Liquid Natural Gas -- A Specious Climate Solution?

This is a guest post from Stewart Taggart of Desertec-Asia.

Nearly US$80 billion of investment is slated for developing liquid natural gas (LNG) projects in Australia and the Timor Sea. More are planned for Southeast Asia.

The good news is that these LNG developments are aimed are replacing dirty coal-fired power in Japan, China and South Korea with a cleaner fuel: natural gas.

The bad news is that LNG's environmental benefits are potentially so illusory that Asia might be better served by a common carrier natural gas pipeline.

LNG is natural gas compressed 600 times. It is then shipped in pressurised ocean-going tankers. This front-end compression process burns up roughly 10% of the original energy. The pressurised tankers then draw off more energy for each day at sea. At the far end, regasification consumes even more energy

The cumulative losses are so great that LNG-based natural gas supplies may not be much better than coal as a future energy source, according to researchers at Carnegie Mellon University in the United States.

At present, lifecycle emissions from LNG are little better than coal
Source: "Comparative Life-Cycle Air Emissions of Coal, Domestic Natural Gas, LNG, and SNG for Electricity Generation," Carnegie Mellon University, 2007
Click here to enlarge image

Worse, shipping LNG requires huge investment in expensive, inflexible, single-purpose infrastructure. It's a recipe for long-term financial waste.

With nearly a dozen LNG trains slated for development in Australia's Northwest Shelf, northern Queensland, the Timor Sea and Papua New Guinea, this infrastructure could take Asia's climate change battle backwards for decades to come.

Given the huge volumes of gas now involved in this burgeoning trade (nearly 60 billion cubic meters per year), a pipeline connecting Australia to China, Japan and South Korea may be a better deal.

Instead of insular, 'go-it-alone' buyer-seller LNG microeconomics, a common-carrier pipeline would enhance competition, lower prices and encourage development of smaller natural gas fields through increasing confidence in downstream market access.

Better yet, a pipeline could carry future fuels like hydrogen. LNG trains, tankers and regasification plants simply don't have this flexibility. They risk becoming 'stranded assets' if future carbon pricing exposes their financial shortcomings.

If the LNG industry gets entrenched, it could doom Asia to a generation of suboptimal infrastructure. This, at at a time when trillions of dollars must be spent to battle climate change. Getting poor value for investment dollars is a bad way to fight global warming.

DESERTEC-Asia examines the LNG/Pipeline tradeoff in greater detail in "Pipelines Vs. LNG." It lays out a plan by which 30 billion cubic meter pipelines could connect Australia's Northwest Shelf and Queensland to a junction point in the Timor Sea East of the Bayu Undan field.

From there, a combined 60 billion cubic meter pipeline could traverse Asia.

If laid at the same time as High Voltage Direct Current Power line, DESERTEC-Asia envisages a bundle of synergistic economic and environmental benefits that could yield Asia a robust, long-lasting 21st Century energy infrastructure enhancing economic growth, reducing geopolitical tensions over energy supplies, increasing multilateralism and helping to combat climate change.

Open markets benefit all. The worst closed markets occur when infrastructure remains proprietary and new market entrants are discouraged by high barriers to entry. If Asia builds an open, transparent, flexible energy infrastructure, it can have a huge positive impact on battling the planet's climate change problem.

China, Japan, South Korea, Australia and the ASEAN nations will collectively account for nearly 40% of global GSP by 2050, double their combined share today. What happens in Asia matters to the world.

Asia should choose carefully. The economics of LNG could be specious.

Cannot fault the argument.
What to do about continental drift? It proceeds at about the same rate that rate as your finger nails grow. Unfortunatly it proceeds in jumps. (Earthquakes)

This is an important issue because if we can solve it then we should be able to have hypersonic linear electric trains running in vaccume tunnels. They should reach orbital velocity.
Coriolis forces will be a problem for north-south components of travel, therefore north-south travel will have to be either by solar powered airship, sub-orbital ramjet or wheelbarrow.

Thanks,Arthur.The application of humour to this idiocy might see the last of it,hopefully.

The area off Timor through which the pipeline would pass is located east of Indonesia's major earthquake zone.

Pipelines to the island from the Sunrise field have been analysed by both Woodside and East Timor. East Timor holds fast on the pipeline idea while Woodside rejects it -- on cost grounds but not on earthquake risk.


If it's 'idiocy,' it's an idiocy taken seriously by both Woodside and East Timor. Perhaps you'd like to direct your comments to them?

Spam off

Huh ?

Try to be civil - gas pipelines are pretty commonplace around the world - if you don't like the proposal, explain why you think it won't work (on grounds of cost, available gas reserves, contribution to global warming or whatever).

As far as I can tell (predicting likely reality rather than personal preference), the gas will get exported, the carbon dioxide will be emitted and the only question is is it more likely to go offshore in LNG ships or via a pipe...

Thanks for that, BG

What piqued my interest in this subject was the vehement non-sequitur position taken by Woodside during the Emissions Trading Scheme debate in Australia that LNG absolutely HAD to be excused from carbon levies because it was a clean fuel.

I thought: huh?

If LNG is so clean, Woodside should WELCOME carbon levies. It didn't add up. That such statements went unchallenged illustrated to me the mental narcolepsy of the domestic business press.

In summary, I believe there may be large negative externalities in LNG that are being conveniently not counted, as the US university research shows....

A few comments.

As TOD is primarily an oil & gas depletion site, I’d like to see an article on LNG and it’s direct relevance to the PO issue. Like what impact will/could the increased production of LNG in Australia and other countries like Qatar have on world fossil fuel supply, how tradeable is shipped LNG on world markets , and so on. I haven't seen a good article on these questions - seems a natural thing for TOD Australia to be interested in.

Try to be civil - gas pipelines are pretty commonplace around the world - if you don't like the proposal, explain why you think it won't work

Agreed Big Gav. It’s seems pretty obvious to me that such pipelines are not, well, in the pipeline, but I’d like to of got a bit more information as to why Woodside rejected the idea. Was it just economic or engineering issues? Is it due to demand competition (ships can change their destination, not so easy for a pipeline) ? Was it because of potential political issues

If Asia builds an open, transparent ...

That’s a big if. Sadly, open and transparent are not the first words that spring to mind when considering Asian economies. Could we finish up with a debacle such as Russia’s pipeline ? (There’s an excellent TOD article about this)

As this article was produced by a consultant for a solar energy company, it’s hard to know as a layman how balanced it is (is there an advantage to DESERTEC in such pipelines being built?). I’d like to hear from anyone that can give me a few answers ........

One more small thing:

a pipeline could carry future fuels like hydrogen

... hydrogen can be used for energy storage, but it is not a fuel .

The LNG market operates in various ways - some projects sell cargoes on the spot market, but the existing Australian LNG producers sign up long term contracts with Asian customers and then supply them as per the contracts - they don't sell on the open market.

As for LNG vs pipeline, you would need a lot of gas being sent north to justify the cost of the pipeline - it wouldn't have made sense for the existing volumes of gas.

Now we have this massive boom in LNG projects 9each developed / operated by different companies or consortiums), it might makde sense to build a pipeline rather than spend a few hundred billion dollars on a swathe of LNG plants.

As for spin-offs for the solar industry - a gas pipeline would have none.

The HVDC link also proposed by Desertec wopuld be a great boon for solar projects though.

The first pipelines should be to south eastern Australia, an idea floated by Rex Connor 30 years ago. The SE gas basins (notably Cooper, Otway, Gippsland and Bass) that serve SA, Vic and Tas are past their prime. Vic's brown coal generators seem unimpressed with multibillion cash offers to help build gas fired generation perhaps because future gas prices may be so volatile. Combined cycle gas might achieve 60% CO2 cuts relative to coal but not the 80% cuts needed long run.

Apart from balancing of wind and solar required under the MRET another likely source of increased domestic gas demand will be as transport fuel. With suitable incentives truck fleet operators could run compressors at depots. The truck could refill for the return journey at the same company's depot interstate. One or two CNG filling stations on the highway could reduce range anxiety in addition to dual fuel capability. If Australian diesel demand is equivalent to around 200,000 barrels of oil a day replacing it with CNG could work out at 4-5 Mt a year. I understand LNG exports will soon exceed 20 Mt a year if they haven't already.

A research group like ABARE should undertake a scenario analysis for future gas demand. Components should include LNG export, fertiliser production, onshore basin depletion, increased gas fired electrical generation, CNG as a diesel replacement, industrial and household gas needs. Allow for the possibility that coal seam and natural gas could be blended if the specs are compatible. When that analysis is done then check if there will be enough security of long term domestic gas supply to allow export pipelines.

Bass Strait and Queensland (and later NSW) coal seam gas would seem to be sufficient to cover east coast demand for many decades - why do you think an east-west pipeline makes sense ?

As far as security of local supply goes, did you read my posts on Australian gas supplies last year ? I calculated we have enough for a century or so, even with dramatically increased exports, power generation and transport use...

Noted but I still maintain that ABARE should check the claim of a century's worth. It seems the Brits may have miscalculated the longevity of the North Sea gas reserves and now need pipeline imports as well as LNG. I think every gas producing country not just Australia needs to look at the changing composition of gas demand, future domestic needs and supply logistics. For example there seems to be some unhappiness about brine discharge associated with CSG in Qld. Will Australia at some point need hydrofracking to maintain gas output?

Cheap gas could be our last shot at maintaining something like business-as-usual and we don't want to squander it.