Overview of LNG industry in
the U.S.
Fisoye Delano
Outline
• What is LNG?
• Is LNG a safe fuel?
• The LNG value chain
• How much does LNG cost?
• Does the U.S. need more LNG?
• Conclusion
© UH IELE. 2
What Is LNG?
• LNG is liquid form of the
•
•
natural gas used for
cooking, heating and
power generation.
LNG is commonly used
in the U.S. for
“peakshaving.”
LNG is used as an
alternative
transportation fuel.
Typical LNG Composition
Others
5%
Methane
95%
LNG COMPOSITION (Mole Percent)
Source
Methane
Alaska
99.72
Algeria
Ethane
Propane
Butane
Nitrogen
0.06
0.0005
0.0005
0.20
86.98
9.35
2.33
0.63
0.71
Baltimore Gas & Electric
93.32
4.65
0.84
0.18
1.01
New York City
98.00
1.40
0.40
0.10
0.10
San Diego Gas & Electric
92.00
6.00
1.00
-
1.00
Source: Liquid Methane Fuel Characterization and Safety Assessment Report . Cryogenic Fuels. Inc. Report
No. CFI-1600, Dec. 1991
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Is LNG A Safe Fuel?
• LNG is odorless, colorless, non-corrosive,
and non-toxic.
– Natural gas vaporized from LNG can cause
asphyxiation in an unventilated confinement.
• LNG has been safely handled for many
years.
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Is LNG A Safe Fuel?
• Worldwide LNG Facilities:
– 17 LNG export (liquefaction) terminals.
– 40 import (regasification) terminals.
– 136 LNG ships altogether handling approximately 120
million metric tons of LNG every year.
– Over 240 peakshaving and LNG storage facilities, some
operating since the mid-60s.
• The U.S. has the largest number of LNG facilities
in the world.
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Is LNG A Safe Fuel?
113 active LNG facilities in the U.S.
U.S. Liquefied Natural Gas Facilities
Source: EIA
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LNG facilities in the U.S.
The types of LNG facilities in the U.S. are:
•
Baseload LNG plants: large facilities providing long,
steady supply of LNG to customers. There two types,
– Baseload LNG liquefaction plants
•
•
– Baseload LNG regasification terminals
Peak-shaving liquefaction and storage
Satellite LNG storage
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LNG facilities in the U.S.
Baseload LNG liquefaction plants.
The only export plant in the U.S. is
the ConocoPhillips/Marathon plant
located in Kenai, Alaska.
Source: ConocoPhillips
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LNG facilities in the U.S.
Baseload LNG regasification
terminals
The four marine LNG import
terminals in the U.S. represent
base load LNG facilities.
Source: CMS
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LNG facilities in the U.S.
Peakshaving LNG facilities liquefy
57 Peakshaving Plants in the U.S.
and store natural gas in the summer for
eventual regasification during the
coldest days of winter. The storage tank
volumes in these facilities can be very
large capable of storing 1.0 to 2.0 BCF
of natural gas. In the US, LNG has
Source: CH·IV International
been utilized by LDCs for peakshaving
for more than 60 years.
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LNG Facilities in the U.S.
Satellite LNG facilities do not contain
39 LNG Storage facilities in the U.S.
liquefaction units, but only storage and
re-gasification equipment. Some of
these units are used for satellite peakshaving duties, while others are
dedicated to vehicle fuel transfer
Source: CH·IV International
systems. LNG is delivered from marine
terminals or satellite facilities, usually
by truck.
Source: CH·IV International
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LNG Facilities in the U.S.
U.S. LNG STORAGE FACILITIES CAPACITY
2%
18%
Marine Export Terminal,
2.3 bcf
Marine Import Terminal,
18.8 bcf
80%
LNG Peak Shaving and
Satellite Storage, 86 bcf
Source: EIA
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U.S. LNG Regulations
Regulations are designed •
to prevent incidents from
•
occurring and if they do
occur, from human or
other error, to protect the •
public from any impact.
•
•
49CFR Part 193 Liquefied
Natural Gas Facilities: Federal
Safety Standards
33CFR Part 127 Waterfront
Facilities Handling Liquefied
Natural Gas and Liquefied
Hazardous Gas
NFPA 59A Standard for the
Production, Storage, and
Handling of Liquefied Natural
Gas (LNG)
NFPA57 Standard for Liquefied
Natural Gas (LNG) Vehicular
Fuel Systems
International Regulations
BS7777 and EN1473
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U.S. LNG Regulators
DOE helps to coordinate across federal
agencies that have regulatory and
policy authority for LNG
FERC is responsible for permitting new
onshore LNG regasification terminals
and ensuring safety at these facilities.
DOT regulates offshore terminals and LNG
tanker operations.
USCG is responsible for assuring the safety
of all marine operations at all LNG
terminals and on tankers in U.S.
coastal waters
U.S. EPA and state environmental agencies
establish air and water standards with
which the LNG industry must comply.
Others include:
U.S. Fish and Wildlife Service
U.S. Army Corps of Engineers for
coastal facilities and wetlands
U.S. MMS for offshore activities
National Oceanic and
Atmospheric
State, county and local
(municipal) agencies play
roles to ensure safe and
environmentally sound
construction and operation of
LNG industry facilities. Local
police and fire departments.
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Is LNG A Safe Fuel?
•
•
•
The industry is not without
incidents but it has maintained an
enviable safety record, especially
over the last 40 years.
The few safety related incidents
have harmed the industry’s
perception by those outside of the
industry.
The experience of the LNG
industry
demonstrates
that
normal operating hazards are
manageable.
LNG Incidents
1944 Cleveland Ohio. LNG
peakshaving plant. 128
people died in adjoining
residential area.
1973 Staten Island NY: LNG
peakshaving plant. 40
maintenance workers dies
1979 Cove Point MD: LNG
Receiving Terminal. 1
operator died
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LNG Value Chain
Energy companies must invest in
the LNG value chain.
EXPLORATION &
PRODUCTION
LIQUEFACTION
SHIPPING
REGASIFICATION
& STORAGE
Sources: BG, ALNG, CMS
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LNG Value Chain
Exploration and Production
•
•
•
•
•
Natural gas is found in the
earth’s crust.
Most of the time natural gas is
discovered during the search
for oil.
Worldwide proved reserves of
natural gas about 6000 Tcf.
Much of this natural gas is
stranded, a long way from
market.
Production operations delivers
the gas to users.
Source: BG
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LNG Value Chain
Liquefaction
•
•
•
Natural gas is converted
into a liquid state.
The gas is cooled to LNG
temperature of -256oF.
The volume reduce by a
factor of 600.
Liquefaction makes natural
gas more economical to
transport.
Source: ALNG
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•
•
•
LNG tankers are doublehulled ships specially
designed and insulated to
prevent leakage or rupture
in an accident.
LNG is a cryogenic liquid
and it is stored in doublewalled tanks at
atmospheric pressure.
The LNG shipping market
is expanding.
Source: BG
Number of LNG ships built 1965 - 2002
14
Ships built each year
Shipping
LNG Value Chain
12
10
8
6
4
2
0
1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001
Source: LNGOneWorld
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LNG Value Chain
Storage and Regasification
•
•
•
•
At the receiving terminal the LNG
is pumped into a double-walled
storage tank.
Vaporized by warming in a
controlled environment.
Vaporized gas is regulated for
pressure and enters the U.S.
natural gas pipeline system.
Residential and commercial
consumers receive natural gas for
daily use from local gas utilities or
in the form of electricity.
Source: CMS
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How Much Does LNG Cost?
LNG Value Chain
EXPLORATION &
PRODUCTION
LIQUEFACTION
SHIPPING
REGASIFICATION
& STORAGE
$0.5-$1.0/MMBtu
$0.8-$1.20/MMBtu
$0.4-$1.0/MMBtu
$0.3-$0.5/MMBtu
Sources: BG, ALNG, CMS
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How Much Does LNG Cost?
LNG costs are declining.
Natural gas can be economically produced and delivered to the U.S. As
LNG in a price range of about $2.50 - $3.50 per MMBtu depending
largely on shipping cost.
Learning reduces capital costs
$ / tpa LNG Plant costs
LNG COSTS ARE DECLINING
700
Does not include feedstock prices
600
$/MMBTU
500
2.5
400
0.5
2
300
0.1
200
0.1
100
1.5
0
2.5
65-70
70-75
75-80
80-85
85-90
90-95
95-99
‘00
Source: BP
1
Trinidad Trinidad
Train 1 Trains 2
and 3
1.8
0.5
Tanker Cost are Dropping
0
1980's
Liquefaction
Shipping
Regasification
and Storage
2000's
LNG carrier (125-135,000 cu.m) newbuilding prices
300
250
200
$M
Sources: El Paso
150
100
50
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2001 2002
So urce: LNGOneWo rld 2001©
© UH IELE. 22
Does The U.S. need more LNG?
•
•
•
Bulk of the natural gas used in
the U.S. comes from domestic
production.
U.S. Gas Supply
Many fields that are several
Domestic
decades old and are declining Production,
85%
rapidly.
New natural gas reserves are
being discovered, but with
advanced recovery
technologies these fields are
quickly depleted.
Canada,
14%
LNG, 1%
74% from Gas Wells
26% from oil wells
© UH IELE. 23
Does The U.S. need more LNG?
Natural Gas Imports, Exports in 2001
U.S. DOE –
Office of Fossil
Energy, bcf
LNG
Japan
Algeria
Nigeria
Oman & Others
64
38
12
Qatar
Australia
23
2
66
Trinidad and Tobago
166
Total U.S.
Consumption =
22.7 tcf
LNG is less than
1 percent
98
3728
10
140
LNG
239
Source: U.S. EIA
© UH IELE. 24
Does The U.S. need more LNG?
•
•
•
Estimated shortfall in supply of
natural gas of about 8 Tcf by 2025.
Increased imports of natural gas
will be required.
– Canada may not be able to
sustain increasing volumes of
exports to the U.S.
– LNG imports is expected to
reach 2.1 Tcf a year by 2025,
or about 6% of our total
consumption. LNG is currently
less than 1% of total U.S. Gas
consumption.
Demand for LNG is growing.
© UH IELE. 25
Proposed LNG Import facilities on U.S. West
Coast
Mare Island
Bechtal/
– Shell abandoned project.
Tijuana
Marathon led
group
– Filed permit
application
with CRE and
selected EPC
contractor.
Ensenada
Sempra/CMS
– Filed permit application with CRE.
Lazaro Cardenas
Tractebel
– Conducting feasibility study.
Baja California
ChevronTexaco
– Filed permit application
with CRE.
© UH IELE. 26
Proposed LNG Import facilities on U.S. Gulf &
East Coast
Freeport
Cheniere
– Announced three Gulf
Coast sites.
Port Pelican
ChevronTexaco
– Filed with the DOT under
Deepwater Port Act.
Altamira
El Paso/Shell
– RFP issued by CFE.
Hackberry
Dynegy
– Received preliminary
approval from FERC.
Energy Bridge
El Paso
– Applied with USCG for
deepwater mooring buoy.
Bahamas
AES
– Resolving pipeline design
and construction issues.
Bahamas
Tractebel
– Tractebel buys Enron interest.
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0103-001
Does The U.S. need more LNG?
•
•
•
Alternative sources of natural gas supply.
– North slope of Alaska - pipeline to the lower 48 U.S. States.
– Rocky Mountain region.
– Offshore resources, the pacific, the Atlantic, the eastern Gulf of
Mexico outer continental shelf (OCS).
Access restriction.
– Offshore resources in the eastern Gulf of Mexico.
– Rocky Mountain region (limited or prevented).
Supply gap in will remains even after the delivery of
Alaskan gas commences.
© UH IELE. 28
Conclusion
• LNG technology makes natural gas available
•
•
throughout the world.
It is important for citizens, industry and
government to develop and communicate
appropriate understandings of relative risks
associated with LNG facilities and shipping.
Demand for LNG is growing.
© UH IELE. 29
IELE Commercial Frameworks for
LNG in North America
•
•
•
•
The 1st briefing paper was published in Jan. 2003
– Available for download, http://www.energy.uh.edu/lng/ .
The 2nd paper.
– LNG safety and the environment is in progress
The 3rd paper.
– U.S. supply-demand balances and energy security: A role for
LNG?
Guide to LNG in North America.
– All three papers and more information will be compiled in a
complete fact book to be issued by summer 2003.
© UH IELE. 30
Sponsors of IELE LNG research
consortium
•
•
•
•
•
•
•
BP Energy Company-Global LNG
•
Tractebel LNG North
BG LNG Services
America/Distrigas of
ChevronTexaco Global LNG
Massachusetts.
Shell Gas & Power
•
Office of Fossil Energy provides
ConocoPhillips Worldwide LNG
El Paso Global LNG
ExxonMobil Gas Marketing Company
The U.S. Department of Energycritical support
•
Ministry of Energy and Industry,
Trinidad & Tobago participates
as an observer.
© UH IELE. 31
Overview of LNG industry in
the U.S.
Fisoye Delano