What Is LNG?


What is LNG?


Liquefied Natural Gas (LNG) is natural gas that has been cooled to -260°F, changing its state from gaseous to liquid form. As a liquid, natural gas is 600 times more compact, making it much easier to transport and distribute to places where pipelines are not available. Natural gas liquefaction was developed in the 19th century, although its role as a globally traded product is a much more recent development.


Currently, the five largest LNG exporting countries are:


1. Qatar

2. Australia

3. United States

4. Russia

5. Malaysia


LNG transport and infrastructure


In its liquid state, natural gas behaves exactly as crude oil or gasoline. It can be easily shipped across the ocean in specialized cargo ships or tankers, or via rail. Although tremendously versatile in this state, transporting LNG requires specialized and highly advanced infrastructure.


When shipped by sea, LNG takes a 3-step journey. First, natural gas is liquefied or cooled down and transformed from gas to liquid at an export terminal. Then, it is moved to LNG carriers where it is stored in cryogenic tanks that maintain the extremely low temperature needed to keep natural gas in its liquid state. Finally, upon arrival to its destination, LNG is placed in special cryogenic storage tanks before being turned back to its gaseous form at an import terminal. This last process is known as regasification.



Source: International Gas Union


From the regasification facility, natural gas can be transported though pipeline to industrial complexes and power plants or distributed directly for residential and commercial use.



Global LNG market


Exporting LNG is not new. But the increased reliance on natural gas as a low-emissions energy source in recent years has underpinned the rise of a truly global natural gas market.


Although historically LNG trade has been driven by Asian markets, especially in Japan and South Korea, recent market liberalization policies have helped to expand LNG infrastructure in the region. Simultaneously, China’s coal-to-gas transformation and supply diversification strategies have been driving demand for LNG, and India – another fast-growing economy – is also rapidly building LNG import infrastructure to capitalize on this clean and low-cost fuel. 


Europe has also played a major role in the global LNG market. In fact, BP’s 2020 Statistical Review reported that LNG demand growth in 2019 was mostly driven by Europe: “European LNG imports rose by 1.73 trillion cubic feet, representing an unprecedented 68 percent increase”.


The role of the United States and Texas in the global LNG market


According to the International Energy Administration (IEA), the Unites States, as well as Australia, will be responsible for suppling over 3.5 trillion cubic feet (tcf) of new LNG between 2018 and 2023. America’s growing role as a major LNG exporter is in part thanks to the shale revolution, which helped transform the United States into the world’s largest natural gas producer in 2012. There are currently six active LNG export terminals in the United States, with a total export capacity of 10.1 Bcf/d. As of May 2020, there are seven more approved LNG export terminals under construction. 



Source: https://www.ferc.gov/industries/gas/indus-act/lng/lng-proposed-export.pdf


U.S. LNG exports reached a high record of 1.08 tcf in 2018, according to the EIA. The top five destination countries include: South Korea (252.2 billion cubic feet (bcf)), Mexico (182.8 bcf), Japan (125.5 bcf); China (90.5 bcf) and India (57.6 bcf).


As of June 2020, the United States is expected to lead LNG growth with the development and expansion of new infrastructure, contributing to 75 percent of the total global growth by 2024. In fact, 16 new LNG export facilities and three expansion projects are expected to come online by 2024 to meet growing LNG demand worldwide.


Climate benefits of LNG


The expansion of America’s LNG export capacity promises to bring not just economic growth domestically, but will bring climate benefits to the world. Natural gas has 55% lower carbon dioxide emissions than coal, which means effectively cutting greenhouse gas emissions in half when switching from coal to natural gas for power generation.


The United States has led the world in reducing greenhouse gas emissions in recent years, thanks in large part to the increased use of natural gas. Helping other countries around the world replicate that progress, particularly economies like China and India, will deliver enormous climate benefits, while also lifting people out of poverty and providing lower-cost energy around the globe.


"More exports of U.S. LNG to the world means more U.S. jobs and more domestic economic growth and cleaner air here at home and around the globe." - U.S. Under Secretary of Energy Mark W. Menezes


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