LNG was first produced in 1964, but due to cost disadvantages, it was typically used in markets without sufficient alternative sources of natural gas or stored for use to ensure adequate supply during periods of peak demand. In the 1970s, four LNG terminals capable of receiving cargo by ship were constructed and operated for a brief period of time. As a result of the decline in natural gas prices that occurred in the late 1970s, all but one of those LNG terminals were decommissioned as the cost of delivered LNG became uncompetitive with conventional U.S. domestic supplies of natural gas.

As a result of the rise in natural gas market prices and significant technological and cost advances in the liquefaction, marine transportation, storage and re-gasification processes, LNG has emerged as an economical means to monetize previously stranded natural gas reserves and deliver them to distant markets. In addition to its competitive cost, liquefaction of natural gas also provides the opportunity to maintain storage for use during high consumption periods close to demand centers and in areas where geologic conditions are not suitable for developing underground natural gas storage facilities.

Over the past 10 years, the LNG market has grown at a compounded rate of approximately 8% per year. Based on announced or planned liquefaction capacity additions, we believe that this growth could potentially double or triple over the next 10 years. The expansion reflects an increase in world demand for natural gas as well as the desire of reserve owners to monetize gas reserves that traditionally would not be economically viable for development.

The liquefied natural gas industry has an exemplary 40-year safety record. Since 1964, an estimated 50 billion metric tons have been produced and 45,000 voyages over more than 60 million nautical miles have been completed without a single maritime incident resulting in major release or injury (see Center for Liquefied Natural Gas).

Today, more than 150 ocean-going ships carry approximately 110 million tons per year of liquefied natural gas over great distances. Currently, 38 liquefaction plants and 47 receiving terminals operate worldwide with a further 12 under construction and as many as 45 terminal projects in various stages of planning. Japan, Korea and Taiwan depend almost entirely on liquefied natural gas for all domestic consumption. Europe, which is connected by pipelines to Siberia's vast reserves, has 11 operating terminals with another 13 planned or under construction. The liquefied natural gas industry is a safe, reliable and fast growing business that connects needy markets, such as the United States, with a worldwide supply of safe and clean-burning natural gas.

In its liquid state, natural gas cannot explode or burn. If LNG is spilled, the resulting vapor will immediately warm, become lighter than air and disperse with the prevailing wind. The lighter-than-air property of liquefied natural gas actually makes it less hazardous than some other fuels, such as propane, butane or gasoline. These fuels have vapors which are heavier than air and can travel considerable distances close to the ground. In its gaseous form, natural gas can burn only if it is released into the air, is mixed with the correct proportion of air (five to 15 percent natural gas) and then finds a source of ignition.

Liquefied natural gas ships represent state-of-the-art naval design, and they are crewed by highly skilled personnel with the most advanced navigation and propulsion equipment available. For both containment and safety, ships are constructed with double-walled hulls and double-membrane tanks. The total thickness of the double hull and tank wall is more than six feet, providing a significant safety factor. They are regularly inspected by the U.S. Coast Guard which must also approve their navigation plans.