The liquefied natural gas business in the U.S. currently "is not doing very well," and the market overall is expected to remain tight, according to James M. Kendall, director of the Natural Gas Division of the U.S. Energy Information Association. This is despite the reality that the U.S. has only about a decade of gas production years remaining (ratio of natural gas reserves to production) compared to 59 years average for the world and 217 years in the Mideast. But there are many factors that will influence what will happen in the future.

To help attendees understand the business and what's happening in various parts of the world, Kendall explained where the expenses lie and where activity is occurring. A quarter of the cost of the business is in exploration, while 53% is in the liquefaction process, 14% is in shipping and 8% is in receiving.

Liquefaction plants-the place where gas is made ready to transport to other countries-typically run between $5 to $8 billion, costs that remain high because the plants are in remote areas, they must deal with difficult safety issues, large amounts of cryogenic materials are used, and equipment and utilities costs run high. By the year 2012, the number of LNG exporting countries is expected to increase to 18, but one-third of those new entrants are in developing countries such as Angola, Iran, and Venezuela, which carry higher degrees of risk.

Meanwhile, the world is "in the midst of a shipping boom," Kendall said, as ship's capacities increase through better technology. The number of ships being made is growing faster than the number of liquefaction plants, he said.

The regasification business-turning the transported liquids back into gas-is booming, also growing faster than liquefaction efforts. But by far the greatest amount of activity is in Japan and Korea, Kendall said, while only 12% of the business is in the U.S. and Mexico. Still, there are currently 8 LNG terminals in the U.S. and Canada, another 5 are proposed or under construction, and 12 have been approved by the Federal Energy Regulatory Commission.