IntroductionLiquefied Natural Gas (LNG) technology has been adopted on a large scale for marine transport of natural gas. Although the liquefaction plant can often be the single largest cost element, large investments are also needed in ships and in the reception terminal (Figure 1 illustrates a typical LNG supply chain for a base load plant). For a major new base load project, the total investment required in the supply chain can be in the region of US$5 billion or more. Figure 1 The LNG Chain
This report evaluates the technical and economic issues involved in the development of modern base load LNG plants, and examines the likely evolution of LNG technology in the future, looking at liquefaction technology, train sizes, and shipping developments (size and propulsion). The report also compares the supply chain economics of the proposed mega LNG trains in the Middle East with that of existing plants in the Pacific Basin. It demonstrates the economies of scale of future large capacity trains in terms of a narrowing of the competitive advantage producers such as Indonesia and Malaysia currently have in Pacific Basin markets. Major topics covered in the report include: Liquefaction Technology, Process Equipment, Storage, Shipping, Economics and LNG Markets. Liquefaction TechnologyLiquefaction processes mainly use mechanical refrigeration, in which heat is transferred from the natural gas, through exchanger surfaces, to a separate closed loop refrigerant fluid. The refrigerant loop uses the cooling effect of fluid expansion, requiring work input via a compressor. A number of different LNG processes have been developed, the main variants being:
- Cascade, in which a number of separate refrigerant loops are used, with different single-component fluids, such as propane, ethylene and methane.
- Mixed refrigerant (MR), in which a mixture of nitrogen and light hydrocarbons is employed.
Additional parameters are single- versus multi-stage processes, cascades of pure and mixed refrigerant stages, as well as two or more mixed refrigerant stages, and use of pure nitrogen as a refrigerant.Cascade refrigeration cycles were employed in the earliest base load LNG plants. However, over the years the Air Products propane pre-cooled MR process emerged as the dominant liquefaction process employed at base-load plants. An optimized version of the Phillips cascade process has also been developed and is in use - this utilizes propane, ethylene and methane as refrigerants. A number of other liquefaction technologies have emerged, which claim significant improvements over existing processes. All currently available liquefaction technologies are described in detail in this report. Process EquipmentRefrigerant compressors and their power sources have been a key focus of improvement in LNG plant design. The large power requirements of LNG trains initially led to the use of steam turbine drivers. The development of technology has allowed the use of gas turbines as standard drivers for most new installations. The advent of new, larger gas turbines leaves much scope for greater economies of scale, with a nearly unprecedented 65 percent increase in train size from 4.7 to 7.8 MTPA expected in the next 3 to 4 years. Some newer plants are also now under development, which utilize electric drives for compression due to the greater reliability of electric motors over turbine drivers. The design of heat exchangers is another critical factor for LNG plant equipment. Conventional shell-and-tube designs are often used for pre-cooling sections, but for the cryogenic section it is normal to use spiral-wound or plate-fin exchangers, which can accommodate multiple parallel fluid streams. Detailed discussions of future evolutionary technology developments are presented in the report. StorageA variety of different storage tank designs have been employed in LNG service, all of which are characterized by their heavy insulation and special material requirements. LNG storage tanks are classified in the report in terms of containment type (single, double or full), and erection method (in-ground, semi-buried and above-ground). ShippingShipping of LNG requires specially designed vessels, with 135 to 145 thousand cubic meters as the current new-build cargo capacity. Future ship designs for which tenders are already being sought are in the 200 to 250 thousand cubic meters capacity range. A number of storage systems or ship designs are employed: Moss type hemispherical and membrane type storage systems are the most common. A number of different propulsion systems can also be employed on a ship - this can be steam turbine, diesel engine, electric motor or a diesel-electric combination. Typically, boil-off gas is used to provide part or all of the ship's fuel requirement. This report discusses ship types and reviews shipping economics for current ship sizes and future ship sizes. RegasificationLNG reception terminals represent large investments, needing docking and unloading facilities, storage tanks and LNG regasification facilities. The major factors that affect regasification terminals are discussed in the report, including the advantages and disadvantages of the types of vaporizer that are commonly used. EconomicsThe economics of the LNG supply chain are evaluated in the report, including current and future train size economics, and current and future ship size economics. A complete economic summary is provided for a typical LNG supply chain. MarketsThe focus of the global LNG market business remains in the Far East. Japan imported 60 million tons (or almost 50 percent of the total 128 million tons exported) in 2003, with South Korea and Taiwan being the other main importers in the region. In the Atlantic basin, Spain, France, and the United States are the current main importers of LNG. There is considerable potential for demand growth in new markets such as India, which commenced imports in 2004, China, which has a number of terminals under development, and the UK. The main exporters of LNG are Indonesia, Algeria, Malaysia and Qatar. Most exporters currently have plans for major expansions as well as new capacity. Qatar for example plans to become the largest LNG exporter within the next decade, with exports rising from 14.5 millions tons in 2003 to over 60 million tons by 2010. All current expansion plans and new projects are highlighted in the report, with most of these due on stream between 2006 and 2010. The report also shows historical LNG trade and growth projections to 2010. | 
