Sunday, February 18, 2007

One of many fights coming over LNG

(Cross-posted at Ezra's)

There's an interesting squabble brewing on the east coast, on the border between New Brunswick and Maine.  In short, US companies would like to take huge liquefied natural gas (LNG) ships through waters claimed by the Canadian government.  The development is opposed by some local residents on the grounds that the LNG ships are much, much larger than the freighters that currently frequent those waters, and that the narrows in the area are too small for the ungainly LNG tankers.

There's also the international aspect -- our Prime Minister, Stephen Harper, is celebrating a year in power after winning an election based on the slogan "standing up for Canada".  He also explicitly made sovereignty over Canadian waters a political issue, so it will be interesting to see how this issue evolves.  The shipping route that is under discussion would have ships cross through Canadian waters to get to LNG terminals in Maine.

One of the issues that is usually brought up surrounding LNG is the possibility of an explosion.  If the contents of a tanker were to explode, the resulting fireball would theoretically carry a nuclear-sized punch.  In reality, it should be nearly impossible to trigger an explosion on a LNG tanker with modern equipment.  (Yes, Syriana had an inaccurate ending.)  There have been occasional accidents and explosions with LNG (including a large one in Cleveland, 1944) but not from ships, so far.  Still, terrorism experts worry that as the volume in LNG traffic increases, the danger will increase as well.

One point that Paul Roberts has made in interviews (apologies, can't find the link) is that worrying about LNG ships while we have tens of thousands of gasoline and LPG trucks running about our cities every day is a perfect example of what's wrong with our thinking on these issues.  The "new" danger gets a lot of people excited, but the old dangers persist unresolved.  Basically, so long as humans draw the bulk of their energy from things that go "boom", there's going to be some opportunity for terrorists.

And of course, there's Iran.  Some people have pointed out that Iran's oil industry is in bad shape, and Iran's oil reserves may not last much longer.  That may be true, but Iran also sits on one of the world's largest reserves of natural gas.  As America comes to rely more and more on LNG, we may see an evolution in the natural gas market from many regional markets fed by pipes to a larger, global market fed by tankers much like the oil market today.  And as we've seen with the oil market, it doesn't really matter if you try to isolate a resource-rich country:  if the US doesn't buy Iranian gas, the Chinese or Indians will.  And as the price for natural gas increases, Iran may very well be able to offset the decline of it's oil industry with gas royalties.

An intelligent long-term strategy for isolating Iran would be to try and get the US, India, and China off of natural gas, or at least to moderate their demand growth as much as possible.  That seems unlikely, and arguably for good reason -- gas is still ridiculously cheap and one of the cleanest energy sources around.  Trying to force the Chinese and Indians to be poorer just because Washington and Tehran can't get along is probably a non-starter.

It is in any case a perfect example of the bind America's in when it comes to security, energy, and even development issues in the world today.  The people America doesn't like have things America (and other countries) want and need.  The only way to solve this is to either: a) not want or need the things your rivals have, or b) try and turn your rivals in to friends.

Of course, there's always c) bomb them until they love us.  I'm sure that'll work this time.

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