About LNG


August 2014


Introduction

Liquefied natural gas (LNG) is natural gas (primarily methane) that has been liquefied by reducing its temperature to minus 260 degrees Fahrenheit. It can be compressed, stored and transported over long distances by ship; and then stored on land in specially-designed storage facilities. The liquefied gas can then be reheated, converted to vapor, and injected into a pipeline system, for distribution throughout a gas system. It can also be transported to local utility storage tanks via truck.

LNG has traditionally been used for supplemental supplies, particularly for winter peak periods. It is also important in particular areas (like parts of New England) to help maintain system pressures at different points of the regional natural gas system. It is a fuel with multiple applications, from powering electric power plants to fueling heavy-duty trucks and water ferries, among other applications.

LNG can help meet demand for natural gas, and provide supply flexibility to the natural gas and energy marketplace.

LNG has an excellent safety record in all its facets - shipping, trucking and storage. The Northeast Gas Association (NGA) runs an annual program with the Massachusetts Firefighting Academy on LNG. The school has been in operation over 25 years, training personnel from utilities, pipelines, and local fire departments.

Use of LNG in the Northeast

LNG remains a significant fuel for New England - providing 30% of daily peak supply in the winter for several local gas utilities. LNG provides about 10% of New England's total annual gas supply.

There is no underground storage located in New England (geologic unsuitability.) LNG is thus an important part of the region's supply and deliverability network.

There are liquefaction and satellite storage tanks in localities in the region that are owned and operated by the local distribution companies (LDCs).

In 2013, according to NGA, the LNG storage capacity in New England among the local distribution companies (LDCs) was 16 Bcf (which does not include the storage at the Distrigas terminal). Vaporization capacity for daily sendout was approximately 1.4 Bcf/day; and liquefaction capability by the LDCs was 51,000 MMBtu/day.

LNG is also part of the utility supply portfolios in New Jersey and downstate New York.

LNG in New York is obtained by liquefaction of pipeline gas. Two LDCs maintain LNG peak-shaving plants. The facilities provide service area system reliability as well as assist in meeting Peak Day Requirements. These facilities have storage capacity of approximately 3.2 Bcf, liquefaction capability of 16,800 Mcf/day, and a vaporization rate of approximately 26,100 Mcf/hr.

LNG ship in Boston Harbor (photo: Distrigas)


LNG is also utilized by several LDCs in New Jersey, with total state storage capacity of about 4 Bcf.

Imports in the region (and in the U.S.) have been on the decline in recent years as U.S. domestic natural gas production has been on the increase. With its more limited pipeline infrastructure, the Northeast and especially New England, however, remain markets for LNG. The import terminals near Boston and in New Brunswick are well-positioned to respond quickly and reliably to increases in natural gas demand when LNG supply is available. Recent gas price spikes during high demand periods have been at levels competitive with worldwide market prices for LNG, so the Northeast U.S. / Maritimes Canada market has again become attractive to LNG suppliers during the peak-demand winter months.

LNG Imports into New England in 2013

According to data from the U.S. Department of Energy, Office of Natural Gas Import and Export Activities, 63.9 Bcf of LNG was imported by Distrigas in 2013, compared to 86.6 Bcf in 2012. The Distrigas imports represented 66% of all U.S. LNG imports in 2013 (which were 96 Bcf, down from 175 Bcf in 2012) As in the U.S., New England LNG imports reached their highest level in recent years in 2007 and have been declining since.

Neither Northeast Gateway nor Neptune have imported any cargoes since 2010, reflecting the changing U.S. supply environment-with the rise of domestic shale gas and the low domestic price in the U.S.

New England also receives valuable supplies from the Canaport LNG facility in Saint John, New Brunswick. The facility is located about 60 miles from the Maine border. Canaport is a joint enterprise of Repsol and Irving Oil. In 2013 it exported approximately 36 Bcf to the U.S. Northeast.

How does the LNG process work?
Click here to view You Tube video
prepared by GDF SUEZ on its Distrigas facility.


Import Facilities in New England



There are three import facilities in New England: the Distrigas facility in Everett, MA; the Northeast Gateway facility offshore Cape Ann, MA; and the Neptune facility offshore Cape Ann, MA.

Distrigas is a subsidiary of GDF SUEZ. Its Everett, MA facility has been in operation since 1971. It has storage of 3.4 billion cubic feet (Bcf). The terminal's maximum installed vaporization capacity is about one billion cubic feet per day; on a sustainable basis, the vaporization capacity is approximately 700 million cubic feet per day. Distrigas also has sendout capability of 100,000 MMBtu/day by truck, which supports local storage refills for local gas utilities throughout the region. The terminal is directly connected to the interstate pipeline network and to National Grid's local distribution system in the Boston area. In 2003, a nearby power plant with two units, with total nameplate capacity of about 1,500 megawatts, entered service, fueled by LNG from the Distrigas facility. Distrigas has received over 1,000 cargoes.

The Northeast Gateway facility is owned and operated by Excelerate Energy. The facility began commercial operations in May 2008. Operating approximately 18 miles east of Boston in Massachusetts Bay, the offshore LNG facility is capable of injecting vaporized natural gas into the existing offshore HubLine natural gas pipeline system operated by Spectra Energy. Excelerate Energy and Spectra Energy teamed up to extend a 16-mile, 24-inch pipeline lateral from Spectra Energy's HubLine to the Deepwater Port. It imported several cargoes from 2008 to 2010 but none since, as the market has shifted in light of the rise in U.S. domestic shale gas production, including the Marcellus Shale.

Canaport facility, New Brunswick, Canada
(photo: Repsol)


The Neptune LNG facility is owned and operated by GDF SUEZ, which also operates Distrigas. The facility is located approximately 10 miles off the coast of Gloucester, Massachusetts. The Neptune port consists of a buoy system where LNG vessels will moor and discharge natural gas by using onboard vaporization equipment. The natural gas can be transported via a 13-mile-long sub-sea pipeline lateral connecting to the existing Spectra Energy pipeline system's HubLineSM, which can then deliver the natural gas to consumers in Massachusetts and throughout New England. It is capable of injecting about 0.4 Bcf per day of gas into the pipeline system from a special regasification system on-board its delivery vessels. It has not been active, again reflecting the change in the U.S. gas supply base.

E. Canada Import Facility

In June 2009, the Canaport LNG terminal in Saint John, New Brunswick, Canada began operations. It was developed by Repsol and Irving Oil. It has 3 storage tanks; each tank can hold 3.3 Bcf. It is capable of moving on average over 700 million cubic feet per day into the Brunswick Pipeline and then the Maritimes & Northeast Pipeline for delivery into Maine and New England. Its markets are in the Maritimes, New England and the Northeast. Since its inception, it has delivered over 300 Bcf into the market.

Potential for U.S. Export of LNG

There is currently one LNG export terminal in the U.S., located in Alaska; its principal export market is Japan.

With the strong rise in U.S. domestic production, there is now a major trend to develop LNG export facilities in the U.S., in many cases reversing the flow of existing import facilities. Numerous companies have filed with the federal government for export licenses. The U.S. government is projecting that the U.S. will become a net exporter of LNG by 2016. Canada is also considering export facilities in British Columbia.

The U.S. Department of Energy maintains a list of export facility project applications; the list is posted online (http://energy.gov/fe/downloads/summary-lng-export-applications-lower-48-states).

Portable LNG (and CNG)

A relatively new development is the introduction of portable or mobile LNG and CNG (compressed natural gas) to bring natural gas to industries and businesses not located near a pipeline system or within a distribution service area. With the dramatic price difference between natural gas and oil, some areas and businesses in northern New England, for instance, are opting for gas (LNG or CNG) delivered by truck to meet energy needs at a more competitive price. The gas is transported via a trailer that also can serve to offload the gas into the facility. This is currently being utilized to serve paper mills, farms and other entities.

LNG for Transportation

The price difference between natural gas and oil/diesel is also leading many companies with vehicle fleets to consider CNG and also LNG as a transport fuel. LNG is of greatest interest for heavy-duty trucks that travel long distances. In the U.S. and Canada, development is underway of LNG fueling stations along highways to serve the trucking sector. In Canada for example, Gaz Métro has introduced the "Blue Highway" concept, adding LNG fueling infrastructure from Québec City to Toronto. In late 2010, a company called Enviro Express built the first LNG fueling station in the Eastern U.S. in Bridgeport, CT. Distrigas has added LNG fueling at its Everett facility, and some fleets in the region are now converting their trucks to run on LNG.

In 2012, ANGA released a major study on LNG as a transportation fuel. It notes: "LNG has higher energy density than CNG and thus offers significant potential in NGV market segments where long vehicle ranges are required. Because LNG must be stored at extremely low temperatures, the tanks required to maintain these temperatures on vehicles are large. As such, LNG is most appropriate for heavy-duty vehicles, which can accommodate the volume needed for LNG storage."

LNG is also suitable for fueling of marine transport-such as water ferries-and rail.

Value of LNG

In a January 2003 report, the U.S. Energy Information Administration (EIA) noted, among other points:
  • "[I]n New England and the coastal areas of the Middle Atlantic states, where underground storage is lacking, LNG is a critical part of the region's supply during cold snaps."
  • "LNG facilities throughout the world generally have had an excellent safety record."
  • "These developments include lower liquefaction costs as well as lower shipping costs. LNG storage facilities will also continue to be important in meeting peak demand needs of local utilities and as a way to store gas until needed."


The Significance of LNG to the Northeast

LNG not only provides valuable supply diversity, but also can help to mitigate volatility in commodity prices.

LNG Terminals in Northeastern North America

A map of the operating facilities is shown here.

For Further Information

GDF SUEZ LNG NA / Distrigas of Massachusetts

Repsol Energy North America

LNG/LP Firefighting & Safety Training - NGA and Mass. Fire Academy

U.S. Dept. of Energy / Fossil Energy