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Texas regulator says LNG imports critical

CALGARY -- Liquefied natural gas imports will play "a pivotal role" in supplying the United States with energy in the coming years, the head of the Texas Railroad Commission says.

"We should aggressively encourage LNG [liquefied natural gas] development," Victor Carrillo, chairman of the railroad commission, Texas's energy regulator, said yesterday. His state wants to be a U.S. leader in LNG, a goal aided by the state's "pro-business philosophy," he added.

Eight onshore LNG terminals have been proposed for Texas, among the several dozen such terminals planned for North America, though some industry players say only two or three will be built this decade. Four terminals already exist in the United States and, in Canada, two have been approved.

Petro-Canada last week said it is looking to build an LNG facility on the U.S. Gulf Coast, which includes Texas, meant to complement a proposed terminal for eastern Quebec.

Mr. Carrillo was speaking in Calgary at a conference looking at higher natural gas prices, which was organized by consultancy Ziff Energy.

North American energy consumption is rising steadily as the continent's production of gas slowly declines. Emerging sources such as LNG (gas cooled for overseas transport) as well as coal-bed methane (gas trapped in seams of coal) and northern supplies from Alaska and the Mackenzie Valley were also discussed.

"We have a voracious appetite for energy," said Mr. Carrillo, arguing that other strategies such as renewable energy and conservation will help but won't be enough.

Murray Smith, Alberta's Energy Minister, believes no single new source of gas is the answer, and said "the new catch phrase is incremental supply." Mr. Smith said LNG and coal-bed methane both will be important additions and described gas from the North as a "tremendous opportunity."

Mr. Smith said recent political moves in the United States to encourage the building of a major gas pipeline in Alaska "increases the urgency" to get the 1,220-kilometre Mackenzie Valley gas pipeline in the Northwest Territories built.

Natural gas prices have been wildly volatile in the past several years. On the New York Mercantile Exchange, the benchmark price of gas rose past $9 (U.S.) per million British thermal units (about 1,000 cubic feet) in late October. That was up more than 80 per cent from less than $5 in September. Yesterday, it had its fifth consecutive decline, closing at about $7.60, pushed lower by high gas storage levels and predictions of milder weather.

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