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LNG 101: What is LNG and why is it important to Canada?

LNG or liquefied natural gas represents a key export opportunity for Canada’s abundant natural gas resources.

What is LNG?

Liquefied natural gas, or LNG, is natural gas that has been cooled to -161 degrees Celsius—the point at which natural gas changes into liquid form. In this state it becomes a clear, odourless and non-toxic liquid.

Liquefaction allows natural gas to be transported economically by ship to overseas markets.

LNG occupies about 1/600th the volume of natural gas. Liquefaction allows natural gas to be transported economically by ship to overseas markets. Upon reaching its destination, LNG is converted back to a gaseous state for use as an energy source. LNG is also used directly as a transportation fuel for ships and cars.

Canada’s Natural Gas and the West Coast LNG Opportunity

Canada has an abundant supply of natural gas—an estimated 1,230 trillion cubic feet—much of it located in underground reservoirs in Western Canada. This amount of natural gas is equivalent to a 300-year supply based on current domestic consumption rates.

Currently 100-per cent of Canadian natural gas exports go to our sole customer: the United States. However, in recent years, U.S. production of natural gas has increased dramatically. This has caused a regional oversupply, driving prices down in North America. It has also decreased demand for Canadian natural gas in markets in the U.S. and Eastern Canada.

LNG exports from Canada's West Coast could access key markets throughout Asia that seek natural gas imports to meet their energy needs.

LNG exports from Canada’s West Coast represents a new market opportunity for Canadian natural gas, particularly to energy-hungry markets in Asia. Countries such as China and India, for example, are forecast to increase their natural gas consumption by 2040 by 190 per cent and 233 per cent respectively (IEA, 2017). Overall, global consumption of natural gas is expected to increase by 45 per cent by 2040.

Canada has a number of advantages in accessing these markets. The sailing distance from the West Coast to markets in Eastern Asia is shorter than for a number of Canada’s competitors. Also, Canada’s cooler climate means that less energy is needed to liquefy natural gas compared with warmer regions. Canada is a trusted trading partner that the world sees as producing environmentally sustainable oil and natural gas.

Natural Gas and the Environment

Natural gas is the cleanest-burning hydrocarbon. It produces 40 percent fewer GHG emissions than coal when burned to produce electricity. China has indicated a desire to switch to greater use of natural gas to reduce its dependence of coal, which is also a major cause of smog and other air pollutants.

Natural gas can also be used as a lower-carbon transportation fuel when converted to LNG or compressed natural gas (CNG). Vehicles that run on natural gas are estimated to produce 13 to 21 per cent fewer GHG emissions than comparable gasoline and diesel-powered vehicles (source: NGVA).

Safe Transportation of LNG

The components of LNG are non-toxic and insoluble in water. In case of accidental release, LNG will completely evaporate, leaving no lasting impacts on land or water. LNG is not flammable on its own.

LNG is transported in large, specially designed ships called LNG carriers. LNG carriers are double hulled, with cargo tanks that are separated from the hull by thick insulation. This design prevents the escape of natural gas. According to the Center for Liquefied Natural Gas, LNG shipping has been carried out around the world successfully and safely for more than 50 years. During this period, LNG shipments have covered more than 160 million kilometres (the equivalent of traveling 4,000 times around the Earth) without major safety incidents either in port or at sea.

Large LNG carriers can hold up to 9.4 million cubic feet of LNG, which is equivalent to about 5.6 billion cubic feet (Bcf) of natural gas in its gaseous state. A single Bcf of natural gas can be used to provide electricity for about 17,600 homes per year.

LNG tankers are a safe way to transport natural gas.

LNG storage is not pressurized and contains no oxygen. Under these conditions, it is not explosive.

The LNG Process

There are three primary processes involved in LNG:

Liquefaction

Natural gas is transported via pipeline from natural gas fields to a liquefaction plant which is usually located near a port. The gas is cooled to -161 degrees Celsius at which point it becomes a liquid and is stored in specially designed insulated tanks to keep it cold until it is ready to be shipped.

Transportation and Storage

From the LNG plant, liquefied natural gas is pumped through a pipeline system into double-hulled LNG carriers. These carriers are designed to act like a thermos, keeping the LNG cold and minimizing LNG evaporation during its voyage.

LNG Regasification

When an LNG carrier reaches its destination, the LNG is pumped into insulated onshore tanks. When needed, LNG is warmed to convert it into a gaseous state and delivered by pipeline to residential, commercial and industrial customers.

The process for LNG transportation and use includes liquefaction, transportation and storage, and re-gasification.