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 over a dozen LNG import facilities to serve the US markets.
LNG storage facilities will also continue to be important in meeting the demands of local utilities as a way to store gas until needed. There is also a need for LNG for vehicular fuel and as an alternative to propane for facilities that aren’t connected to a grid.
Liquefaction also provided the opportunity to store natural gas for use during high demand periods in areas where conditions are not suitable for underground storage facilities.
For example, in New England and the coastal area of the Mid-Atlantic states where underground storages is lacking, LNG is a critical part of the regions’ supply during cold snaps. In regions where pipeline capacity from supply area can be expensive and seasonal, liquefaction for storage occurs during off-peak periods in order to reduce expensive pipeline capacity commitment.
With the recent large increase of shale gas development in the US, domestic natural gas prices have declined, domestic gas is abundant and the need to import LNG into the US has diminished.
Kenai, Alaska, is home to the first LNG export terminal built in the US. It received natural gas from production wells near Cook Inlet. Natural gas was sent to the plant in Kenai where it is liquefied and then exported, primarily to Japan.
The Kenai plant’s Department of Energy export license expired in March 2013 and has not been renewed. If there are large new discoveries in Cook Inlet, application for a new license may occur.
With lower domestic gas prices, several US import terminals have sought approval to build liquefaction facilities for exporting LNG. Depending on gas supply and price, these facilities will be able to import LNG when it is needed in the US and export LNG when it is economical.
There are several existing import LNG terminals in the United States, including a terminal located in Puerto Rico. These facilities are located in Everett, Mass.; Cove Point, Md.; Elba Island, Ga.; Lake Charles, La.; Gulf Gateway Energy Bridge, Deep-water Port, Gulf of Mexico; Penuelas LNG, Bahia de Guayanilla, Puerto Rico, and Sabine Pass LNG, Cameron Parish, La. LNG is imported to these facilities from Trinidad and Tobago, Algeria, Egypt, Malaysia, Nigeria, Qatar and Oman.
The current world market for LNG is clearly creating an opportunity. In the next segment we’ll look at the worldwide need for LNG.
This is the first in a 10-part series produced by the Alaska Support Industry Alliance.