This blog discusses whether Liquefied Natural Gas is green
or gangrene. Natural gas is naturally a
gas not a liquid – duh! In order to liquefy
the gas for easier transportation to far off markets, it is cooled to very low
cryogenic temperatures and held within thermos type storage tanks. In the process of liquefying the gas
approximately 10% of the energy in the gas has to be used for the refrigeration. The ships that transport LNG use
approximately another 10% of the energy content of the gas to get the product
to market. Hence compared with natural
gas in a pipeline in the USA, LNG landed in Japan has 120% of the carbon
footprint.
Argonne National Labs states that the upstream production of
natural gas emits 6.995 kg of CO2 per million BTU LHV and the actual burning of
the gas emits 59.41 kg of CO2 per million BTU LHV. Gas is sold on higher heating value (HHV) not
lower heating value (LHV) and we use pounds in the USA. Performing the math we have emissions of
132.2 pounds of CO2 per million BTU HHV and 146.4 pounds of CO2 per million BTU
LHV for pipeline gas in the USA. In
Japan the LNG has emissions of 158.6 pounds of CO2 per million BTU HHV, and 175.7
pounds of CO2 per million BTU LHV.
The delivered price of natural gas at Henry Hub in the USA
is approximately $3 per million BTU HHV.
The delivered price of LNG with the same heating content at a port in
Japan is $12.40. The extra $9.40 per
million BTU accounts for the cost of liquefaction and the transportation of the
LNG to Japan. The Japanese and other LNG importers wish they
had shale deposits and production like the USA.
The LNG is expensive because of the complex supply chain but
it is greener than burning coal or fuel oil to generate electricity. The global trade of LNG is growing and many
new liquefaction facilities are being built in countries with gas
reserves. Australia and the US are
leading the charge to construct natural gas liquefaction facilities and there
is also a considerable amount of activity in the LNG sector in Africa. However the projects are now looking less
promising and certainly less profitable given that oil prices have dropped and
more competition has come to the LNG market.
Two years ago LNG landed in Japan was selling for $18 per million BTU.
A project at Curtiss Island in Queensland Australia has just
come on line that cost $20 billion to build with a capacity of 8.5 million
metric ton per year. This project will
hardly be profitable as the capital cost of the project far exceeded the
original budget. In fact many LNG
projects have seen massive cost overruns, and one project in Angola was poorly
designed and built it has failed to run and has to be rebuilt entirely. It is the poster child of how not to design
and build a LNG facility.
The owners of these and other LNG facilities probably wish
they had selected more competent contractors for the engineering, procurement ,
and construction (EPC) of the projects but they are stuck with massive
investments in locations where there is stranded gas. As the stranded gas is useless at it source,
the gas will be liquefied and transported to distant markets even if the
profitability of the project is not as high as expected. Several projects that are still in planning
will now probably not get built. One casualty
of the “glut” of LNG is a project in Lavaca Bay Texas, that was cancelled this
week.
From a green perspective the use of LNG is far greener than
fuel oil or coal, but from an owners’ perspective the word LNG may be gangrene
given the billions of greenbacks these projects have overrun and the many
billions of expected profit that will not materialize. Future LNG projects will get far better management
of the EPC contractors, and Chevron has promised its shareholders to do exactly
this after the Angola LNG debacle.
My early career was spent in LNG and cryogenics so there may
be a role for the green machine to help owners select and manage EPC
contractors to yield better project results.
I think LNG is green and I have always said the best method to generate electricity
that is fully dispatchable and affordable is using natural gas in a combined
cycle power station. Had Delaware and California not wasted money
on Bloom Boxes and had they built combined cycle natural gas power stations the
ratepayers in these states would be far happier and better served. It is quite amazing how much money was
wasted on mismanaged LNG projects and on Bloom Boxes. In the end just like Chevron, we hope that
public utilities commissions in Delaware and California also learn some lessons. God knows how hard I have tried to teach
them.
Lindsay - the fuel used in liquefaction depends on the process and the source of the power. For the Air Products technology with grid power fuel "loss" is below 5%. Same with shipping. It depends on how long the ships are at sea. Boil off is used for ship fuel. from Australia or the NA west coast it is 10 days or less and again around 5%.
ReplyDeleteBut the meaningful comparison is LNG-gas versus coal. And with much of the coal in Asia coming from Australia or Indonesia or the US then the minemouth to burnertip CO2 emissions are significant. And of course CO2 are not the only factors one should consider when looking at pollution. Coal fired generation causes significant emissions of small PM 2.5 and less particulates and many other nasty elements. There is no comparison LNG - gas is greener than spring asparagus!
cheers, Colin
Colin I included the carbon footprint of the electric power and also the carbon footprint for the ship's engine to get the load to Asia. I was comparing the co2 at the port in Japan to a use point on the pipeline in USA. Probably greater than an added 20%
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