HOUSTON — Days after New York and Connecticut leaders opposed plans to build a massive liquefied natural gas terminal in Long Island Sound, the Gulf Coast is welcoming two new LNG terminals — the first such land-based ports to open in the U.S. in roughly a quarter-century.
Cheniere Energy Inc. said its new terminal in southwest Louisiana received its first cargo of liquefied natural gas Friday, and Freeport LNG Development LP is set to get its first shipment on the Texas Gulf Coast this week.
In addition, Excelerate Energy LLC’s Northeast Gateway off the coast of Boston also is preparing for its first cargo, according to Waterborne Energy Inc., a Houston firm that tracks the LNG industry.
All three terminal developers are based in the Houston area.
Largely a little-used energy source until natural gas prices jumped in recent years, gas cooled to minus 260 degrees and turned into liquid is the only practical way to import supplies from overseas.
At sites like Cheniere’s new Sabine Pass terminal, the liquid — transported in large tankers — is warmed into a gas and shipped through pipelines for use as fuel.
Yet, even though the energy industry considers LNG a vital step in keeping up with U.S. natural gas demand, proposals to build terminals have raised environmental and safety concerns.
What’s more, given the dozens of new LNG terminals either under construction or proposed, a potential glut of terminal capacity also has become an issue. The three new U.S. terminals will join five others that import LNG in Massachusetts, Maryland, Georgia, Louisiana and in the Gulf of Mexico.
In a research note Monday, Lehman Brothers analyst Mansi Singhal said the global supply of LNG is likely to be crimped in the next couple of years because of project delays in Norway, Nigeria and Qatar. U.S. LNG imports are forecast to decline nearly 25 percent this year versus a year ago, Singhal said.
For Cheniere in particular, overcapacity concerns have contributed to a significant decline in its share price. Shares rose 41 cents Monday to $16.07, about 50 percent off their price to start 2008. They’ve traded in a range of $15.59 to $43.50 in the past year.
Besides Sabine Pass, Cheniere has a 30 percent stake in the Freeport project.
In February, Cheniere said it had retained Credit Suisse to help it evaluate strategic options to boost shareholder value. In a recent research note, industry analyst Bernard Picchi of Wall Street Access said he took the news from Cheniere as a ”tacit admission … that it cannot go alone.”
In a statement Monday, Cheniere Chairman and Chief Executive Charif Souki said the company had selected its sites based on several criteria, including locations that have significant access to natural gas infrastructure and regional demand.
Natural gas accounts for about a quarter of total U.S. energy consumption. About 20 percent of it is imported, the vast majority from Canada. Roughly 3 percent came from LNG imports in recent years, from places like Nigeria and Algeria.
But U.S. natural gas supplies are getting tighter, and Rice University’s Baker Institute for Public Policy has said U.S. consumers could rely on LNG imports for as much as 30 percent of their total supply by 2030.
That projected demand has spurred proposals for a variety of terminals on the East, West and Gulf coasts, though analysts say many will never be built. But along with actual or even potential construction comes fears of accidents or terrorist attacks.
Last week, the governors of New York and Connecticut came out against a high-profile plan for an LNG terminal about nine miles from Long Island and 10 miles from Connecticut. The $700 million floating terminal would be 1,200 feet long and 82 feet tall.
New York Gov. David Paterson said the project ”would scar Long Island Sound,” although the Federal Energy Regulatory Commission concluded the project would have no major environmental effect on the region.
The biggest concerns, however, center on safety.
Although not flammable in its liquid state, opponents worry about leaks at terminals and on tankers that would allow the liquid to heat quickly and return to its flammable gas form.
Advocates for building more LNG facilities, however, say they have an excellent safety record.