What is LNG?
LNG is simply natural gas in its liquid state. When natural gas is chilled to a temperature of about minus 160° C (minus 260° F) at atmospheric pressure, it becomes a clear, colourless and odourless liquid.
LNG is non-corrosive and non-toxic. The liquefaction process removes water, oxygen, carbon dioxide and sulfur compounds contained in the natural gas. This results in an LNG composition of mostly methane with small amounts of other hydrocarbons and nitrogen.
As a liquid, natural gas is reduced to 1/600th of its original volume. This makes it feasible and economical to transport over long distances in specially designed ocean tankers. Once received, the LNG goes into storage tanks, is regassified, and delivered to markets.
LNG in North America
LNG has been a source of energy in the United States since the 1960s and is available from both domestic and foreign sources of natural gas. Domestic LNG is produced, liquefied and stored in North America. Marine, or imported LNG, is foreign-produced natural gas, which is liquefied abroad and transported to North America via ocean tankers.
North America accounts for a relatively small portion of worldwide LNG demand, as it is largely self-sufficient in terms of natural gas production. In 2012, Canadian imports of LNG accounted for less than 1% of global LNG imports, while the United States accounted for just over 1% of global LNG imports.
Table 1 – Existing North American LNG Import and Export Facilities (Spring 2013)
Source: U.S. Federal Energy Regulatory Commission, National Energy Board
In the early 2000's, optimistic projections about future LNG demand spurred an investment boom to build new import facilities. However, many LNG import terminal projects in North America were cancelled on account of the following:
- Low natural gas prices,
- Weak industrial demand, and
- Massive U.S. shale gas production.
As of spring 2013, Canada has one operating LNG import facility, the Canaport terminal in Saint John, New Brunswick.
With ample unconventional resources, industry is shifting its focus from importing LNG into North America to exporting LNG from North America. As of spring 2013, there are several proposals for LNG export facilities in Canada. Consult Canadian LNG Projects for more information on the status of Canadian projects.
As a clean-burning fossil fuel, natural gas is expected to play an ever more important role in worldwide energy demand. Energy demand is expected to increase over the long-term and global LNG production is also expected to grow.
LNG Supply Chain
The LNG supply chain (as illustrated in the figure below) consists of several interconnected elements.
Liquefaction plants are built at marine terminals so the LNG can be loaded onto special tankers for transport overseas. After tankers deliver the LNG cargo to import terminals, the LNG is stored, regassified and injected into pipeline systems for delivery to end users.
Where Does LNG Come From?
World natural gas reserves are abundant. However, much of this natural gas is considered “stranded” as it is located in regions distant from consuming markets (e.g. Trindad and Nigeria).
Liquefying natural gas and shipping it overseas provides an opportunity for these regions to economically develop their natural gas reserves.
In 2011, 18 countries produced and shipped a combined 241.5 million tonnes of LNG:
“Others” include Yemen, Egypt, United Arab Emirates, Equatorial Guinea, Peru, Norway, the United States* and Libya.
* Until 2012, small quantities of LNG have been produced in Alaska by Kenai LNG (located in Cook Inlet) for export to Japan.
Where is LNG Delivered?
In 2011, 25 countries imported a combined 241.5 million tonnes LNG:
“Others” include Turkey, Belgium, Argentina, Mexico, Chile, Canada, Kuwait, Portugal, United Arab Emirates, Greece, Dominican Republic, Thailand, Brazil, the Netherlands and Puerto Rico.
In general, the countries listed above import LNG for one of two reasons:
- Domestic supplies of natural gas are not readily available; or,
- Demand for natural gas exceeds what can be produced domestically.
Canadian LNG Projects
For information on the status of Canadian LNG import and export projects, please consult the Canadian LNG Projects.
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