In 2009, unconventional shale gas emerged as the dominant driver in North American natural gas markets. Rapid increases in shale gas production and shale-driven upward revisions to the U.S....
LNG's Final Hurdle
Interchangeability issues threaten to delay vitally needed LNG projects.
natural gas around the world has a higher heating value than the U.S. gas stream. LDCs and end-users began voicing concern about the interchangeability of the hotter regasified LNG with their historical gas supplies in LNG terminal authorization proceedings at FERC.
The most notable example involves Cove Point, in which Washington Gas Light Co. (WGL), an LDC in the Washington, D.C., metropolitan area, protested the reactivation, citing concerns over the impact of LNG imported from foreign sources on its distribution system and end-use customers. To resolve the issue, the terminal operator and the three importers agreed to conduct extensive research and data collection in the Washington and Baltimore areas to determine the impact of different gas compositions on end-use equipment. The five parties reached a settlement and the extensive gas composition specifications that resulted from the research were incorporated into the LNG terminal’s tariff on file with FERC. 3
For LNG regasification terminals, hydrocarbon liquid dropout largely is irrelevant because when the natural gas is cooled and converted into LNG, the heavy C5+ hydrocarbons must be removed to avoid operational problems that would be caused by frozen liquids.
In one unusual case, however, WGL filed a protest in early November 2005 at FERC against the proposed Dominion Cove Point LNG facility expansion. The WGL filing claims heavy hydrocarbons in domestic pipeline gas actually caused seals in 40 year-old couplings in WGL’s distribution system to swell slightly, and regasified LNG caused those seals to shrink slightly, contributing to their failure. To mitigate this alleged problem, WGL says it is installing equipment for injecting heavy hydrocarbons into the pipeline at WGL’s largest gate station on the Dominion Cove Point pipeline. WGL has made these allegations despite the fact that the LNG imported to Cove Point has met the gas composition standards contained in the FERC-approved tariff. WGL’s assertions have not yet withstood close scrutiny.
Indeed, Dominion Cove Point has accused WGL of proffering bad science to support its leak allegations, using WGL’s own internal documentation to support its position that the problems are the result of WGL’s infrastructure, not the regasified LNG. But irrespective of the merit of WGL’s complaint, it added to the list of possible concerns that LDCs and end-users are raising about gas composition issues. The majority of gas composition issues, however, do not focus on dry gas, but rather on liquid drop out and Btu values.
To date, most of the LNG imported into the United States has originated from fields in Trinidad, producing gas with heating values comparable to domestic U.S. natural-gas supplies. Some cargoes, however, have originated elsewhere, and importers and terminal operators have several methods by which they can stabilize the heating value, including stripping additional hydrocarbons from the regasified LNG, adding nitrogen to cut the heat content, blending multiple sources of LNG within the LNG storage tank, and blending streams on pipelines. This has ensured regasified LNG enters the domestic U.S. gas stream without causing problems for end-users.
In the future, however, the increasing number of LNG facilities means there will be more and more high-Btu