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Demystifying LNG, From Source to Market | Part One

Liquefied natural gas (LNG) is a critical component of the energy mix in Europe, Asia, and much of the world.. Lauded as the world’s cleanest fossil fuel, LNG produces 30% less carbon dioxide than oil and 40% less than coal. In the US and in Europe, LNG is used in many residential and commercial contexts, including cooking, heating, and transportation. Famously, the US has extensive pipeline networks all across the country to transport liquefied natural gas, before it is heated and converted back to a gaseous state through a process known as regasification.

Demand for LNG is projected to rise, especially as it becomes a core energy source for European markets. In this first post in our two-part LNG blog, we’ll discuss the origins of LNG, how it’s brought to market, and the key players driving the LNG economy. Part two will discuss LNG’s diverse applications and the projects driving LNG market growth.

LNG’s Journey From Source to Market

In the US, natural gas is extracted from one of many reserves located across the country and transported via extensive pipeline networks to either end user facilities (such as gas-fired power plants) or to an export location, typically on the Gulf coast. From there, a process called liquefaction takes place to prepare the product for transport.Here are the steps involved in bringing this resource to market.

Extraction From Underground Reserves

US natural gas reserves are found most notably in shale, sandstone, carbonate, and other tight geological formations. Texas, Louisiana, Pennsylvania, Oklahoma, and West Virginia were the top LNG-producing states in 2021.

Natural gas reserves are first located through exploration activities, including geological surveys, seismic imaging, and test well drilling. Once a viable natural gas reserve is identified, production wells are drilled to extract the gas.

Before liquefaction, extracted natural gas often undergoes pretreatment to remove impurities such as water, sulfur compounds, and heavy Natural gas liquids (NGLs). These impurities can cause corrosion, reduce the efficiency of the liquefaction process, and affect the quality of the resulting LNG.

Conversion of Natural Gas to LNG Through the Liquefaction Process and LNG Infrastructure

Pretreated natural gas is cooled via compression to extremely low temperatures – about -260°F – to convert it into a liquid state. This is done through a liquefaction process, typically using one of two main approaches:

● The conventional method uses a refrigeration cycle with a series of heat exchangers to cool the gas. The gas is first compressed, then cooled using refrigerants, such as propane or ethylene. At this point, the gas transforms into a liquid and becomes LNG.

● Another emerging methodology is known as cryogenic, or mixed refrigerant, liquefaction. This uses a mixed refrigerant cycle to cool the gas, eliminating the need for separate refrigerants. This technology offers some advantages in terms of energy efficiency and lower capital costs.

As technology advances, digital infrastructures are also playing a growing role in optimizing and enhancing various aspects of LNG processing. These include:

● Data analytics and machine learning:With the vast amount of data generated during LNG processing, advanced data analytics and machine learning techniques can be applied to identify patterns, optimize processes, and predict equipment failures that can cause catastrophic releases. These technologies can help detect anomalies, optimize liquefaction and regasification processes, and support maintenance strategies to minimize downtime and process safety related incidents.

● Digital twins: A digital twin creates a data-driven virtual replica of the physical LNG plant or equipment. It integrates real-time data with simulation models, enabling operators to visualize, monitor, and analyze the plant's performance. Digital twins can be used for predictive maintenance, process optimization, and scenario testing to improve operational efficiency and reduce risks.

● Remote monitoring : Remote monitoring solutions enable the control of LNG plants from afar, allowing operators to access real-time data, monitor equipment, and make adjustments from remote locations. This capability enhances operational flexibility, reduces travel requirements for personnel, and improves overall operational efficiency. However, this capability comes with its own set of unique risks; one of them being control systems hackers. For this reason a robust cyber security system is essential.

Transportation of LNG

LNG is mostly transported using two methods: through insulated pipelines and on massive insulated ships called tankers. LNG is specifically designed for easy transportation over long distances, which is good news for global energy markets. In its liquid state, LNG occupies about 1/600th of the volume of natural gas in its gaseous state, making it highly efficient for transportation and storage. [1]

Most LNG flows from liquefaction facilities to storage facilities, storage facilities to tankers, and then from tankers to regasification facilities.

Storage and Regasification

LNG is typically stored in specially designed cryogenic tanks, which are heavily insulated to maintain the liquid’s extremely low temperature. LNG regasification facilities convert LNG back into its gaseous form, allowing for distribution and utilization. Common regasification technologies include submerged combustion vaporizers, ambient air vaporizers, and shell-and-tube heat exchangers.

Once regasified, the natural gas is typically metered, measured, and distributed through pipelines to end users, including power plants, residential areas, and commercial establishments. We’ll dive into the details of LNG use cases in the next blog post.

Key Players in the LNG Ecosystem

The US is soon to become the world’s largest LNG exporter , largely thanks to a recent boost in exports from the Sabine Pass and Freeport Facilities. However, other global powerhouses have long played a critical role in shaping the LNG market:

● Qatar holds significant natural gas reserves and has developed large-scale liquefaction facilities, mostly in its North Field .

● Australiais home to one of the world’s largest LNG projects: the Gorgon Project on Barrow Island. The country also boasts other large-scale LNG projects, located primarily in Western Australia and Queensland.

● Russia is among the world’s leading producers of natural gas. The country's major LNG producer is Novatek, which operates the Yamal LNG project in the Arctic region. Due to the war in Ukraine, much of Western Europe has cut back on Russian LNG supplies, fueling an increase in American exports.

● Iranhas the world’s second-largest natural gas reserves. Currently, the country is making plans to relaunch several LNG projects that were stymied due to sanctions (which are still in place). This move is in direct response to the situation in the Ukraine, as Europe scrambles to find other LNG suppliers.

● The African country of Equatorial Guinea also has a large LNG production facility. It is attempting to join the list of countries above who are the major players in today’s LNG export market.

Conclusion: LNG Has a Bright Future Ahead

LNG has emerged as a vital component of the global energy landscape, and its future outlook is broadly positive. Its versatility, relatively cleaner emissions, and ability to be transported over long distances make it an attractive option for energy-hungry countries. Moreover, advancements in the LNG sphere will continue as digital technologies are deployed to optimize LNG processing operations, improve maintenance strategies, and enhance decision-making. Check back for part two of this blog post to learn about the many applications of LNG, as well as some of the world,volume%20in%20its%20gaseous%20state.

About the Author

Bob Hooper is a senior industry consultant at Hexagon with a successful track record in the development and implementation of operational excellence, lean manufacturing and reliability programs within the oil and gas, chemicals and consumer products industries. His areas of expertise include program management and change management, and he specializes in helping customers understand the intricacies and applications of a variety of digital technologies.

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