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LNG Expansion: The Key Role of Infrastructure
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By Mary Fay

There is no arguing that natural gas production and consumption have experienced a consistent rise and are projected to continue growing as the U.S. seeks alternatives to coal and foreign oil. Along with a growing market, an increasing portion of U.S. natural gas volumes undergo a cooling process to become liquefied natural gas (LNG). Six hundred times denser than natural gas in its initial state, LNG is significantly easier to store and transport, especially where pipelines do not exist.

By 2020, U.S. LNG exports are expected to reach three trillion cubic feet per year, increasing more than six times current levels. Simultaneously, LNG growth domestically will be another source of rising demand. Infrastructure is critical to LNG’s success as an emerging fuel. For export, infrastructure priorities center on creating economically-viable and efficient ways for massive volumes of LNG to be transported to overseas markets. For domestic use of LNG, infrastructure determines where and how to liquefy the gas and subsequently supply it to domestic users.

With most U.S. LNG production slated for export, major export facilities are being planned, mostly along the Gulf Coast, with some unique innovations under consideration. Streamlined construction and operation of these facilities is crucial to enabling the U.S. to be a global LNG exporter.

As an alternative to the development of LNG facilities on land, floating LNG (FLNG) facilities are being developed for export purposes. The facilities allow developers to access gas resources from underwater fields that are too challenging or uneconomical to access from land. The infrastructure needs of FLNG are much smaller than typical onshore production. It eliminates the need for pipelines to transfer gas and construction of these facilities can even occur elsewhere and be transferred to the final location where they can remain for roughly 25 years. Developers, however, face the challenges of operating at sea and the need to compress the facility to a much smaller area than land facilities.

For the domestic market, companies such as GE, Shell and Kinder Morgan are developing small scale, modular LNG production plants that can be built rapidly and moved as needed for local LNG production. These systems are approximately 10 percent of the size of typical export facilities. Easier to manufacture and install, these systems reduce installation costs and investment risks by reducing the overall price tag and increasing flexibility.

Further infrastructure is required for LNG use in vehicles. Options for refueling station development range from new-build LNG stations to mobile LNG refueling stations or centralized hubs that can be customized for fleets of LNG vehicles. Regardless of the type of refueling model, transport and storage considerations are an important component of developing effective domestic LNG refueling capabilities.

As growth in U.S. natural gas production continues, LNG production is projected to continue to increase. While infrastructure can pose challenges to LNG’s development, it also creates opportunities for energy companies, developers, engineers, investors and operators to innovate in a rapidly growing market.

Mary Fay is an MBA student at the McDonough School of Business at Georgetown University and Summer Senior Consultant at Ernst & Young in the Transaction Services Advisory practice. Before business school, Mary worked for four years in sales and marketing at Enviva, a renewable bioenergy company in Bethesda, MD and holds a Bachelor’s degree in Environmental Studies from American University.

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