Report from LNG 17: Three Trends to Watch in the LNG Industry
Last month, Houston hosted LNG 17, the largest global liquefied natural gas industry event of 2013. A record-breaking 5,000 delegates from more than 80 countries attended the conference and exhibition, including Andrew Rhodes and Shawn Modar of The Rhodes Group.
The LNG conference is held every three years, alternating between producer and consumer countries. This was the first year the conference was held in Houston and the first time the conference has been back to the U.S. since 1986 when it was held in Los Angeles.
Some of the key trends highlighted at the conference included:
1. LNG Exports
At LNG 16 held in Algeria in 2010, imports into the U.S. were the talk of the conference. Just 3 years later, producers in the U.S. are seeking to convert existing import terminals into export terminals.
The shift comes as a result of the glut created by the abundance of shale gas tapped by innovations in drilling techniques, namely horizontal drilling and hydraulic fracturing. Leading industrial analyst Daniel Yergin of IHS said in his keynote address that the “breakthrough on shale gas….would have major consequences not only for the North American gas market but for the global gas market.”
While Yergin identified demand, not supply, as the main constraint for the LNG industry, Chevron and Exxonmobil ranked project lead times and regulatory burdens among the biggest challenges for importing and exporting countries. In the U.S., approval to export LNG to countries with which the government does not have Free Trade Agreements – a hotly debated topic of late – is key. The largest importers of LNG, such as Japan, are non-FTA countries.
Currently 19 non-FTA export terminals are under review by the Federal Energy Regulatory Committee (FERC). Until very recently, only one export terminal, Cheniere’s Sabine Pass, had approval to export to non-FTA countries. On May 17, 2013, the DOE granted preliminary authorization to Freeport LNG Expansion L.P. to export LNG from its existing facility in Quintana Island, TX. The Freeport project still requires final regulatory approval, but the DOE’s preliminary decision bodes well for other projects. Meanwhile, construction at Sabine Pass is reported to be ahead of schedule. The facility is expected to begin exporting in late 2015.
2. Floating LNG (FLNG)
Just as innovations in drilling have helped bring gas from Shale to market, new advances in Floating LNG (FLNG) facilities are making “stranded” offshore gas fields –once considered too costly to develop – a viable option.
FLNG reduces the need for the extensive infrastructure typically associated with traditional LNG facilities, including long pipelines to shore and production platforms. With FLNG, the entire process is carried out at sea, where gas is produced, liquefied, stored and transferred before carriers ship it directly to markets. Executives from companies involved in FLNG projects discussed the benefits, challenges, and technologies involved in the design of their FLNG vessels.
Royal Dutch Shell is currently in line to complete the first FLNG facility off the shore of Australia. Shell laid the keel for Prelude earlier this month, a key milestone for the project.
3. LNG in Transportation
The boom in shale gas has also led to the growing use of LNG in transportation. With high oil prices and pressure to lower emissions, LNG is being touted as a cleaner, cheaper alternative for both land and maritime transport.
Over 200 LNG fueling stations are currently planned in the United States. Clean Energy Fuels is building 150 LNG fueling stations as part of America’s Natural Gas Highway, with more than 70 stations already in place. Shell and TravelCenters of America recently announced plans to construct at least two LNG fueling stations and storage facilities at up to 100 existing TA and Petro Shopping Centers along the U.S. interstate highway system. ENN, a Chinese company, and Blu LNG have plans for 50 LNG stations. Meanwhile, a similar initiative in Europe – the Blue Corridor – offers several LNG refueling possibilities for heavy vehicles.
Other sectors where LNG is making headway include maritime fuel, heavy off-road equipment (such as that used in mining and construction), and rail. Shell recently announced plans to build two small-scale liquefaction units to supply two new LNG transport corridors in the Great Lakes and Gulf Coast Regions. The units will supply LNG to commercial marine customers, as well on-road, industrial and rail.
About LNG 17
LNG 17 was held under the auspices of the International Gas Union (IGU), Gas Technology Institute (GTI) and International Institute of Refrigeration (IIR), and was hosted by the American Gas Association (AGA). LNG 18 will be held in Perth, Australia.
About The Rhodes Group
The Rhodes Group is a leading construction claims consulting firm with global reach and experience across all major industries. Our comprehensive services span the life of a project — from preconstruction through formal dispute resolution. Our experience includes multi-million and multi-billion dollar projects that range in function from professional sports stadiums to liquefied natural gas facilities.