Overview of U.S. LNG Industry

7/27/2019 Overview of U.S. LNG Industry

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Overview of LNG industry inthe U.S.Fisoye Delano


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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


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What Is LNG?

LNG is liquid form of thenatural gas used forcooking, heating and

power generation. LNG is commonly usedin the U.S. forpeakshaving.

LNG is used as analternativetransportation fuel.

Typical LNG Composition

Others

5%Methane

95%

Source Methane Ethane Propane Butane Nitrogen

Alaska 99.72 0.06 0.0005 0.0005 0.20

Algeria 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

LNG COMPOSITION (Mole Percent)


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Is LNG A Safe Fuel?

LNG is odorless, colorless, non-corrosive,and non-toxic.

Natural gas vaporized from LNG can causeasphyxiation in an unventilated confinement.

LNG has been safely handled for manyyears.


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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 120million metric tons of LNG every year.

Over 240 peakshaving and LNG storage facilities, someoperating since the mid-60s.

The U.S. has the largest number of LNG facilitiesin the world.


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Source: EIA

Source: EIA

113 active LNG facilities in the U.S.

Is LNG A Safe Fuel?


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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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Source: ConocoPhillips


Baseload LNG liquefaction plants.

The only export plant in the U.S. is

the ConocoPhillips/Marathon plant

located in Kenai, Alaska.


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Baseload LNG regasificationterminals

The four marine LNG importterminals in the U.S. represent

base load LNG facilities.

Source: CMS


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Peakshaving LNG facilities liquefy

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. I n the US, LNG has

been uti l ized by LDCs for peakshaving

for more than 60 years.

Source: CHIV International

57 Peakshaving Plants in the U.S.


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LNG Facilities in the U.S.

Satellite LNG facilities do not contain

liquefaction units, but only storage and

re-gasification equipment. Some of

these units are used for satellite peak-

shaving duties, while others are

dedicated to vehicle fuel transfer

systems. LNG is delivered from marine

terminals or satellite facilities, usually

by truck.



39 LNG Storage facilities in the U.S.


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LNG Facilities in the U.S.

U.S. LNG STORAGE FACILITIES CAPACITY

2%

18%

80%

Marine Export Terminal,

2.3 bcf

Marine Import Terminal,

18.8 bcf

LNG Peak Shaving andSatellite Storage, 86 bcf

Source: EIA


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U.S. LNG RegulationsRegulations are designedto prevent incidents from

occurring and if they dooccur, from human orother error, to protect thepublic from any impact.

49CFR Part 193LiquefiedNatural Gas Facilities: FederalSafety Standards

33CFR Part 127WaterfrontFacilities Handling LiquefiedNatural Gas and LiquefiedHazardous Gas

NFPA 59AStandard for theProduction, Storage, andHandling of Liquefied Natural

Gas (LNG) NFPA57Standard for LiquefiedNatural Gas (LNG) VehicularFuel Systems

International RegulationsBS7777 and EN1473


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U.S. LNG RegulatorsDOE helps to coordinate across federal

agencies that have regulatory and

policy authority for LNGFERC is responsible for permitting newonshore LNG regasification terminalsand ensuring safety at these facilities.

DOT regulates offshore terminals and LNGtanker operations.USCG is responsible for assuring the safetyof all marine operations at all LNGterminals and on tankers in U.S.coastal waters

U.S. EPA and state environmental agenciesestablish air and water standards withwhich the LNG industry must comply.

Others include:U.S. Fish and Wildlife Service

U.S. Army Corps of Engineers forcoastal facilities and wetlandsU.S. MMS for offshore activitiesNational Oceanic and

AtmosphericState, county and local

(municipal) agencies playroles to ensure safe andenvironmentally soundconstruction and operation ofLNG industry facilities. Localpolice and fire departments.


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Is LNG A Safe Fuel?

The industry is not withoutincidents but it has maintained anenviable safety record, especiallyover the last 40 years.

The few safety related incidentshave harmed the industrysperception by those outside of theindustry.

The experience of the LNGindustry demonstrates thatnormal operating hazards aremanageable.

LNG Incidents1944 Cleveland Ohio. LNG

peakshaving plant. 128

people died in adjoiningresidential area.

1973 Staten Island NY: LNGpeakshaving plant. 40maintenance workers dies

1979 Cove Point MD: LNGReceiving Terminal. 1operator died


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LNG Value ChainEnergy companies must invest in

the LNG value chain.

REGASIFICATION

& STORAGESHIPPINGLIQUEFACTION

EXPLORATION &

PRODUCTION

Sources: BG, ALNG, CMS


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LNG Value Chain Natural gas is found in the

earths crust. Most of the time natural gas is

discovered during the searchfor oil.

Worldwide proved reserves ofnatural gas about 6000 Tcf.

Much of this natural gas isstranded, a long way frommarket.

Production operations deliversthe gas to users.

Source: BGSource: BG

Exploration and Production


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LNG Value Chain Natural gas is converted

into a liquid state.

The gas is cooled to LNGtemperature of -256oF.The volume reduce by afactor of 600.

Liquefaction makes naturalgas more economical totransport.

Liquefaction

Source: ALNGSource: ALNG


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LNG Value Chain LNG tankers are double-

hulled ships speciallydesigned and insulated toprevent leakage or rupture

in an accident. LNG is a cryogenic liquid

and it is stored in double-walled tanks atatmospheric pressure.

The LNG shipping marketis expanding.

Source: BGSource: BG

Number of LNG ships built 1965 - 2002

0

2

4

6

8

10

12

14

1 96 5 1 96 7 1 96 9 1 97 1 1 97 3 1 97 5 1 97 7 1 97 9 1 98 1 1 98 3 1 98 5 1 98 7 1 98 9 1 99 1 1 99 3 1 99 5 1 99 7 1 99 9 2 00 1

Shipsbuilteach

year

Source: LNGOneWorld

Shipping


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LNG Value Chain At the receiving terminal the LNG

is pumped into a double-walledstorage tank.

Vaporized by warming in acontrolled environment.

Vaporized gas is regulated forpressure and enters the U.S.natural gas pipeline system.

Residential and commercialconsumers receive natural gas fordaily use from local gas utilities orin the form of electricity.

Storage and Regasification

Source: CMS


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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

LNG Value Chain

Sources: BG, ALNG, CMS

How Much Does LNG Cost?


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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 dependinglargely on shipping cost.

LNG COSTS ARE DECLININGDoes not include feedstock prices

2.51.8

0.50.1

0.1

00.5

11.5

22.5

1980's Liquefaction Shipping Regasificationand Storage 2000's

$/MMBTU

Sources: El Paso

Learning reduces capital costs

0

100

200

300

400

500

600

700

6 5-7 0 7 0-7 5 7 5-8 0 8 0-8 5 8 5-9 0 9 0-9 5 TrinidadTrain 1

TrinidadTrains 2

and 3

95-99 00

$ / tpa LNG Plant costs

Source: BP

Tanker Cost are DroppingLNG carrier (125-135,000 cu.m) newbuilding prices

0

50

100

150

200

250

300

1 990 1 991 1 992 1 993 1 994 1 995 1 996 1 997 1 998 1 999 2 001 2 002

$M

Sourc e: LNGOneWorld 2001

How Much Does LNG Cost?


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Does The U.S. need more LNG?

Bulk of the natural gas used inthe U.S. comes from domestic

production.

Many fields that are severaldecades old and are declining

rapidly.

New natural gas reserves arebeing discovered, but with

advanced recoverytechnologies these fields are

quickly depleted.

U.S. Gas Supply

Canada,14%

LNG, 1%

Domestic

roduction,

85%

74% from Gas Wells

26% from oil wells


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Japan

239140

10

166

3728

LNG

LNG

66Trinidad and Tobago

98

2

Australia

Algeria

64 12

Oman & OthersNigeria

38

23

Qatar

U.S. DOE

Office of Fossil

Energy, bcf

Total U.S.

Consumption =

22.7 tcf

LNG is less than

1 percent

Natural Gas Imports, Exports in 2001Does The U.S. need more LNG?

Source: U.S. EIA


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Estimated shortfall in supply ofnatural gas of about 8 Tcf by 2025.

Increased imports of natural gaswill be required.

Canada may not be able tosustain increasing volumes ofexports to the U.S.

LNG imports is expected toreach 2.1 Tcf a year by 2025,or about 6% of our totalconsumption. LNG is currently

less than 1% of total U.S. Gasconsumption.

Demand for LNG is growing.


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Proposed LNG Import facilities on U.S. WestCoastMare IslandBechtal/ Shell abandoned project.

Lazaro Cardenas

Tractebel Conducting feasibility study.

TijuanaMarathon ledgroup Filed permit

applicationwith CRE andselected EPCcontractor.

EnsenadaSempra/CMS

Filed permit application with CRE.

Baja CaliforniaChevronTexaco Filed permit application

with CRE.


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Proposed LNG Import facilities on U.S. Gulf &East Coast

BahamasAES Resolving pipeline design

and construction issues.Port PelicanChevronTexaco Filed with the DOT under

Deepwater Port Act.

AltamiraEl Paso/Shell RFP issued by CFE.

HackberryDynegy Received preliminary

approval from FERC.

Energy BridgeEl Paso Applied with USCG for

deepwater mooring buoy.FreeportCheniere Announced three Gulf

Coast sites.

BahamasTractebel

Tractebel buys Enron interest.0103-001


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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 ofAlaskan gas commences.



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Conclusion LNG technology makes natural gas available

throughout the world.

It is important for citizens, industry andgovernment to develop and communicateappropriate understandings of relative risksassociated with LNG facilities and shipping.

Demand for LNG is growing.


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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.
http://www.energy.uh.edu/lng/http://www.energy.uh.edu/lng/


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Sponsors of IELE LNG researchconsortium BP Energy Company-Global LNG BG LNG Services ChevronTexaco Global LNG Shell Gas & Power ConocoPhillips Worldwide LNG El Paso Global LNG ExxonMobil Gas Marketing Company

Tractebel LNG NorthAmerica/Distrigas ofMassachusetts.

The U.S. Department of Energy-Office of Fossil Energy providescritical support

Ministry of Energy and Industry,Trinidad & Tobago participatesas an observer.


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Overview of LNG industry inthe U.S.Fisoye Delano

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Overview of U.S. LNG Industry