In the first quarter of 2019, Europe became the principal destination for US liquefied natural gas (LNG) shipments, resurrecting an old question: Can US LNG compete with Russian gas in Europe? This dispute, in turn, is based on assumptions about the expense of transporting US LNG to Europe, a topic where the typical reader is certain to come across wildly contradicting stories. What do we know about these figures, and what can we deduce from the actual facts on LNG exports from the United States to Europe?
At least in basic terms, the value chain for US LNG exports is well understood. Gas is purchased from the grid at a price that resembles Henry Hub. That gas is transferred to an export facility, where it is liquefieda service for which Cheniere Energy initially charged a 15% markup, resulting in a reference number that is used in subsequent analysis. Cheniere’s publicly announced figures for liquefaction fees ranged from $2.25 to $3.50 per million British thermal units (MMBtu), while newer contracts are thought to be around $2/MMBtu. Short-term charter rates are volatile, but long-term charter rates are steady. Shipping costs vary by destination and market conditions. However, the cost of shipping US LNG to Europe falls within a small range.
However, actual data reveals significantly more variety. The graph below is a little jumbled, but that’s kind of the point. Each diamond is a cargo travelling to a set of European markets on the export side. On the import side, there is a single country and the price it paid each month for all of the LNG it purchased from the United States (so each circle might include more than one cargo). The range of pricing for a particular month among cargoes (for exports) or between nations is shown by the variance along the y-axis (for imports).
Why is there so much variety? This is partly due to the fact that our stylised expenses are simply that: stylized averages. There are also some differences in reporting, such as whether fixed fees for liquefaction should be included in exported prices. However, there is a significant distinction between costs and pricesand between different prices. Gas pricing are still fragmented and (relatively) opaque, and the actual statistics on supplied US LNG to Europe reflects this. As a result, all grand pronouncements about how much Europe pays for US LNG should be taken with a grain of saltand, ideally, backed up by actual statistics.
What is the cost of converting natural gas to LNG?
The expenses of producing and delivering LNG can be broken down into the several components that make up the supply chain.
- Facilities for gas production. Given the high cost of liquefaction and shipping LNG, having a low-cost feed gas is critical for producing LNG competitively. The cost of producing gas ranges from $0.25 per million Btu to more than $1.0 per million Btu. To make the LNG alternative commercially viable, the production cost must be less than US $1.0/million Btu.
- Storage and export facilities are available at this baseload liquefaction plant. Projects involving LNG are inherently capital expensive. The liquefaction facility is the most expensive part of the LNG chain, accounting for around half of the entire cost. The average capital cost breakdown of a grassroots LNG liquefaction facility is shown in Figure 2. The capital cost of liquefaction plants is determined by a number of criteria, including the plant’s location, size, site characteristics, and feed gas quality. The cost of the liquefaction facility contributes between $1.5 and $2.0 per million Btu to the cost of LNG delivery. The cost of a liquefaction plant is a substantial component of the LNG chain’s cost; thus, liquefaction facility cost reduction is a critical problem. Liquefaction processes have well-developed thermodynamics. As a result, refinement of equipment to better service (make more efficient) the liquefaction process and/or support infrastructure will lead to future advancements and cost savings in this business (utilities). Several articles discuss liquefaction plant cost savings.
- Ships that deliver LNG (transportation). A LNG project’s tanker fleet accounts for a large share of the entire cost of the LNG chain. The distance between the liquefaction facility and the market determines the number of ships and, as a result, the cost of shipping. The cost of shipping typically contributes around $0.5 to $1.2/million Btu to the cost of supplied LNG.
- Storage and regasification facilities are available at the import terminal. The cost of receiving terminals, which include tanks, vaporization equipment, and utilities, adds about $0.3 to $0.4 per million Btu to the delivered price of LNG. These expenses are greatly influenced by design techniques (particularly the design of storage tanks) and site factors.
Is it possible to liquefy natural gas?
Natural gas is carried as liquefied natural gas on specially built ships (LNG). LNG is natural gas that has been cooled to -260F, the temperature at which it turns into a liquid. The liquid’s volume is 600 times that of the gaseous version.
Is LNG a good investment?
Adaptable energy solutions are required in the twenty-first century to meet not just the economic needs of energy firms and their consumers, but also to safeguard the environment in the face of climate change and pollution. The solution is liquefied natural gas (LNG). LNG is the future’s fuel, and that future has finally here.
You’ve probably heard a lot about LNG and its incredible potential as a cost-effective and environmentally friendly fuel source for your business. LNG is the cleanest-burning fossil fuel with several environmental benefits, offering operators a sensible, safe, and cost-effective option to comply with laws. California, for example, has some of the harshest environmental and labor restrictions in the country.
LNG is a transparent, odorless, and colorless liquid made from natural gas that has been chilled to minus 259 degrees Fahrenheit. The natural gas is liquefied by cooling it below its boiling point, removing constituents such as most hydrocarbons, water, carbon dioxide, nitrogen, oxygen, and some sulfur compounds. Only trace amounts of other hydrocarbons are present in the leftover liquefied natural gas.
Increased usage of LNG, as the cleanest-burning fossil fuel, can considerably improve local air quality while also lowering carbon dioxide (CO2) emissions. LNG emits 45-50 percent less CO2 than coal and 30% less CO2 than fuel oil, cuts nitrogen oxide emissions considerably, creates no soot, dust, or odors, and produces negligible levels of sulfur dioxide, mercury, and other particles when compared to other fuels.
Indeed, energy-related carbon emissions fell to an 18-year low in 2012, mainly to greater use of natural gas. According to a 2015 analysis by Pace Global, if five major industrialized countriesGermany, Japan, South Korea, China, and Indiacontinue to use coal to generate power instead of LNG, their greenhouse gas emissions might rise by up to 194% above present levels. Consider the environmental benefits of more enterprises and countries switching to LNG that burns cleanly.
LNG is not only good for the environment, but it’s also a good investment for your company. The volume of LNG has been decreased to 1/600th that of its un-liquified state, making it easier to store and transport. LNG is also less than half the weight of water, making it not only lighter but also floatable, making it easier to skim off the top in the unlikely case of a leak or spill.
LNG is a versatile renewable energy source that may be added to your operation’s renewable energy mix. “Power generation based on natural gas gives the flexibility and greater dispatchability that complements renewable energy power generation,” the National Renewable Energy Laboratory stated. You may continue to produce electricity when wind or solar resources fluctuate by introducing LNG into your operation’s energy mix, providing crucial power when you need it while also lowering carbon dioxide emissions. As a result, LNG offers a cost-effective and adaptable solution for satisfying carbon emission criteria in even the most stringent jurisdictions.
Given the ever-changing political and economic situation in the country’s most populous states, Matrix NAC is uniquely qualified to assist you in realizing LNG’s enormous potential.
For example, in 2014, California Senate Bill 54 (SB 54) went into force, effectively prohibiting non-trades contractors from working on refinery projects. Our unionized workforce has the expertise and training that your business need, as well as what jurisdictions like California require. Matrix NAC has provided unionized professional personnel in the construction, maintenance, and repair services to energy and industrial industries across North America since 1986 as the direct-union hire part of Matrix Service Company.
LNG is the versatile, cheap, and environmentally responsible answer your organization need in a dynamic, ever-changing marketplace with sophisticated laws. Matrix NAC is the key to unlocking its full potential.
Is Liquefied Natural Gas (LNG) more expensive than natural gas?
LNG prices are often higher than CNG pricing since LNG has a more complicated production and shipping procedure.
What is the energy required to liquefy natural gas?
With theoretical calculations, it can be predicted that when LNG is regasified to an ambient temperature of 20 C, an important amount of the energy required for the liquefaction process might theoretically be recovered: this equates to 0.23 kWh per kg of LNG.
Is liquefied natural gas a renewable energy source?
Natural gas is a compelling alternative to petroleum because of its plentiful supply and low price. While it isn’t a renewable energy source like solar or wind, it could serve as a bridge to a more renewable energy future.
Natural gas is a liquid that has been converted from gas pumped from the Earth’s crust. When cooled to minus 260 degrees Fahrenheit (126.7 degrees Celsius), the gas transforms into a liquid that is easier to store. It can then be carried in a supertanker, similar to oil. That is now the simplest method of transporting natural gas over great distances. The gas is odorless and colorless, and it emits significantly fewer pollutants than petroleum when burned.
Natural gas liquefies at what temperature?
Liquefied Natural Gas is abbreviated as LNG. Natural gas condenses into a liquid when it is chilled to about -260F (-161.5C) at atmospheric pressure in a liquefaction facility. A volume of liquid equals around 1/600 of a volume of natural gas. To remove contaminants that might solidify at liquefaction temperatures, careful purification and dehydration are required.
LNG is almost entirely made up of methane. It floats on water because its weight is around 45 percent that of water. LNG is non-toxic, odorless, colorless, and non-corrosive. As a liquid, LNG will not burn.
When LNG vaporizes, it burns at a concentration of around 5% to 15% gas in the atmosphere. While LNG vapor (methane) is originally heavier than air, as it reaches a temperature of -160F (-106.7C), it becomes lighter than air and rises and disperses rather than settling near the ground. LNG is a vaporized form of natural gas that allows for efficient storage and transportation.
Is there any natural gas left?
The world’s proven reserves are equal to 52.3 times yearly consumption. This indicates there’s around 52 years of gas left in the tank (at current consumption levels and excluding unproven reserves).