The LNG industry has been safely producing, transporting, receiving and regasifying LNG around the world for 40 years. There have been more than 33,000 LNG carrier voyages worldwide covering more than 60 million miles without a major accident. Currently, 120 million metric tons of LNG is shipped annually. LNG is a very mature industry in the global market arena that has been steadily growing at an annual rate of about eight percent since the seventies. LNG serves as a major supply source for many industrialized countries in the world with the largest consumers being those countries in Europe and Asia. The largest importers of LNG today are Japan and Korea who rely on LNG for all their natural gas needs. Presently the highest demand growth regions for future LNG are expected to be the United States and Europe.

Worldwide there are 17 LNG export terminals, 40 LNG import terminals and 136 specially designed LNG ships. Currently in the U.S., there are 113 active LNG facilities, including marine terminals, storage facilities, and operations involved in niche markets.

Currently the U.S. is importing LNG through the four existing land-based terminals:

• Trunkline LNG – Lake Charles, Louisiana
• Southern LNG - Elba Island, Georgia (near Savannah)
• Cove Point LNG - Cove Point, Maryland
• Distrigas LNG - Everett, Massachusetts (near Boston)

Domestic Supply & Demand of Natural Gas

The United States is the largest consumer of natural gas in the world with an annual demand of approximately 22 Tcf (“Trillion cubic feet”). There is a significant increase in new natural gas-fired electric power plants, which use less fuel than older, more polluting gas and oil power plants. In addition, there is a steady growth in demand for natural gas from residential, commercial, and industrial customers. The current domestic production in the U.S. is approximately 19 Tcf with the supply and demand gap traditionally filled by imports from Canada and to some extent Mexico. In recent years, however, domestic production in many natural gas basins have experienced significant declines in production rates. This shortfall coupled with production declines from Canada reserves and the increase of U.S. natural gas imports to Mexico will continue to widen the demand – supply gap in the U.S. More specifically, according to the Energy Information Administration (EIA), natural gas production in the U.S. is predicted to grow to about 26.4 Tcf in 2025. At the same time, total natural gas consumption is expected to increase to about 32 Tcf in 2025. Considering that North American proven reserves are only about 4% of the entire world reserves, LNG will play an increasingly important role in meeting the U.S growing demand for natural gas. According to the EIA, the U.S. imported 0.17 Tcf of natural gas in the form of LNG in 2002. LNG imports are expected to increase at an average annual rate of 15.8% to levels of 4.8 Tcf of natural gas by 2025. However, to meet the natural gas supply shortfall, the U.S. will need to aggressively expand their LNG regasification terminal capacity. As quoted by Alan Greenspan in his testimony to Congress in June of 2003 “Access to world natural gas supplies will require a major expansion of LNG terminal import capacity.