What is Liquefied Natural Gas?

The US is the largest producer of natural gas in the world. It supplies around a third of the country's primary energy needs, such as electricity generation and heating. Although most of the natural gas is transported in its gaseous form through pipelines in the US, the country's growing demand for this fuel has led to the development of a liquefied natural gas (LNG) facility.

LNG Basics Unlike its gaseous form, natural gas is cooled to a liquid state, which allows it to be transported and stored in different ways. Compared to its gaseous state, natural gas in its liquid state has about 600 times smaller volume. This process allows it to be transported to different areas that pipelines cannot reach.

When natural gas is not feasible to transport through pipelines, it can be transported to markets far away from its producing regions using the LNG process. This natural gas is transported in its compact liquid form and can be transported to different terminals worldwide. These facilities then process the natural gas and deliver it to various industrial and power plants.

LNG Trade The natural gas is loaded onto double-hulled ships for large-volume ocean transportation of natural gas. These vessels are commonly used to transport natural gas and are insulated using special equipment. After reaching the receiving port, the gas is off-loaded into storage tanks.

Small-scale shipments of natural gas are also commonly carried out. These shipments are usually made using the same containers commonly used for international trade and trucks.

These shipments are equipped with special storage tanks.

Other small-scale activities related to producing and storing natural gas include liquefaction facilities that can hold natural gas at a compact volume. These facilities can be utilized in the US during times of peak demand.

In 2020, the US exported approximately 2,400 billion cubic feet of natural gas in the form of LNG. This natural gas was transported in its compact liquid form and can be transported on large tanker ships or trucks. As of August 2021, the US has delivered natural gas to 40 countries. It is still importing some of this gas, mainly to New England, due to the country's limited storage and pipeline capacity.

DOE's Role The US Department of Energy (DOE) has various responsibilities when it comes to regulating the exportation of natural gas. Companies interested in exporting natural gas must first get approval from the agency's FECM. The agency also reviews applications to export natural gas to countries that do not have free trade agreements with the US. Through its natural gas import-export program, the FECM coordinates the activities of the division of regulation.

The NGA also has two standards that are used when it comes to reviewing applications for the exportation of natural gas. These standards are based on the country's destination countries.

The public interest in exporting natural gas is considered when it comes to applications to countries with free trade agreements with the US. The NGA also reviews applications for the export of natural gas to other non-FTA countries. If the Department determines that the proposed shipments would not be consistent with the interests of the public, it will not allow the export of natural gas. After completing a public interest review, the DOE decides to allow the export of natural gas to non-FTA nations.

In the US, the Federal Energy Commission (FERC) is responsible for overseeing the activities related to the construction, siting, and operation of natural gas export facilities. It also reviews the environmental impact of proposed projects using the National Environmental Policy Act. Getting the go-ahead from the Department of Energy to export natural gas to other countries is an important step in the development of projects.

Unfortunately, some companies that have received approval from the DOE for exporting natural gas have not yet reached their final investment decisions. Due to the complexity of the project, it can take years for companies to complete and build large facilities.

Through its monthly LNG report, the DOE promotes market transparency by providing information about the various factors that affect the price and volumes of natural gas exported.

In February 2016, the first shipment of domestically-produced natural gas was delivered to Brazil. The shipment was carried out through the Sabine Pass Liquefaction facility of Cheniere Energy.

The status of the various projects that have received approval from the DOE for exporting natural gas is reported to the Department twice a year through its Semi-Annual Reports. If a customer is interested in buying natural gas from the US, they can contact the companies authorized to export it.