End?
the global – economy is not growing as rapidly, and the combination of increasing LNG imports; in fact, the administration appears to be taking
expanding domestic natural gas production while reducing future the opposite path. One last sign of the changing times is the main image
imports
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will certainly limit any future offshore LNG terminal on the website of the Minerals Management Service, the agency
development. The current state of overcapacity for LNG regasification is traditionally associated with offshore oil and gas development, which
clearly an obstacle. Nowhere has the Obama administration discussed displays a picture of offshore wind turbines. ■
1. Whitmore WD, Baxter VK, Laska SK, A Critique of Offshore New Orleans Times—Picayune, 29 March 2007. 30 June 2008.
Liquefied Natural Gas (LNG) Terminal Policy, Ocean & Coastal 10. Jensen JT, Global LNG Trade to 2020 Marked by Uncertainty, 21. Sandia National Laboratories, Guidance on Risk Alysis and
Management, 2009;52:10–16. Oil and Gas Journal, 25 February 2008. Safety Implications of a Large Liquefied Natural Gas (LNG)
2. United States Coast Guard, Deepwater Ports License 11. Shook B, Been There, Done That, US LNG Sector Snared in Spill Over Water, Sandia National Laboratories, SAND2004-
Applications Deepwater Ports Standards Division. Available Boom-Bust Loop, Natural Gas Week, 6 October 2008. 6258, 2004.
at: www.uscg.mil/hq/cg5/cg522/cg5225/dwp.asp (accessed 12. Energy Information Administration, Annual Energy Outlook 22. Snow N, GAO Recommends Fuller Studies of LNG Spill
11 February 2009). 2008 With Projections to 2030, DOE/EIA-0383, 2008. Impacts, Oil and Gas Journal, 26 March 2007.
3. Federal Energy Reglulatory Commission, North American LNG 13. Joshi R, US Imports Hit By Onshore Gas Usage Rise, Lloyds 23. O’Neil L, Senators Drum Up Measure Giving States Authority
terminals – Approved as of February 6, 2009, Federal Energy List, 22 September 2008. Over LNG Siting, Natural Gas Week, 14 April 2008.
Regulatory Commission. Available at: www.ferc.gov/ 14. Tatum M, BP Shelves New Jersey LNG Import Project; 24. Hansen B, Obama Looks to Chu, Others, to Transform Energy
industries/lng/indus-act/terminals/lng-approved.pdf (accessed Alabama Governor Scuttles Offshore Terminal, Platts Inside Mix, Inside Energy with Federal Lands, 22 December 2008.
11 February 2009). FERC, 13 October 2008. 25. O’Neil L, Senior Energy Advisors Magnify McCain, Obama,
4. Shook B, Report: LNG’s Share of the Market Set to Explode 15. Gray, T, Woodside Drops US Gas Terminal Plans, Lloyd’s List, Natural Gas Week, 20 October 2008.
by End of Decade, Natural Gas Week, 5 March 2007. 19 January 2008. 26. Minerals Management Service, Secretary Salazar Details
5. Energy Information Administration, Annual Energy Outlook 16. Sullivan JA, North American LNG Projects Face Rocky Week Strategy for Comprehensive Energy Plan on U.S. Outer
2007 With Projections to 2030, DOE/EIA00383, 2007. from Mexico to Mass, Natural Gas Week, 27 February 2007. Continental Shelf, The News Room, 2009. Available at:
6. Tatum, M, MARAD Working to Develop US-Flagged Fleet of 17. Tatum M, California Panel Rejects Cabrillo LNG Lease; Could www.mms.gov/ooc/press/2009/press0210.htm (accessed
LNG Tankers, Says Agency Head, Platts Oilgram News, Mark Defeat for Offshore Project Backed by BHP, Platts 24 February 2009).
2007;85(191):12. Oilgram News, 2007;85(71):9. 27. The White House, The Agenda: Energy and the Environment,
7. Joshi R, Overcapcity Fears in US as New Plants Come Online, 18. Kirkland J, US LNG Import Contract Seen Facing Heavy 2009. Available at: www.whitehouse.gov/agenda/
Lloyds List, 27 May 2008. Scrutiny, Inside FERC, 5 May 2008. energy_and_environment/ (accessed 24 February 2009).
8. Marron J, Rising Costs, Global Competition Spur Analysts to 19. Palti L, Offshore LNG terminals gaining traction, both in US 28. Energy Information Administration, Annual Energy Outlook
Slash LNG Import Estimates, Inside FERC’s Gas Market Report, and abroad, Natural Gas Week, 21 January 2008. 2009, Early Release, 2008. Available at: www.eia.doe.gov/
28 December 2007. 20. Magill J, With local opposition growing in effectiveness, LNG oiaf/aeo/index.html (accessed 24 February 2009).
9. Russell PR, Shell Drops its Plans for LNG Terminal, developers turning to offshore technologies, Platts Inside FERC,
Obama Energy Stimulus Criticised
Despite containing the largest energy bill in US history, Barack Obama’s from now until the year 2019,” said Russell, noting that according to
US$787 billion stimulus package has received criticism from both the oil the legislative proposals, oil and natural gas should be “a thing of the
and gas industry and, surprisingly, the renewable energy sector. past” by then. “If Congress and the administration are counting on oil
and natural gas to be in production and available during the year 2019,
The package pledges historic investment in renewable energy, whose then these tax provisions are not the way to go about promoting
winnings include US$8 billion of loans for power generation and exploration and production.”
transmission projects, US$2 billion for energy efficiency measures and
US$11 billion for modernisation of the electricity grid to take up clean There are even some criticisms from the renewable energy industry, the
energy. The oil and gas industry, on the other hand, will suffer a 13% recipient of previously unimagined funds. Specifically, some feel that the
excise tax on offshore oil and gas production in the Gulf of Mexico, on sector is simply not ready to utilise the money being granted to it.
top of the US$30 billion tax increase on American energy producers as “Before you spend billions of dollars on new power lines, you have to
part of Obama’s FY 2010 budget. Viewed in the context of new spend millions of dollars on design work,” said Michael Moynihan, the
Obama policies – including delaying the leasing process for new Green Project Director of the liberal think tank New Democrat Movement
offshore drilling and challenging oil shale development – this could in Washington. “Nobody had been thinking about this much money. So
lower the productivity of America’s domestic industry, contradicting the planning just has not been done.”
Obama’s desire to reduce US dependence on foreign oil. Scarcer oil
would also push up prices, hurting consumers. Longview Economics, Obama admitted the plan was not perfect, but said, “the scale and
for example, predicts savings of more than US$1.7 trillion this year if oil scope of this plan is right. It’s what America needs, and we need to
prices stay low. move forward today,”
“I think what they did is in many ways a sham,” said Priscilla McLeroy, China’s stimulus package, meanwhile, devotes considerable funds
Director and Managing Partner at Arthur D Little. “It has very little to do to the oil and gas industry, particularly the refining sector. It will seek to
with oil and very much to do with promoting alternative energy.” Barry speed up structural changes in the industry and rationalise refinery
Russell, President and CEO of the Independent Petroleum Association of capacity, enlarge installed capacity, decommission obsolete and
America (IPAA), has also pointed out important inconsistencies in the inefficient facilities, provide more credit access to struggling oil and
full budget strategy. “What seems most interesting to me is the petrochemical enterprises and improve the supply distribution networks
inclusion of royalties [in the budget] from oil and natural gas production of diesel to the agricultural industry. ■
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EXPLORATION & PRODUCTION – VOLUME 7 ISSUE 1
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