Liquefied Natural Gas LNG) is natural gas that has been cooled to the point that it condenses to a liquid, which occurs at a temperature of approximately -256 degrees F (-161 degrees C) at atmospheric pressure.  Liquefaction reduces the volume of gas by approximately 600 times making it more economical to store natural gas where other forms of storage do not exist, and transport gas over long distances for which pipelines are too expensive or for which other restrictions exist.  Liquefaction makes it possible to move natural gas between continents in specially designed ships.  Thus, LNG technology makes natural gas available throughout the world.

To make LNG available for use in a country like the U.S., energy companies must invest in a number of different operations that are highly linked and dependent upon one another.  The major stages of the LNG Value Chain, excluding pipeline operations between the stages, consist of the following:

  • Exploration – to find natural gas in the earth’s crust and production of the gas for delivery to gas users.  Most, but not all, of the time natural gas is discovered during the search for oil
  • Liquefaction – to convert natural gas into a liquid state so that it can be transported in ships
  • Shipping – the LNG is special purpose vessels
  • Storage – of LNG in specially made tanks, and regasification to convert the LNG from the liquid phase to the gaseous phase, ready to be moved to the final destination through the natural gas pipeline system

Liquefaction provides the opportunity to store natural gas for use during high demand periods in areas where geologic conditions are not suitable for developing underground storage facilities.  In the northeastern part of the U.S., LNG peak shaving is a critical part of the region’s supply during cold snaps or heat waves.  In regions where pipeline capacity from areas can be very expensive and use is highly seasonal, liquefaction and storage of LNG occurs during off-peak periods in order to reduce expensive pipeline capacity commitments during peak periods.