NEW YORK (Reuters) - Dow Chemical Co. (DOW.N) Chief Executive Andrew Liveris said the company would wait to sign long-term purchase contracts for liquefied natural gas until more production capacity came on line.
“We, like most of the rest of the world, are waiting before we put in place long-term contracts until LNG becomes surplus at the liquefaction end. We believe that’s going to happen,” Liveris told the Reuters Global Energy Summit.
Dow is an owner, along with ConocoPhillips (COP.N), Cheniere Energy Inc. (LNG.A) and Contango Oil & Gas Co. (MCF.A) of the Freeport LNG Development LP. Freeport LNG’s regasification terminal near Dow’s Freeport, Texas, manufacturing facility is scheduled to come on line in early 2008.
That plant will have an initial vaporization capacity of 1.5 billion cubic feet per day. Last year, federal regulators approved a proposed expansion of the plant to 4 billion cubic feet per day.
LNG is natural gas that is cooled to minus 259 degrees Fahrenheit (minus 162 Celsius) at liquefaction plants. The liquid product can then be shipped aboard tankers to regasification terminals, where it is returned to a gaseous form and sent through pipelines to customers.
“There’re a lot more liquefaction plants being built than regasification terminals, and that will create a supply-demand imbalance in LNG that will enable us eventually (after early 2008) to take advantage of that regasification facility,” he said.