Increasing pressure on industry to use cleaner fuels, combined with a recent abundance of supply from the US, have made liquefied natural gas (LNG) a hotly contested commodity
LNG is created when natural gas is cooled at atmospheric pressure to -162°C, where it condenses to become liquid and its volume is reduced by about 600 times.
Advances in transportation technology have opened up the supply of LNG to new markets. “It’s exactly the same gas you get when you turn your cooker on,” says Jonathan Westby of Centrica. “Shrinking it makes it more economically viable to put on a ship and sail around the world.”
LNG generates 45% less carbon dioxide than coal, with significant reductions in nitrogen oxide and sulphur dioxide emissions. This is driving up demand in China, which is striving to meet new environmental standards.
The development of LNG storage introduced a reliability in the supply chain that was never thought possible. Large-scale cryogenic storage facilities allow LNG to be ‘regasified’ at a moment’s notice and fed into local pipelines.
Natural gas is said to have been discovered between 6000 and 2000 BC when lightning strikes ignited gas seeping from the ground. British scientist Michael Faraday first experimented with liquefaction in the 1820s.
In 2018, global LNG trade set a record for the fifth consecutive year, reaching 316.5 MT. An increase of 28.2 MT (+9.8% year-on-year) from 2017.
LNG may be less polluting than burning oil or coal, but it’s still a fossil fuel that contributes to carbon emissions. Methods of extracting gas from the earth also involve the process of fracking.
The use of LNG to power marine vessels has been boosted following a mandate by the IMO to replace high sulphur fuels with sulphur-free LNG. SEA/LNG chairman Peter Keller says: “From limited availability at select ports, LNG bunkering has grown to encompass 24 out of the world’s top 25 ports.”
What They Say
“Natural gas is becoming more widely appreciated; we are in a macro growth trend. It will be one of the main energy sources of the future.”
George Procopiou, chairman of Dynacom tankers management
“Even if the countries decide not to import [LNG], but have the terminals there, it changes the entire market balance vis-a-vis the Russians. It’s forced them to consider market rates.”
Frank Fannon, US assistant secretary of state for energy resources
“It’s been incredible that until now, this industry [LNG] has gotten away with being such a massive source of carbon dioxide, while barely being acknowledged.”
Piers Verstegen, director at conservation council of Western Australia
The availability of LNG has skyrocketed as the technology to store and transport natural gas has developed. Longtime suppliers like Australia and Qatar are now having to compete with an aggressive US market, which experienced a ‘shale revolution’ in the early 2000s and began shipping LNG overseas in 2016. This can be seen as a positive in helping to ensure the future security of the global energy supply, especially in Europe, which is heavily reliant on Russian pipeline gas. Although LNG is a cleaner energy source than coal or oil, its production process remains an emissions-intensive one. Still, it’s certain it will continue to be an essential part of the energy mix, combining with renewable energy (solar, wind power, biomass) to help countries around the world fall in line with ever-more stringent environmental regulations, without sacrificing economic growth.