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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
LNG facilities in the U.S.
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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LNG facilities in the U.S.
Baseload LNG regasificationterminals
The four marine LNG importterminals in the U.S. represent
base load LNG facilities.
Source: CMS
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LNG facilities in the U.S.
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.
Source: CHIV International
Source: CHIV International
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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Does The U.S. need more LNG?
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.
Does The U.S. need more LNG?
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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.
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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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