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LNG Transportation and Storage: Economic Feasibility and Government Policy Overview

Learn about LNG transportation and storage, including challenges, economic feasibility, and government policy. Discover the process, costs, and benefits of LNG in meeting natural gas demand. Understand the importance of supplier reliability and regulatory support in the industry.

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LNG Transportation and Storage: Economic Feasibility and Government Policy Overview

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  1. LNG Transportation and Storage William Guo 10/11/2005

  2. Overview • Introduction • Background • Challenges • Economic Feasibility • Government Policy • Conclusion

  3. Introduction • Increasing natural gas demand and cost • Source for reliable, affordable energy • Relatively mature technology • Cooling natural gas to -260° F, changes it from a vapor into a liquid • Reduces the space natural gas occupies by more than 600 times, making it a practical size for storage and transportation

  4. Background • Special designed LNG tankers with double hulls • Ships unload LNG at specially designed terminals where the LNG is pumped to insulated storage tanks • Converted back to gas at the terminal, which is connected to natural gas pipelines • LNG is stored in double-walled, insulated tanks

  5. LNG Tanker

  6. LNG Terminal

  7. LNG Tank

  8. Challenges • High initial cost ($5 Billion +) • Lack of existing facilities and domestic markets • Supplier reliability • Transportation security

  9. Producers & Markets

  10. Economic Feasibility • Costs (Two 3 trains facility, 6,500 miles distance, 10 TCF reserve for 20 years) • Source gas: $1.3 Billion • Liquefaction: $1.4 Billion • Transportation: $1.8 Billion • Re-gasification: $0.5 Billion • Feasible with >3,000 mile distance and $5/MSCF outlet gas price

  11. Government Policy • Confirmed supports from federal, state, and local level • FERC’s policy (2002) intends to remove economic and regulatory barriers to the development of onshore LNG import terminals

  12. Conclusion • In transition stage • High potential due to increasing gas demand • Largest risk is supplier stability • Currently only feasible with long transporting distance

  13. Questions?

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