Years ago, prospectors cursed the natural gas that bubbled up as a by-product of oil drilling. They burned it off as a nuisance.
But today, experts predict that gas will overtake oil as the world's primary fuel in just 15 years…and the industry is spending hundreds of billions of dollars to meet the growing demand.
"A dynamic world marketplace is now developing for natural gas in much the same way that it developed for crude oil over half a century ago," according to Stephen Baum, chairman of Sempra, a Fortune 500 energy holding company.
Production of natural gas has peaked in the United States and demand is starting to outstrip supply. But there are huge gas reserves around the world in places where there is little or no local demand.
And if the government acts soon (as has been predicted for months), we could have a $600 million liquified natural gas receiving terminal operating here within three years.
The stakes are high. Direct revenues could be as much as $40 million a year, in addition to hundreds of construction jobs, scores of permanent jobs, and the economic diversification of a long-term business with strong corporate partners.
But perhaps the most interesting possibility is the conversion of our own power stations to assured supplies of LNG – widely seen as the premier fuel of the 21st century.
Jamaica is already planning conversion to gas-based power generation in order to cut oil imports, and an LNG receiving terminal is expected to be operating there by 2007. The Dominican Republic began operating an LNG terminal last year, supplied by Trinidad.
However, although Freeport and Abaco could probably convert, it may not be cost-effective to pipe gas to New Providence. Florida has a large central gas-line and several LNG plants providing power for millions of people, whereas Nassau would have one plant on one pipeline.
But it's certainly worth considering.
Natural gas accounts for a quarter of US energy consumption today and LNG imports are expected to supply 21 per cent of total US gas consumption by the end of this decade.
That's because most new power plants will be fueled by gas. According to the International Energy Administration, natural gas is "environmentally friendly, more efficiently used in power-generating processes, and has better levels of greenhouse gas emissions."
The three Bahamas LNG pipeline proposals (Houston-based El Paso, Belgian subsidiary Tractebel and Virginia-based AES) are part of an international race to build and expand terminals to supply imported gas to burgeoning US and other markets.
As has long been pointed out, these companies are interested in The Bahamas because the 200 acres of land needed for a re-gasification terminal are not available near a deepwater port in South Florida at an economical price.
The US has five import terminals now, but there are dozens of active proposals for new ones. Among the developers are Sempra, ChevronTexaco, Cheniere, McMoran Exploration, and ExxonMobil.
Gas has become the fossil fuel of choice, and LNG has become economical because of technological advances that made it feasible to ship super-cooled gas in a liquid state from remote regions to high-demand markets in Europe, North America and Asia.
When the specially-built, double-hulled tankers reach the receiving terminal, the super-cooled liquid is turned back into a gas and piped to consumers.
Some authorities are predicting a global oil crunch as early as 2010. Oil currently accounts for 40 per cent of all traded energy and 90 per cent of all transport fuel, including the military.
"It is hard to envisage the effects of a radically reduced oil supply on a modern economy. Yet just such a radical reduction is staring us in the face," according to former British environment minister Michael Meacher.
Meacher and others say the world must switch to renewable sources of energy, strict energy efficiency and a steady reduction in oil use. This will require huge investment in new energy generation and transportation technologies.
But many experts (including US Federal Reserve Chairman Alan Greenspan) see plentiful natural gas reserves as the key to near-term economic health. In fact, the oil crunch scenario is one of the factors influencing LNG companies to propose multimillion-dollar investments in the Bahamas.
Clearly this is very big business. And the often hysterical outcry swirling around the Bahamas LNG proposals has never seemed rooted in reality.
There are certainly risks. But are they any greater than the risks we currently face in gasoline and diesel transport and storage, where the environmental and safety dangers are well known?
Both the Financial Times and the New York Times report that LNG companies face fierce opposition from people who do not want terminals in their back yard for fear of explosions or terrorist attacks. But the fact is that over 40 years the industry has had a near perfect safety record.
Proponents argue that safety concerns are misplaced. LNG is neither explosive nor inflammable. It is non-toxic and will vapourise and dissipate if released. Security concerns are not specific to LNG and can be equally applied to other industries.
The environmental arguments against laying a 24-inch diameter pipeline across the Gulf Stream at depths of about 2700 feet, do not seem to outweigh the economic gains. The Tractebel pipeline, for example, would run from the already contaminated Bahamas Cement property through the existing dredged ship anchorage off Freeport harbour and into deep water.
On the Florida side, concerns have been raised about drilling through sensitive coral reefs. But any damage would be localised and the pipeline company would undertake mitigating environmental work in compensation.
Both sides of the political fence are divided on this issue. The FNM tentatively approved the Tracetbel proposal (which was originally an Enron project) in 2001, but retired FNM Arthur Foulkes and resuscitated PLP George Smith both term the LNG projects "a serious threat" to the environment and to the security of the country.
Meanwhile, Trade & industry Minister Leslie Miller has been an unapologetic proponent of the LNG proposals. But he is said to be at odds with the prime minister on the issue.
And according to the entirely unreconstructed Loftus Roker, government approval would be "the first step on the road to losing our freedom"…whatever that means.
This article was first published in The Tribune May 20, 2004.
The column 'Tough Call' by Larry Smith is published in The Tribune every Wednesday and is reprinted here as a courtesy. Mr. Smith founded and successfully grew an advertising agency over 20 years. Under his direction Media Enterprises diversified into short-run commercial printing and publishing, and is now the largest non-fiction book wholesaler in the Bahamas. He has 30 years experience as a journalist and publicist and has contributed numerous articles and columns to the Bahamian press. A former reporter at the Nassau Guardian, local correspondent for Reuters and editor at the Bahamas News Bureau, he conceived and edited the Bahama Almanac (published 2000 by Media Enterprises), wrote the commentary for Mike Toogood's Portrait of an Archipelago (published 2004 by Macmillan Caribbean), and edited the Bahamas Environmental Handbook (published 2002 by the government). In 2003 he took a year's leave of absence from Media Enterprises to lead a transition management team at the Nassau Guardian after the paper was acquired by local investors. After leaving the Guardian he was contracted by the Tribune as online manager/editor and columnist. He has a degree in political science and journalism from the University of Miami. Mr. Smith can be contacted at: email@example.com