LNG 101 week four: Shipping LNG around the globe
Nov04

LNG 101 week four: Shipping LNG around the globe

Natural gas is normally shipped by pipeline, but it is impractical to build a pipeline from the Middle East or Africa to the United States and other locations. This logistical challenge has led to the creation of special ships capable of carrying the liquid form of natural gas — LNG. LNG carriers are “tank ships” — merchant vessels designed to transport liquids in bulk. The first LNG carrier was launched from the Calcasieu River on the Louisiana Gulf coast in January 1959 with the world’s first ocean cargo of LNG and it sailed to the UK where the cargo was delivered. The expansion of the LNG trade has led to a large expansion of the fleet. Hundreds of vessels have been built and today, giant LNG ships are sailing worldwide. Every single LNG ship that is seaworthy is active. There is not much spare capacity anywhere in the world. Early LNG ships were made with independent aluminum cargo tanks, with a capacity of 27,000 cubic meters and were used in the Algerian LNG trade in the late 1960s. Today, the International Maritime Organization (IMO) rules specify that all LNG ships must be one of three types. Type A are those built according to standard oil tank design. Type C refers to those that have a pressure vessel design. Type B refers to tanks that are neither of the first two types. In the eyes of the Coast Guard, all LNG tanks are Type B because Type B tanks must be designed without any of the general assumptions that go into designing the other tank types. There are three general Type B tank designs for LNG. The first type of design, the membrane tank, is supported by the hold it occupies. The other two designs, spherical and prismatic, are self-supporting. Membrane tanks are composed of a layer of metal, a layer of insulation, another liquid-proof layer, and another layer of insulation. These layers are then attached to the walls of the hold. In the case of the first design, the primary and secondary barriers are sheets of nickel steel. Unlike regular steel, this nickel steel barely contracts upon cooling. All membranes are built up from the surface of a hold using units of insulation, called panels, that are anchored to it. Special insulation is inserted around the anchors. A membrane design is very complex with many design elements. The year was 1969 when Phillips Petroleum and Marathon Oil began shipping natural gas from Cook Inlet to Japan. The Polar Alaska and the Arctic Tokyo, identical LNG carriers, were specially designed pressure vessels just for this purpose. The tanks on these...

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LNG 101 week three: The Upstream Chain
Oct29

LNG 101 week three: The Upstream Chain

The LNG process, one that is much more complex than pipeline transportation, is often referred to as the “LNG chain.” It is made up of distinct parts: upstream, liquefaction plant, shipping, regasification and gas distribution. In this issue, we’ll discuss the gathering and processing aspects of the chain (upstream), as well as the liquefaction plants. Of course, the entire process begins with a decision to develop a gas field. That decision is typically related to the distance from the gas field to market, if a pipeline is available or if LNG shipment is required. Other considerations include the amount of recoverable gas, the cost to produce the gas that is delivered to the liquefaction plant in the removal of any impurities from the gas, a port that is close enough to the gas field for a liquefaction plant to be built, a political situation that supports longterm investments and a market price that is high enough to support the entire process and provide a good return. The upstream section of the LNG chain is very similar to regular gas systems. It includes drilling exploratory wells and eventually drilling and operating wells that recover the natural gas and bring it to the surface. The exact placement of an exploration well depends on the nature of the formation to be drilled, what the geology of the formation looks like, and the depth and size of the deposit. After a geophysical team chooses the best location for a well, the drilling company works to ensure that it completes all the necessary steps so that it can egally drill in that area. Securing permits for the drilling operations is a critical part of this phase. Once a natural gas well is drilled, and it has been confirmed that a large enough quantity of natural gas is there to commercially develop, the well must be “completed” to allow the natural gas to flow out of the formation and up to the surface. This process includes evaluating the pressure and temperature of the formation, running casing and tubing, and using the proper equipment to ensure an efficient flow of natural gas out of the well. A piece of equipment, referred to as a “Christmas tree” fits on top of the well, and contains tubes and valves that control the flow of gas and other fluids out of the well. It contains many branches and is shaped somewhat like a tree. The “Christmas tree” is the most noticeable part of a well, and allows people on the surface to monitor and regulate the production from a producing well. A typical “Christmas tree” is about six feet...

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LNG 101 week two: Global demand on the rise
Oct22

LNG 101 week two: Global demand on the rise

Why is there a global demand for LNG? The answer is simple. The world needs more energy and wants clean energy, safe energy and affordable energy. The global population is predicted to rise from 7 billion to 9 billion in 2050 and the world will obviously need more energy. LNG is a safe, clean, and efficient energy source and is already part of the global energy mix. According to the International Group of Liquefied Natural Gas Import- ers, since 2006, China, Brazil, Chile, Dubai, Kuwait, the Netherlands, Canada and Mexico all became first-time importers of LNG. These countries joined LNG consumers from Japan, South Korea and Taiwan. In 2012, 25 different countries imported LNG. While natural gas demand has grown by about 2.7 percent per year since 2000, LNG demand has risen by about 7.6 percent per year in the same time period — almost three times faster. Since 2001, the total volume of LNG shipped has doubled to reach 496 million cubic meters, the equivalent of about 1.5 billion barrels of oil. Between 2009 and 2010 alone, world LNG trade grew by 22.6 percent. That trend is expected to continue, even though there was a downward trend in LNG trade in 2012. The International Energy Agency (IEA) forecasts a growing need for natural gas in the world’s energy mix, with the natural gas share growing from 21 percent in 2010 to 25 percent in 2035. It is important to note that natural gas was the only fossil fuel whose share was growing. The IEA sees global natural gas demand growing at about 1.6 percent per year through 2035, more than twice the expected growth rate for oil. Other forecasters put the growth rate for gas even higher. LNG demand growth is, however, expected to be even stronger, particularly through 2020. While a wide range of forecasts exist, a majority of industry analysts see average annual growth of around 5 percent to 6 percent per year. After 2020, demand growth is expected to continue, at a slightly slower pace — around 2 percent to 3 percent per year. Many industry experts agree the increase in LNG demand has been driven by a strong need from Asia, currently 60 percent of the total demand, and by political pressure to guarantee energy supply security, improve energy infrastructure, and reduce the world’s carbon footprint, by replacing coal with natural gas, while economies and population grow. In addition, the nuclear plant explosion in Fukishima in 2011 has led to rising popular opposition to nuclear power generation and more emphasis on LNG. The impact of the Fukushima disaster on global LNG need was high-lighted as...

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LNG 101: What it is, who uses it, and why
Oct15

LNG 101: What it is, who uses it, and why

Liquefied natural gas, or LNG, is natural gas converted to its liquid form. When natural gas is cooled to minus-259 degrees Fahrenheit, it becomes a clear, colorless, odorless liquid. LNG is produced by taking natural gas from a production field, processing it to remove impurities, and then liquefying the processed gas. LNG isn’t corrosive or toxic. It doesn’t explode or burn as a liquid. Natural gas is primarily methane, with low levels of other hydrocarbons, water, carbon dioxide, nitrogen, oxygen and some sulfur compounds. During the process known as liquefaction, natural gas is cooled below its boiling point, removing most of these compounds. The remaining natural gas is primarily methane with only small amounts of other hydrocarbons. LNG weighs less than half the weight of water so it will float if spilled on water. Converting natural gas to LNG, a process that greatly reduces its volume — similar to reducing the volume of a beach ball to the volume of a Ping-Pong ball — allows it to be transported on cargo ships. Once delivered to its destination, LNG is warmed back into its original gas state so that it can be used just like existing natural gas supplies, sending it through pipelines to be distributed to homes and businesses. Natural gas transported as LNG is used for residential, commercial and industrial purposes like heating and cooling homes, cooking, generating electricity and manufacturing paper, metal, glass and other materials. LNG is also being used on a small scale to fuel heavy-duty vehicles. Because it is easy to transport, LNG makes previously stranded natural gas economical. These are typically natural gas deposits where the construction of a pipeline is uneconomical. LNG is usually transported by specialized tanker with insulated walls, and is kept in liquid form by auto refrigeration, a process in which the LNG is kept at its boiling point. Any heat additions are offset by the energy lost from LNG vapor that is vented out of storage and used to power the vessel. Imported LNG makes up a little bit more than 1 percent of natural gas used in the United States. LNG imports represent an important part of the natural gas supply picture in the United States, especially to areas where there are limited pipelines delivering from US natural gas basins. LNG takes up much less space than natural gas, which again, allows it to be shipped much more efficiently. Interest in LNG imports for the US had increased with higher natural gas prices during the 2000 to 2009 period. Technology advances have lowered costs for liquefaction and regasifying, shipping and storing LNG. Companies have announced plans to construct...

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