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Liquefied natural gas or '''LNG''' is Natural Gas that has been processed to remove impurities and heavy hydrocarbons and then Condensed into a Liquid at atmospheric pressure by cooling it to approximately -163 degrees Celsius. LNG is transported by specially designed vessels and stored in specially designed tanks. LNG is about 1/600th the volume of natural gas at Standard Temperature And Pressure (STP) , making it much more cost-efficient to transport over long distances where pipelines do not exist. Where moving natural gas by pipelines is not possible or economical, it can be transported by LNG vessels, where the most common tank types are membrane(prismatic) or Moss Rosenberg(spheres). BASIC FACTS ON LNG LNG offers an Energy Density comparable to Petrol and Diesel fuels and produces less pollution, but its relatively high cost of production and the need to store it in expensive cryogenic tanks have prevented its widespread use in commercial applications. Conditions required to condense natural gas depend on its precise composition, the market that it will be sold to and the process being used, but typically involve temperatures between -120 and -170 degrees Celsius (pure methane liquefies at -161.6 C) and pressures of between 101 and 6000 KPa (14.7 and 870 lbf/in²). High pressure natural gas that is condensed is then reduced in pressure for storage and shipping. The density of LNG is roughly 0.41 to 0.5 kg/L, depending on temperature, pressure and composition. In comparison Water has a density of 1.0 kg/L. LNG does not have a specific heat value as it is made from natural gas, which is a mixture of different gases. The heat value depends on the source of gas that is used and the process that is used to liquefy the gas. The Higher Heating Value of LNG is estimated to be 24MJ/L at -164 degrees Celsius. This corresonds to a Lower Heating Value of 21MJ/L. The natural gas fed into the LNG plant will be treated to remove Water , Hydrogen Sulfide , Carbon Dioxide and other components that will Freeze (e.g., Benzene ) under the low temperatures needed for storage or be destructive to the liquefaction facility. Purified LNG typically contains more than 90 % Methane . It also contains small amounts of Ethane , Propane , Butane and some heavier Alkanes . The purification process can be designed to give almost 100% methane. The most important infrastructure needed for LNG production and transportation is an LNG plant consisting of one or more LNG trains, each of which is an independent unit for gas liquefaction. The largest LNG train is the SEGAS Plant in Egypt with a capacity of 5mtpa Exxon Mobil operating Qatargas stage 2, of which one train has a production ability of 5 million ton per annum (mpta). Other facilities needed are load-out terminals for loading the LNG onto vehicles, LNG vessels for transportation, and a receiving terminal at the destination for discharge and regasification, where the LNG is reheated and turned into gas. Regasification terminals are usually connected to a storage and pipeline distribution network to distribute natural gas to local distribution companies (LDCs) or Independent Power Plants (IPPs). In 1964 the UK and France became the LNG buyers under the world’s first LNG trade from Algeria , witnessing a new era of energy. As most LNG plants are located in "stranded" areas not served by pipelines, the costs of LNG treatment and transportation were so huge that development was slow during the past half century. The construction of a LNG plant costs nearly USD 1-3 billion, a receiving terminal costs USD 0.5-1 billion, and LNG vessels cost USD 0.2-0.3 billion. Compared with the crude oil, the natural gas market is small but mature. The commercial development of LNG is a style called value chain, which means LNG suppliers first confirm the downstream buyers and then sign 20-25 year contracts with strict terms and structures for gas pricing. Only when the customers were confirmed and the development of a greenfield project deemed economically feasible could the sponsors of an LNG project invest in their development and operation. Thus, the LNG business has been regarded as a game of the rich, where only players with strong financial and political resources could get involved. Major International Oil Companies (IOCs) such as BP , ExxonMobil , Royal Dutch Shell ; and National Oil Companies (NOCs) such as Pertamina , Petronas were active players. Japan , South Korea and Taiwan imported large sums of LNG due to their shortage in energy. In 2002 Japan imported 54 million tons of LNG, representing 48% of the LNG trade around the world that year. Also in 2002, South Korea imported 17.7 million tons and Taiwan 5.33 million tons. These three major buyers purchase approximately 70% of the world's LNG demand. In recent years, as more players take part in investment both in downstream and upstream and new technologies are adopted, the price for construction of LNG plants, receiving terminals and vessels have fallen, making LNG a more competitive means of energy distribution. The standard price for a 125,000 cubic meter LNG vessel built in European and Japanese shipyards used to be USD 250 million. When Korean and Chinese shipyards entered the race, increased competition reduced profit margins and improved efficiency, reducing costs 60%. The per-ton construction cost of a LNG liquefaction plant fell steadily from the 1970s through 1990s, with the cost reduced to approximately 35%. Due to energy shortage concerns, many new LNG terminals are being contemplated in the United States. Concerns over the safety of such facilities has created extensive controversy in the regions where plans have been created to build such facilities. One such location is in the Long Island Sound between Connecticut and Long Island. Broadwater Energy, an effort between Trans Canada and Shell (A British-Dutch Corporation) wishes to build a LNG terminal in the sound on the New York side. Local politicans including the Suffolk County Executive have raised questions about the terminal. New York Senators Chuck Schumer and Hillary Clinton have both announced their opposition to the project. Trade in LNG LNG is shipped around the world in specially constructed Seagoing Vessels . The trade of LNG is completed by signing a Sale and Purchase Agreement (SPA) between a supplier and receiving terminal, and by signing a Gas Sale Agreement (GSA) between a receiving terminal and end-users. Most of the contract terms used to be DEX or Ex Ship , which meant the seller was responsible for the transportation. But with low shipbuilding costs, and the buyer preferring to ensure reliable and stable supply, there are more and more contract terms of FOB , under which the buyer is responsible for the transportation, which is realized by the buyer owning the vessel or signing a long term charter agreement with independent carriers. The agreements for LNG trade used to be long term portfolios that were relatively inflexible both in price and volume. If the annual contract quantity is confirmed, the buyer is obliged to take and pay for the product, or pay for even if not taken, which is called the obligation of Take Or Pay (TOP). In contrast to LNG imported to North America, whose price is pegged to Henry Hub , most of the LNG imported to Asia is pegged to crude oil prices by a formula consisting of indexation called Japan Crude Cocktail (JCC). The pricing structure that has been widely used in Asian LNG SPAs is as follows: PLNG = A+B×Pcrude oil, where A refers to a term that represents various non-oil factors, but usually a constant determined by negotiation at a level that can prevent LNG prices from falling below a certain level. It thus varies regardless of oil price fluctuation. Typical figures of ex-ship contracts range from USD 0.7 to 0.9. B is a degree of indexation to oil prices; typical figures are 0.1485 or 0.1558, and Pcrude oil usually denominated in JCC. PLNG and Pcrude oil stand for price of oil in USD per million British Thermal Unit (MMBTU (in the fuel industry, M stands for 1000 and MM for 1 000 000)). With the demand of LNG moving up and down, the price of LNG moves in a "S" curve. With new demand from China, India and US increasing dramatically, and crude oil price skyrocketing, the LNG price is on the rise too. In the mid 1990s LNG was a buyer's market. At the request of buyers, the SPAs began to adopt some flexibilities on volume and price. The buyers had more upward and downward flexibilities in TOP, and short term SPAs less than 15 years came into effect. At the same time, alternative destinations for cargo and arbitrage were also allowed. By the turn of the 21st century, the market was again in favor of sellers. Sellers now propose rigid SPAs and would like an association similar to OPEC to be established to protect their interests. It is certain that the competition between sellers and buyers will go on. Receiving terminals exist in several countries (see list of ''importing'' countries in table below; China is expected to move onto the list by 2006), allowing gas imports from other areas (see list of '''''exporting''''' countries in table below). The United States Department Of Energy's Energy Information Administration provides estimates of LNG trade in 2002 as follows: LNG SAFETY AND ACCIDENTS In its liquid state, LNG is not explosive. For an explosion to occur with LNG, it must first vaporize and then mix with air in the proper proportions (the Explosive Range is 5% to 15%), and then be ignited afterwards. Serious accidents involving LNG to date are listed below:
Seaborne LNG transport tankers (including their loading terminals) have not had a major accident in over 33,000 voyages since maritime inception in 1959 . There have, however, been several significant incidents with LNG ships, but with no spills. In addition to accidents, terrorism experts are concerned that intentional sabotage could lead to unprecedented releases, resulting in massive fires and other damaging effects. The latter may include detonations (producing large blast waves) and deflagration-to-detonation transition phenomena. As the Department of Energy notes in its December 2004 report (Sandia National Labs, SAND2004-6258), the available testing data on LNG spills are based on releases of very small size in comparison to releases expected from intentional attacks. Despite intense local opposition, the Federal Energy Regulatory Commission has approved a site permit for an LNG terminal in Fall River, Massachusetts in a densely populated harbor area. EXTERNAL LINKS
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