Oil and gas are some of the widely used commodities in the world today. Every commodity that is produced needs to be transported or moved to the final consumers. That is why the aspect of logistics or transport is critical to the entire natural gas value chain. This begs the question; how does LNG get transported worldwide?
I would like you to think of the various commodities you know. Each one of them requires transport to move it from the point of production, to the point where you can access it easily.
When it comes to oil or gas, you will need to have the commodity at your nearest gas station. To make this work for you, it means the LNG producers or trading companies have transported it to where you can use it.
This article is going to help you understand how LNG is transported and the kind of vessels used to move it across the globe.
However, you should start by knowing what LNG is and what it is all about.
What is LNG (Liquefied Natural Gas)?
Liquefied Natural Gas, or LNG is natural gas that has been cooled down into liquid form to make it easy for transportation purposes.
LNG is therefore natural gas in liquid form.
How Does LNG Get Transported Worldwide?
When it comes to the transportation of LNG across the world, it is done in three main ways;
- Ships or Sea Vessels
LNG gas is transported through ships or vessels worldwide in its liquid form, to make it easier to move it from one point to another.
The trade of the liquefied natural gas is completed by signing a sale and purchase agreement between a supplier and a receiving terminal.
It also involves the signing of a gas-sale agreement between a receiving terminal and the end users.
LNG Transportation Industry Overview
The market for LNG has exploded in the last few years as countries, in particular China, look to reduce their reliance on coal.
Technological developments have also enabled the United States to unlock cheap, abundant shale gas supplies.
Starting from scratch, the United States has become the world’s fourth-largest exporter of LNG in three years.
How Can LNG be transported?
I have listed for you ways in which LNG is transported worldwide. The main ways include use of pipelines, trucks and vessels or ships.
Transporting LNG using Pipelines
This is one of the methods of transporting natural gas. It is good to note that LNG flows efficiently through pipelines.
Most LNG pipeline infrastructure takes the LNG between liquefaction facilities and storage facilities, from storage facilities to tankers, and from tankers to re-gasification facilities.
LNG is much denser than compressed natural gas (CNG). This means that much higher amounts of gas are able to be transported for the same volume flow. The downside is that LNG pipelines are difficult and costly to construct.
As LNG requires a temperature of -160°C (-260°F) to remain in its liquid form, significant insulation must be incorporated into LNG pipelines in order to maintain this low temperature and ensure no re-gasification occurs. This normally includes a combination of mechanical insulation, for example glass foam and a vacuum layer.
This complex insulation system makes LNG pipelines significantly more difficult and expensive to manufacture than standard natural gas pipelines.
Is it difficult to transport natural gas through pipelines?
The transport of natural gas is difficult through pipelines because the friction in the pipeline causes the gas to heat up.
Thus, due to safety concerns, it is not transported through pipelines over long distances.
LNG Ships or Vessels
The majority of worldwide LNG exports take place at an intercontinental level, meaning that shipping LNG across the ocean is often required.
This is done with the use of an LNG vessel or LNG ship, which transports large quantities of LNG between export and import terminals.
Several types of LNG vessels exist in the industry today, with the main one being referred to as an LNG tanker.
Can LNG be transported by Trucks?
As you have seen above, trucking is one of the ways used to transport LNG. Therefore, YES is the simple answer to your question.
However, this can only be over short distances, and not trans-continental. For that, LNG sea vessels are the best option.
Bulk commodity transportation of LNG and LPG typically occurs in the U.S. via truck for both materials, but only LPG has a history of large-scale transport by rail.
A truck can carry about 9,300 gallons of LNG.
Big Money in LNG Transportation
In the booming market for super cooled natural gas, the most precious commodity is the ship.
A global quest for cleaner energy has fired up demand for liquefied natural gas (LNG), which produces less carbon dioxide than coal.
But an abundance of supply has helped keep prices subdued, meaning the most profitable trade is in renting out vessels to transport it.
Reflecting the white-hot demand for ships, over a dozen different companies, including energy majors BP and ExxonMobil, trading house Trafigura and gas utility Centrica are now chartering LNG boats.
Energy firms are trying to avoid getting stuck without ships on charter for the winter seasons, when cold weather typically drives up trade in LNG and, consequently, transport costs.
They also want to profit off less nimble rivals.
Last winter, spot charter rates, the cost of renting a ship to transport LNG in real-time, soared to almost $200,000 per day in November compared to around $40,000 in May, squeezing those companies which had left it too late to secure vessels cheaply.
Currently, spot rates are around $40,000 per day while rates for charters covering next winter are between $70,000-$80,000 a day.
Energy groups including Shell, BP, China National Offshore Oil Corp (CNOOC), Cheniere and Gazprom, utilities Naturgy and Centrica and trading firms such as Gunvor and Trafigura are renting vessels for months or years and sub-letting some of them to competitors.
The market for LNG freight trade is relatively new and many companies are reluctant to talk about trading strategies, which are still being developed.
Upcoming LNG Projects.
There are a number of upcoming liquefied natural gas projects across the world.
Related: 17 Upcoming LNG Projects and Terminals
Some are near completion; others in development stage and a number are waiting for the final investment decision to be taken.
You should know where they are located as this will determine how the natural gas produced will be transported.
In the meantime, you can watch this YouTube video for more details;
What is the difference between LNG and LPG?
The major difference between LPG and LNG is that; LPG is stored, shipped and transported in tanks or cylinders.
On the other hand, LNG is stored and shipped in purpose built cryogenic tanks.
In conclusion, transportation of LNG across the world is very important. It is the way you take this great product to the market.
The cost of LNG transportation is a key factor to the final consumer prices you get as an end-user.
In some places, it is easier to transport LNG through trucks. In other areas, it is easier to use pipelines and vessels or ships. A company will choose the option that is most efficient and cost-effective.
As companies continue to explore and discover natural gas, thinking about markets is important. In this regard, the mode of transporting the LNG to the markets is always something they think about.
It is important to ensure there is an easy and cost-effective way to take the LNG to the market. Getting the product to the consumers is paramount to the success of the gas trading business.
Would you want to learn how commodity trading works? If yes, then check out this resource on how you can start commodity trading as a beginner.