Electrification and the Rise of Liquefied Natural Gas – Part One of Four
Liquefied Natural Gas (LNG) was first patented a hundred years ago this year, and has seen accelerated adoption in recent years. Global energy use is expected to grow by 56% from 2010 -2040, with half this increase attributed to China and India. Both of those countries have an immense geographic footprint, large populations and limited pipeline infrastructure. As gas’ importance in fulfilling global energy needs grows, so too will the need for LNG transport to reach far-flung requirements in these markets and beyond. China and India alone are expected to have the top growth rates for LNG imports through to 2030. In this context, it’s widely expected that offshore gas will catch up to offshore oil in importance, in terms of meeting the world’s energy demands in the years ahead.
LNG imports doubled between 2000 & 2012, and the last decade also saw a compounded 10% annual growth rate for LNG—a level of demand that surpasses almost any other product transported by sea, according to the FT. Indeed, this growth is hampered by substantial capacity constraints. There aren’t as many vessels as are needed to meet the fast-growing global demands for LNG, with 96 vessels on order last year – representing a 25% growth to the global fleet of around 370 vessels, with hundreds more orders expected to be placed through to 2022. Annual demand for carrier vessels is set to grow 60% from 2016-2022 compared to 2013-2015.
Another major contributor to the rise of LNG is the increasing scarcity of natural resources, which is forcing innovation in the types of resource exploitation oil and gas firms undertake around the world. Where historically gas deposits might have been left untapped if they were too difficult to extract, a variety of modern technologies, from shale gas extraction to floating production and storage and offloading (FPSO) vessels, have changed the parameters and economics for LNG. Qatar and Australia are leading the charge in boosting their exports of LNG.
Historically the process of liquefying natural gas, involving chilling the gas to -162 degrees Celsius and keeping it cold and under pressure and refrigeration through transport, was relatively expensive compared with other modes of fossil fuel extraction and transport. However, a few key developments in recent years have transformed the potential here, which I’ll explore in this series in more detail, in the forms of small-scale LNG, floating LNG (FLNG) and electric drive train LNG (ELNG) production.
The overriding change, however, is that of electrification. Throughout the production, extraction, storage and transport of LNG, the gas-powered mechanical drives that used to support the process of liquefaction or regasification are fast being superseded by electrical drives. These are smaller, more efficient, require less maintenance, have a smaller impact on the environment. They can also be deployed in new and more flexible contexts, such as aboard FPSOs (FLNG) and throughout pipelines in small-scale LNG deployments. In the past, deploying this kind of electrical infrastructure was technically challenging but the last few decades of innovation have seen electrification drive efficiency gains compared to mechanical systems, reduce physical footprints and diminish environmental impact.
I’ll explore the impact of electrification in FLNG, small-scale LNG and ELNG contexts in my upcoming posts. I believe the change electrification is driving in LNG is dramatic – and would be interested in your views in the comments.