The Changing Tides of LNG Export Regulations

Posted by PortVision

Most of the world's LNG trade originates in Qatar, Australia, Malaysia and Indonesia. Historically, the US has not been a significant exporter of LNG. That will soon change as the Federal Energy Regulatory Commission (FERC) begins to respond to the record output of natural gas in the US. Advances in technology related to natural gas, including hydraulic fracturing, have made the US the world's largest producer.

LNG-tanker

Energy companies are calling for the authorization to export LNG; the US government has begun (slowly) to approve these requests, allowing natural gas produced in the US to be exported. These authorizations, will aid US firms to enter the global market for LNG. Bloomberg reports that, worldwide, LNG trade will rise by 40 percent by 2019.

The Natural Gas Act of 1938 requires that authorization be granted from the Department of Energy for the export of liquid natural gas to a foreign country. Two types of authorizations are possible: Blanket authorization allows export for up to two years on a short-term or spot market basis. Long term authorization involves a signed contract for a period longer than two years.

In 2014, the Federal Energy Regulatory Commission (FERC) has received 14 proposals for new export terminals in the U.S. Gulf Coast, on the East Coast, and in the Pacific Northwest. As of September, 2014, the International Business Times reports that four of these have been approved so far.

At present, only one LNG export terminal operates in the United States. ConocoPhillips’ produces LNG at its Kenai LNG Terminal near Anchorage Alaska. In July, one project by Oregon LNG won a conditional permit to export 1.25 billion cubic feet of natural gas each day for 20 years.

The four LNG terminals that have received approvals include:

  • Cove Point LMG, MD. Dominion Resources Inc. plans to export 1.8 billion cubic feet of natural gas per day in their new $3.8 billion facility. It is expected to open in June, 2017.
  • Sabine Pass Liquefaction, LA. Cheniere Energy Inc. This $10 billion plant was the first to be approved by FERC outside of Alaska. It is currently under construction at a site next to an existing gas-import terminal. When it comes online late next year, it will export 2.8 billion cubic feet of LNG each day to customers in London, Barcelona, India and South Korea. An additional export facility is planned to be located near Corpus Christi TX which could be online in early 2017.
  • Cameron Liquefaction Project, LA. Cameron LNG (a subsidiary of San Diego's Sempra Energy) was authorized to begin construction of a $10 billion project in Hackberry, LA. Three LNG trains will be capable of liquefying and purifying natural gas for an export total of 1.7 billion cubic feet of LNG per day. This project could be operational by 2019.
  • Freeport Liquefaction & Export Project, TX. Freeport LNG Development LP received approval for their planned $11 billion project on Quintana Island, on the Texas Gulf Coast. It will be built next to an existing LNG import terminal. Completion of the project and shipments to Asian buyers could begin by 2019. ConocoPhillips is a major investor.

Liquid Natural Gas (LNG) is manufactured by cooling natural gas until it transforms into a clear liquid. This form of the fuel takes up 1/600th the volume of the gaseous state, saving space and cost for its transportation and storage. It is odorless, colorless, non-toxic and non-corrosive, but it is also highly flammable. An LNG plant is made up of trains, each of which carry out liquefaction and purification. Condensing the gas is accomplished by refrigeration to less than -161 degrees centigrade. In the liquid state, specially designed cryogenic marine vessels or road tankers are used for LNG transport.

LNG-Refinery-Factory

LNG marine transport has special safety, security, and logistics challenges. PortVision has supported this new movement towards US exports by providing AIS-based vessel movement studies and historical analysis of ship tracks and activities in affected regions and waterways. PortVision also provides real-time ship tracking for existing (and emerging) LNG export operations through a global network of satellite and terrestrial AIS receivers. You can learn more at www.portvision.com.

PortVision 360 AIS Vessel Tracking

Posted on Mar 10, 2015, 1:34:31 PM

Topics: Blog