Liquefied Natural Gas

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 re-gasified, 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 2009, Canada received its first ever shipment of LNG, while the United States accounted for less than 5 percent of global LNG imports.

Table 1 – Existing North American LNG Import and Export Facilities (2010)
Country Import Export
Canada 1 0
United States 11 1

Source: U.S. Energy Information Administration, National Energy Board

Although LNG remains an important source of supply for the North American natural gas market, its role in North America’s energy future remains uncertain.  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 have recently been delayed or cancelled on account of the following:

  1. Low natural gas prices,
  2. Weak industrial demand, and
  3. Massive U.S. shale gas production.

Canada currently has one operating LNG import facility, the Canaport terminal in Saint John, New Brunswick.  Kitimat LNG also has a proposal for a LNG export facility in the Port of Kitimat, B.C.  (Consult the Canadian LNG Import and Export Projects Update for more information on the status of Canadian projects).

Despite the current economic downturn, 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.

Illustration of the LNG Supply Chain. Interconnected elements include the gas field, liquefaction plant, LNG storage tank, LNG tanker, LNG storage tank, vaporizers, and pipeline systems.

In LNG exporting countries, natural gas is extracted from basins and transported by pipeline to liquefaction plants. There, the natural gas is liquefied and stored.

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, re-gasified 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. Russia and Qatar).

Liquefying natural gas and shipping it overseas provides an opportunity for these regions to economically develop their natural gas reserves.

18 countries currently produce and ship LNG:

  • Algeria
  • Australia
  • Brunei
  • Egypt
  • Equatorial Guinea
  • Indonesia
  • Libya
  • Malaysia
  • Nigeria
  • Norway
  • Oman
  • Peru
  • Qatar
  • Russia
  • Trinidad and Tobago
  • United Arab Emirates
  • The United States*
  • Yemen

* Since the 1970s, small quantities of LNG have been produced in Alaska by Kenai LNG (located in Cook Inlet) for export to Japan

Where is LNG Delivered?

At present, 19 countries import LNG:

  • Argentina
  • Belgium
  • Canada
  • China
  • Dominican Republic
  • France
  • Greece
  • India
  • Italy
  • Japan
  • Mexico
  • Portugal
  • Puerto Rico
  • South Korea
  • Spain
  • Taiwan
  • Turkey
  • The U.K.
  • The United States

In general, the countries listed above import LNG for one of two reasons:

1) Domestic supplies of natural gas are not readily available, or
2) Demand for natural gas exceeds what can be produced domestically.

Canadian LNG Import and Export Projects Update

For up to date information on the status of Canadian LNG import and export projects, please consult the Canadian LNG Import and Export Projects Update

Reports

The reports below provide additional information on LNG.

Liquefied Natural Gas: Properties and Reliability