Natural Gas

Natural gas accounts for 20% of the world’s marketed energy, with more than 120 quadrillion BTUs of natural gas is consumed globally. It is a critical fuel in the generation of electric power and heat. Furthermore, it is used in industry as an energy source and/or feedstock for manufacturing fertilizer, pulp and paper, metals, chemicals, textiles, plastics and pharmaceuticals, among others. The process of getting natural gas out of the ground, and to its final destination to be used, is a complicated one.

Because of its low density and high volume, natural gas is costly and inefficient to store and transport over long distances in its gaseous state. Moreover, crossing international borders via pipeline amplifies commercial and investment risks and complexities. Pipeline construction and maintenance costs, along with technical challenges, escalate with distance. Further, when the pipeline must traverse countries which are not involved as gas producers or consumers, concessions may be difficult and costly to obtain.

Liquefied natural gas (LNG) is natural gas which has been converted to liquid form for ease of storage or transport. Liquefying natural gas allows access to natural gas from regions with vast production potential to end markets too distant to be connected by pipeline. International trade of LNG began in 1964 when the United Kingdom became the world’s first LNG importer; accepting receipts at Canvey Island from Algeria. By the end of the decade, commercial LNG trade routes from Algeria to France, Libya to Italy and Spain and Alaska to Japan were initiated. In 1972, Algeria began supplying LNG to the United States at the Everett, MA marine terminal.

Today, the global market for LNG is in excess of 225 billion cubic meters annually and accounts for nearly 10% of total annual worldwide natural gas consumption. Pipeline gas continues to account for the majority of global natural gas trade. However, nearly 30% of natural gas trade is now provided by LNG. The global market for LNG is currently valued at over $72 billion.