The LNG in Your Future

Dec. 6, 2006

by Lewis Tagliaferre

If the price of your natural gas has stabilized or even declined somewhat temporarily, the reason could be increasing imports of liquefied natural gas (LNG). Imported LNG must be an increasing proportion of pipeline gas supplies since accelerating depletion of domestic gas fields cannot keep up with demand. A report by the Washington, D.C.-based Energy Information Administration (EIA), a statistical agency of the U.S. Department of Energy, noted that natural gas wells drilled in the Gulf of Mexico in 1972 declined from their peak at an average rate of 17 percent per year, but natural gas wells drilled in 1996 have declined at an annual rate of 49 percent. Two years after peaking, production from Gulf gas wells drilled in 1972 averaged 63 percent of their peak level, whereas output of those drilled in 1996 averaged only 31 percent of peak output 2 years later. Trends like this obviously do not bode well for future expansion of gas supplies.

Although there are estimated to be vast reserves of natural gas in the United States under public lands, most of it is in protected areas; hence, the need for imports to meet growing demand. Reserves in several other countries are available and for sale, but the gas has to be transported across oceans. The only economical way to transport natural gas across the ocean is to liquefy it and ship it in specially built tankers. LNG permits gas from some of the largest resources (including Trinidad, Nigeria, Norway, Venezuela and Algeria, Russia, Middle East, and Africa) to supply the largest markets in North America, Europe, Japan, Korea, India, and, potentially, China. A single ship can carry about 34 million gallons of LNG - enough to meet the daily energy needs of more than 10 million homes. Opponents of increasing LNG imports cite land-use concerns and environmental impacts, as well as safety issues, in their complaints. Perhaps knowing more about LNG will help you become an educated consumer.

Historical Notes

British chemist and physicist Michael Faraday experimented with liquefying natural gas in the 19th century. German engineer Karl van Linde built the first practical compressor-refrigerator machine in Munich, Germany, in 1873. Technology for chilling and liquefying natural gas emerged in the United States during the 1920s, when engineers began to liquefy natural gas by cooling it to -260 degrees F. Six hundred (600) cubic feet of natural gas take up only 1 cubic foot of space when liquefied, making it economical to transport in specially designed ocean tanker ships. The LNG is then stored in insulated tanks at terminals where it can be re-gasified and distributed to customers by pipeline. The storage tanks consist of a stainless-steel inner tank surrounded by about 4 feet of insulation, which is contained by an outer steel tank much like a thermos bottle. The first liquefied natural gas plant was built in West Virginia in 1912, while the first commercial liquefication plant was built in Cleveland in 1941.

In January 1959, the world’s first LNG tanker, the “Methane Pioneer” (a converted World War II Liberty freighter), carried liquefied natural gas from Lake Charles, LA, to Canvey Island, United Kingdom. This voyage demonstrated that large quantities of liquefied natural gas could be transported safely across the ocean. In 1964, the British Gas Council began importing liquefied natural gas from Algeria, making the United Kingdom the world’s first LNG importer and Algeria its first exporter.

U.S. natural gas companies built four marine liquefied-natural-gas terminals between 1971 and 1980: Lake Charles (owned by CMS Energy), Everett, MA (owned by Tractebel), Elba Island, GA (owned by El Paso Energy), and Cove Point, MD (owned by Dominion Resources). After receiving a peak receipt volume of 253 billion cubic feet (BCF) in 1979, which represented 1.3 percent of U.S. gas demand, LNG imports declined because deregulation led to increasing North American domestic natural gas production. In 1999, the first Atlantic Basin LNG liquefication plant came on line in Trinidad and Tobago. This event, combined with increasing U.S. natural-gas demand (particularly for electric power generation), resulted in renewed interest in liquefied natural gas for the American market. There are about 113 active LNG facilities spread across the United States now, with the highest number located in the Northeastern states.

Safety and Security Notes

LNG is non-toxic, odorless, non-explosive, and non-flammable in its liquid state. In fact, it will burn only after it has been re-gasified and mixed with air within the range of a 5- to 15-percent gas-to-air mixture. Liquefied natural gas has about 45 percent of the density of water; if it’s spilled onto a waterway, it will float on top of the water until it evaporates into the atmosphere.

Since commercial LNG transport began, it has been safely transported, stored, and delivered to densely populated cities without any serious incident. More than 33,000 LNG ocean-carrier voyages, covering more than 60 million miles, have arrived safely without an accident or safety problem either in port or at sea. This is a record the crews certainly can be proud of. LNG ships are well-built, robust vessels with double-hull designs to withstand the low-energy impacts common during harbor and docking operations.

Maintaining LNG safety is a top priority for several federal and state agencies, including the U.S. Coast Guard. The Coast Guard’s jurisdiction includes a ship in domestic waters and while docked at the offshore platform, the equipment and piping on the offshore platform, and the piping leading from the platform to the tanks onshore. The Coast Guard also continually enforces a safety zone around the offshore platform, even when a ship is not present. Jurisdiction of the U.S. Department of Transportation’s Office of Pipeline Safety (OPS) begins where the onshore Coast Guard jurisdiction ends and includes the tanks, the facility process equipment, and the pipeline.

Case in Point

Dominion Resources Cove Point LNG terminal is strategically located south of Baltimore on the Chesapeake Bay, where it receives LNG tankers from docks 1 mile offshore, stores the LNG onshore, then transforms it back to gas when it is needed to meet demand. The Cove Point LNG terminal occupies 1,017 acres, of which 108 are developed, 800 are under conservation management, 190 acres are freshwater marsh, and 80 acres make up a county park. It has a storage capacity of 7.8 billion cubic feet (BCF) and a daily output capacity of 1 BCF. The terminal connects, via its own pipeline, to the gas transmission systems of Transcontinental Gas Pipeline, Columbia Gas Transmission, and Dominion Transmission.

The company notes: “Dominion Resources is one of the nation's largest producers of energy. The company’s asset portfolio consists of about 28,000 megawatts of power generation, 6,000 miles of electric transmission, about 6.3 trillion cubic feet equivalent of proved natural-gas reserves, 7,800 miles of natural gas pipeline, and the nation’s largest natural gas storage system, with about 950 billion cubic feet of storage capacity. Dominion serves retail energy customers in 11 states. Corporate headquarters are in Richmond, VA.” (

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