LIQUEFIED NATURAL GAS: AN OVERVIEW

Liquefied natural Gas


As the cleanest burning fossil fuel, natural gas is a leading energy choice for fueling American homes and industries. To meet growing demand and diversify our energy supply, the United States needs to bring in natural gas from overseas in the form of liquefied natural gas (LNG). LNG takes up much less space than gaseous natural gas, allowing it to be shipped much more efficiently. For more than 50 years, LNG has been safely and securely shipped to our shores, where it is used as a reliable fuel for a variety of purposes including electricity generation, heating and cooling homes, cooking food, and much more. Liquefied natural gas (LNG) imports represent an increasingly important part of the natural gas supply picture in the States. 

LNG FUNDAMENTAL INFORMATION
LNG is simply natural gas in its liquid form. It is the same natural gas more than 63 million American homeowners use every day.Natural gas is converted to LNG by cooling it to -260° Fahrenheit, at which point it becomes a liquid. This process reduces its volume by a factor of more than 600 – similar to reducing the volume of a beach ball to the volume of a ping-pong ball. This allows natural gas to be transported efficiently by sea. Once it reaches the United States, LNG is unloaded from ships at import terminals where it is stored as a liquid until it is warmed back to natural gas. The natural gas is then sent through pipelines for distribution to businesses and homeowners.

The ability to convert natural gas to LNG, which can be shipped on specially built ocean-going ships, provides U.S. consumers with access to vast natural gas resources worldwide.LNG is an odorless, non-toxic and non-corrosive liquid, and if spilled, LNG would not result in a slick. Absent an ignition source, LNG evaporates quickly and disperses, leaving no residue. There is no environmental cleanup needed for LNG spills on water or land.


THE NATURAL GAS SUPPLY/DEMAND GAP
As America moves toward a greener energy future, clean burning natural gas will likely emerge as a leading choice to heat our homes, and fuel our power plants and industries. Demand for natural gas is likely to increase because of its clean-burning characteristics, especially for producing electricity.

The United States already consumes more natural gas than it produces. Currently, there is an approximate 13% gap between domestic natural gas production and consumption, according to the U.S. Department of Energy (DOE).

Importing liquefied natural gas (LNG) is a viable and economical way for the U.S. to supplement its growing demand for natural gas.

Although we are encouraged by the development of shale gas in the U.S., it is unclear what proportion shale gas will contribute to the U.S. gas supply. Given the potential environmental and economic hurdles the new shale technology may face, the U.S. must continue to position itself as an attractive market for LNG imports.


LNG’S ROLE IN FILLING THE SUPPLY/DEMAND GAP
With climate change legislation likely to bolster demand for clean burning natural gas, the U.S. can rely on LNG to supplement supply and mitigate natural gas prices for consumers. According to the U.S. Department of Energy (DOE), natural gas makes up 24% of total energy consumption in the United States. Currently, LNG makes up only 2% of the natural gas supply.

LNG alone cannot meet growing demand, but it has a critical role to play in the mix of energy choices necessary to help our nation meet it’s pressing need for new, clean energy when and where it is needed.


INCREASING LNG IMPORTS
The U.S. must have a well-developed LNG infrastructure to ensure American businesses are not disadvantaged when competing for LNG supplies, which are in high demand throughout the world market.
Today, there are nine U.S. facilities (and one facility in Puerto Rico) capable of importing LNG.
Learn more about the locations of existing and proposed new LNG import terminals.


ENVIRONMENTAL ISSUES
In 2009, CLNG commissioned a report performed by Pace Global Energy Services comparing the overall lifecycle greenhouse gas emissions of LNG production, processing and transportation, to those of coal. The study shows that existing domestic coal power plants produce two-and-a-half times more emissions on a lifecycle basis than LNG. Even the cleanest coal technologies were found to produce 70% more lifecycle emissions than LNG. Read the report here.


MORE LNG SUPPLIES CONTRIBUTE TO ECONOMIC GROWTH
LNG is a key component of our nation’s three-pronged natural gas supply mix which includes domestic production, Canadian imports, and LNG. Having LNG in our natural gas supply mix helps to ensure diversity of energy choices, which creates competition, improves security of supply, and benefits consumers.

With 63 million American families relying on natural gas to fuel their homes, household budgets take a direct hit when prices are high. As The largest market for natural gas in the world, the U.S. can expect more LNG imports in the next few years due to the significant increase in global LNG supplies. This is welcome news for consumers during these challenging economic times since increased supplies mitigate prices.


(Via: EIA)
The variation of LNG costs, and thus the availability of more LNG, affect the demand for natural gas. The impacts on natural gas consumption in the high and low LNG cost cases are seen towards the end of the forecast, with the spread reaching 0.6 trillion cubic feet by 2020. The corresponding difference in the wellhead price in 2020 is $0.16 per thousand cubic feet, indicating that the availability of more LNG reduces prices. The largest price spread ($0.21 per thousand cubic feet) occurs in 2017 and represents a difference of about 6 percent between the two analysis cases.

The projected prices in the high LNG cost case are sufficiently high to make expansion at existing facilities over what has already been announced and construction of new facilities uneconomical. As a result, the 2020 projection for LNG import capacity in the high LNG cost case is the same as in the reference case, and LNG imports are the same in the two cases throughout the forecast.

Domestic natural gas production shows a maximum variation across the cases of 0.5 trillion cubic feet in 2015, but the gap narrows to 0.2 trillion cubic feet by 2020 as more LNG capacity becomes available. In 2020, the difference in LNG imports between the two LNG analysis cases exceeds the difference in production by 50 percent. Thus, LNG in these cases not only makes up for the difference in production but also displaces some Canadian imports (Figure 18).

Although additional expansion of LNG import capacity beyond the expansion plans already announced is not projected to occur in the reference case or in the high LNG cost case, additional expansion is projected in the carbon dioxide emissions limit case and the low LNG cost case. In the carbon dioxide emissions limit case, prices reach a level that triggers expansion at existing U.S. receiving facilities and new facility construction, and net LNG imports are projected to increase to 1.35 trillion cubic feet, or 3.7 percent of demand, by 2020. Beginning in 2010, when natural gas wellhead prices peak at $3.81 per thousand cubic feet, expansion begins at existing facilities beyond what has already been announced, and some new construction begins in the South Atlantic region. Partly in response to the availability of the new supply, average lower 48 wellhead prices fall back to $3.37 per thousand cubic feet by 2015. With the demand for natural gas continuing to increase, prices change direction and increase to $3.72 per thousand cubic feet in 2020. The total increase in sustainable LNG receiving terminal capacity by 2020 includes an increase in capacity over existing and proposed capacity at the four U.S. terminals of 526 billion cubic feet.

In the low LNG cost case, lower LNG costs trigger expansion at existing U.S. LNG receiving facilities and construction of new facilities. LNG is projected to meet 4.7 percent of total U.S. natural gas demand by 2020 (as compared with 0.7 percent in 2000 and 2.3 percent in 2020 in the high LNG cost case). The projected level of expansion in the low LNG cost case exceeds that in the carbon dioxide emissions limit case by 912 billion cubic feet. Total LNG imports in 2020 are projected to increase to 1.8 trillion cubic feet in the low LNG cost case, double the 0.9 trillion cubic feet projected in both the carbon dioxide emissions limit case and the reference case. The level of LNG imports grows steadily each year, leveling off in 2016 and then increasing again beginning in 2019. Average wellhead prices in the low LNG cost  case reach a high of $3.81 per thousand cubic feet in 2009 and 2010, which leads to expansion and new construction of LNG receiving facilities in both the South Atlantic and West South Central regions. The projected increase in LNG imports has an immediate effect on prices, which fall to $3.32 per thousand cubic feet by 2016 in the low LNG cost case. Prices then begin increasing, reaching $3.59 per thousand cubic feet in 2019, when LNG capacity again begins to increase.

(Very Ambiguous again Via: EIA) CONCLUSION
The results of EIA’s analysis suggest that increased imports of LNG could have a positive effect on U.S. natural gas markets, especially in an environment of high demand. LNG can meet demand that otherwise would have to be met by higher cost sources, thus tempering price increases. If only a fraction of the LNG terminal capacity currently proposed is built, LNG could capture a much larger portion of the U.S. import market for natural gas than it holds today. In some regions, LNG could have a proportionately larger impact.


Advertisements
Comments
2 Responses to “LIQUEFIED NATURAL GAS: AN OVERVIEW”
  1. Thanks a lot for your great post. I have been looking for such content for a really long time. J0G@5_F@R_C3LL ,Not all your content is fully clear to me ,even though it is definitely interesting and worth reading.

  2. I never thought of it that way, well put!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

  • Blog Stats

    • 62,710 hits
  • Post Archives

  • Categories

  • Enter your email address to subscribe

    Join 5 other followers

%d bloggers like this: