Liquid options

Supply of gas is not going to get any easier anytime soon, so Liquefied Natural Gas looks set to remain the only alternative to pipelines for long distances and large volumes

Azfar Shaukat, Mott MacDonald's Oil and gas director, on the role of energy balance

(Article taken from our customer magazine, Momentum)

Natural gas is mostly pure methane which has been processed to remove impurities such as water and heavy hydrocarbons. When this gas is cooled to -163˚C it condenses into a liquid and will stay so at almost atmospheric pressure, as long as the temperature is maintained. This is Liquefied Natural Gas (LNG), which is transported by cryogenic sea vessels and road tankers and stored in specially designed tanks. LNG is about 1/600th the volume of natural gas at standard temperature and pressure, making it much more cost-efficient to transport over long distances where pipelines would be infeasible or uneconomic.

“There isn’t really any alternative to LNG,” says Azfar Shaukat, one of Mott MacDonald’s leading energy specialists, explaining LNG’s place in the energy balance. “You can’t build pipelines to everywhere, so you can’t connect the gas producing parts of the world to many markets in any other way than by LNG.”

“You can’t connect the gas producing parts of the world to many markets in any other way than by LNG.” Azfar Shaukat

Azfar Shaukat"The only issue is whether people are going to be willing to pay for the rising prices. In the developed world the prices we pay already reflect the higher purchase cost to the gas supplier but, in developing countries like China, it’s not possible to pass that cost through to the consumer. That’s a major impediment to developing LNG facilities and a core reason why many of the planned regasification terminals do not proceed.”

At the moment the only options are LNG or transnational pipelines but, according to Azfar, this is something that may change with the advent of Compressed Natural Gas (CNG) by ship. “Currently in development, CNG vessels offer a cheaper value chain as there is no liquefaction involved, ordinary cargo vessels can be used and regasification terminals are not needed. Also on the horizon is clean coal, which burns at a higher pressure, increasing combustion efficiency and reducing emissions,” explains Azfar.

Nonetheless, LNG has its share of advantages. “It’s long established in the supply chain with a perfect safety record,” says Azfar. “There’s already a lot of development out there, with larger production trains and lots of efficient carriers, so the unit costs all along the chain are falling. Furthermore, the concentration ratio with LNG, at 600/1, is higher than any other method of transporting gas.”

Supply of gas is not going to get any easier anytime soon, so LNG looks set to remain the only alternative to pipelines for long distances and large volumes. “Although gas prices are almost certainly going to continue rising, LNG provides a long term solution that is well established and contributes to low emissions,” concludes Azfar.