Liquefied Natural Gas - Production

Production

The natural gas fed into the LNG plant will be treated to remove water, hydrogen sulfide, carbon dioxide and other components that will freeze (e.g., benzene) under the low temperatures needed for storage or be destructive to the liquefaction facility. LNG typically contains more than 90% methane. It also contains small amounts of ethane, propane, butane, some heavier alkanes, and Nitrogen. The purification process can be designed to give almost 100% methane. One of the risks of LNG is a rapid phase transition explosion (RPT), which occurs when cold LNG comes into contact with water.

The most important infrastructure needed for LNG production and transportation is an LNG plant consisting of one or more LNG trains, each of which is an independent unit for gas liquefaction. The largest LNG train now in operation is in Qatar. Until recently it was the Train 4 of Atlantic LNG in Trinidad and Tobago with a production capacity of 5.2 million metric ton per annum (mmtpa), followed by the SEGAS LNG plant in Egypt with a capacity of 5 mmtpa. The Qatargas II plant has a production capacity of 7.8 mmtpa for each of its two trains. LNG is loaded onto ships and delivered to a regasification terminal, where the LNG is allowed to expand and reconvert into gas. Regasification terminals are usually connected to a storage and pipeline distribution network to distribute natural gas to local distribution companies (LDCs) or independent power plants (IPPs).

Information for the following table is derived in part from publication by the U.S. Energy Information Administration.

Plant Name Location Country Startup Date Capacity (mmtpa) Corporation
Qatargas II Ras Laffan Qatar 2009 7.8
Arzew GL4Z Algeria 1964 0.90
Arzew GL1Z Algeria 1978
Arzew GL1Z Algeria 1997 7.9
Skikda GL1K Algeria 1972
Skikda GL1K Algeria 1981
Skikda GL1K Algeria 1999 6.0
Lumut 1 Brunei 1972 7.2
Bontang A-B Indonesia 1977
Bontang A-D Indonesia 1986
Bontang A-E Indonesia 1989
Bontang A-F Indonesia 1993
Bontang A-G Indonesia 1998
Bontang A-H Indonesia 1999 22.6
Point Fortin Trinidad and Tobago 1999 Atlantic LNG
Point Fortin Trinidad and Tobago 2003 9.9 Atlantic LNG
Damietta Egypt 2004 5.5 Segas LNG
Idku Egypt 2005 7.2
Bintulu MLNG 1 Malaysia 1983 7.6
Bintulu MLNG 2 Malaysia 1994 7.8
Bintulu MLNG 3 Malaysia 2003 3.4
Nigeria LNG Nigeria 1999 23.5
Northwest Shelf Venture Karratha Australia 2009 16.3
Withnell Bay Karratha Australia 1989
Withnell Bay Karratha Australia 1995 (7.7)
Sakhalin II Russia 2009 9.6.
Yemen LNG Balhaf Yemen 2008 6.7
Tangguh LNG Project Pappua Barat Indonesia 2009 6.7
Qatargas I Ras Laffan Qatar 1996 (4.0)
Qatargas I Ras Laffan Qatar 2005 10.0
Qatargas III Qatar 2010 7.8
Rasgas I and II Ras Laffan Qatar 1999 6.6
Qalhat Oman 2000 7.3
Das Island I United Arab Emirates 1977
Das Island I and II United Arab Emirates 1994 5.7
TOTAL WORLD 1990 50
TOTAL WORLD 2002 130
TOTAL WORLD 2007 160

As most LNG plants are located in "stranded" areas not served by pipelines and the costs of LNG treatment and transportation are huge, development was slow during the second half of the last century. The construction of an LNG plant costs at least $1.5 billion per 1 mmtpa capacity, a receiving terminal costs $1 billion per 1 bcf/day throughput capacity, and LNG vessels cost $200-300 million.

In the early 2000s, as more players invested, both in liquefaction and regasification, and with new technologies, the prices for construction of LNG plants, receiving terminals and vessels have fallen, making LNG a more competitive means of energy distribution, but increasing material costs and demand for construction contractors have driven up prices in the last few years. The standard price for a 125,000 cubic meter LNG vessel built in European and Japanese shipyards used to be USD 250 million. When Korean and Chinese shipyards entered the race, increased competition reduced profit margins and improved efficiency, costs were reduced by 60%. Costs in US dollar terms also declined due to the devaluation of the currencies of the world's largest shipbuilders, Japanese yen and Korean won. Since 2004, ship costs have increased due to a large number of orders which have increased demand for shipyard slots. The per-ton construction cost of an LNG liquefaction plant fell steadily from the 1970s through the 1990s. The cost reduced by approximately 35%. However, recently, due to materials costs, lack of skilled labor, shortage of professional engineers, designers, managers and other white-collar professionals, the cost of building liquefaction and regasification terminals has doubled.

Due to energy shortage concerns, many new LNG terminals are being contemplated in the United States. Concerns over the safety of such facilities has created extensive controversy in the regions where plans have been created to build such facilities. One such location is in the Long Island Sound between Connecticut and Long Island. Broadwater Energy, an effort of TransCanada Corp. and Shell, wishes to build an LNG terminal in the sound on the New York side. Local politicians including the Suffolk County Executive have raised questions about the terminal. In 2005, New York Senators Chuck Schumer and Hillary Clinton have both announced their opposition to the project. Several terminal proposals along the coast of Maine have also been met with high levels of resistance and questions.

The commercial development of LNG is a style called value chain, which means LNG suppliers first confirm sales to the downstream buyers and then sign 20–25 year contracts with strict terms and structures for gas pricing. Only when the customers are confirmed and the development of a greenfield project deemed economically feasible could the sponsors of an LNG project invest in their development and operation. Thus, the LNG liquefaction business has been regarded as a game of the rich, where only players with strong financial and political resources could get involved. Major international oil companies (IOCs) such as ExxonMobil, Royal Dutch Shell, BP, BG Group; Chevron, and national oil companies (NOCs) such as Pertamina, Petronas are active players.

Reflecting slowdown in the economy, the growth rate of eight infrastructure sectors in India slowed down to 2.2% in April 2012 because of poor performance of crude oil, natural gas, petroleum refinery products and fertilizers.

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