What Is LNG and Where Does It Come From?
When natural gas is cooled to temperatures below minus 260° F it condenses
Into liquefied natural gas, or LNG. As a liquid, natural gas occupies only 1/600th the
Volume of its gaseous state, so it is stored more effectively in a limited space and is
More readily transported. A single tanker ship, for example, can carry huge
Quantities of LNG – enough to supply the daily energy needs of over 10 million
Homes. When LNG is warmed it “regasifies” and can be used for the same purposes
As conventional natural gas such as heating, cooking, and power generation.
In 2003, LNG imports to the United States originated primarily in Trinidad
(77%), Algeria (10%), and Nigeria (9%). Some shipments also came from Qatar,
Oman, and other countries.2 Malaysia, Brunei, Australia, Indonesia, and the United
Arab Emirates also export LNG, and may be significant U. S. suppliers in
In addition to importing LNG to the lower 48 states, the United States exports
Alaskan LNG to Japan.
Expectations for U. S. LNG Import Growth
The United States has used LNG commercially since the 1940s, but LNG
Imports have until recently been small because low domestic natural gas prices made
Imports uncompetitive. In 2002, for example, LNG imports accounted for only 1%
Of total U. S. gas consumption. Among several countries with limited domestic gas
Reserves, however, LNG imports are substantial. Japan, for one, imports 97% of its
Natural gas supply as LNG – several times as much LNG as the United States.
South Korea, France, Spain, and Taiwan are also large LNG importers.
Deliveries.” Latin Petroleum Analytics. Houston, TX. June 11, 2003.
Natural gas demand has accelerated in the U. S. over the last several years due
To environmental concerns about other energy sources, widespread building of natural
Gas-fired electricity generation, and low natural gas prices through the 1980s and
1990s. Domestic gas supplies have not kept up with this demand, however, so prices
Have recently become high and volatile. At the same time, international prices for
LNG have fallen substantially because of increased supplies and lower production
And transportation costs, making LNG more competitive with domestic natural gas.
In recent testimony before Congress, the Federal Reserve Chairman called for
A sharp increase in LNG imports to help avert a potential barrier to the U. S. economic
Recovery. According to the Chairman’s testimony: “… high gas prices projected in the
American distant futures market have made us a potential very large importer…
Access to world natural gas supplies will require a major expansion of LNG terminal
Import capacity.” If current natural gas trends continue, industry analysts predict
That LNG imports could increase to 20% of total U. S. gas supply by 2020.
Proposed LNG Import Terminals in the United States
LNG tankers unload their cargo at dedicated marine terminals which store and
Regasify the LNG for distribution to domestic markets. Onshore terminals consist of
Docks, LNG handling equipment, storage tanks, and interconnections to regional gas
Transmission pipelines and electric power plants. Offshore terminals regasify and
Pump the LNG directly into offshore natural gas pipelines or may store LNG in
Undersea salt caverns for later injection into offshore pipelines.
There are five active onshore LNG import terminals in the United States at
Everett, Massachusetts; Lake Charles, Louisiana; Cove Point, Maryland; Elba Island,