The ABC’s of LNG: A closer look at liquefied natural gas – The Globe and Mail


Liquefied natural gas is an increasingly important pillar of the global energy industry.

Long used to heat homes and power industry, natural gas is traditionally extracted from the ground and shipped through pipelines.

But in recent decades, some of the world’s largest energy companies started shipping gas between continents by feeding those pipelines into enormous export terminals. There, the natural gas is run through a production “train” that supercools the gas into a liquid one-600th the size of its gaseous volume – essentially, from a beach ball of gas to a Ping-Pong ball of liquid.


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Chart: A look at liquefied natural gas projects, supply and demand

It then becomes economical to ship that liquefied gas on specially built transport ships with huge domed tanks to energy-hungry countries willing to pay top dollar.

It is generally considered a cheaper, greener form of energy than oil. Global demand for LNG is predicted to nearly double between 2012 and 2030, Ernst & Young says.


Because of the huge cost of building facilities, LNG projects are usually the result of negotiations between oil and gas suppliers operating in resource-rich countries with sparse populations (such as Australia) and large purchasers in densely populated, relatively resource-poor countries (such as Japan).

In the Persian Gulf, Qatargas has helped Qatar become the world’s largest LNG exporter, while Malaysia’s Petronas has propelled the Southeast Asian state to No. 2 globally.

In Australia, the No. 3 global producer, firms such as Shell, ExxonMobil, Woodside, Santos, ConocoPhillips and others have signed contracts with energy companies in Asia: Japanese firms such as Kansai Electric and Tokyo Gas and large Chinese energy firms such as China National Offshore Oil Corp. (CNOOC) and China Petroleum & Chemical Corp. (Sinopec).


Current demand for liquefied gas is coming mainly from industrialized Asia: Japan, South Korea and Taiwan alone account for more than half of global demand, according to Ernst & Young. In Japan, in particular, opposition to nuclear power in the wake of the Fukushima disaster has spurred demand. But China’s interest in natural gas is also increasing because of efforts by the state to move its energy supply away from an overwhelming reliance on coal.

Australia, already an LNG powerhouse with multiple export terminals, is building out even more. But the biggest development is in the United States, where shale gas is reshaping the global energy industry. Because of the vast U.S. reserves, existing local expertise, and U.S. import facilities that can be turned into export hubs faster than new export facilities can be built in Canada or Australia, producers in the U.S. have a huge advantage over projects being built elsewhere.

via The ABC’s of LNG: A closer look at liquefied natural gas – The Globe and Mail.