Empire On the Edge--Betting On LNG **

** -- Or, Everything You Wanted Know about LNG but Were Afraid to Ask

Liquified natural gas (aka LNG) involves cooling the gas to minus 160 degrees (Celsius). That shrinks it to about 1/600th of its original volume, allowing significant quantities of this LNG to be loaded aboard tankers for shipment overseas. When the gas reaches its destination at an LNG terminal, the gas is reheated (regasification) and shipped through pipelines to end users.

[ED: Dave's really put together an amazing post here...much to read under the fold.]
As most regular TOD contributors and readers know, the natural gas situation in North America is precarious and getting more so. HO has done a number of posts--for example The problems of natural gas supply-- on this subject over the last couple months spelling out various aspects of the situation. This crisis is due to five related factors.
  • Natural gas can be transported globally from place to place using only two methods--via pipelines or by LNG tanker shipments to regasification facilities (LNG terminals). To emphasize this point, there is also what is called Stranded Natural Gas which can only be practically extracted by means of GTL (gas to liquids) technology as stated below.
    Reserves of "stranded" natural gas--the stuff that's abandoned because there's no economical way to transport it--come to maybe 2,500 trillion cubic feet. If captured and converted [by a GTL process], the gas would make (after conversion losses) 250 billion barrels of synthetics [liquids], from clean-burning diesel to jet fuel.
    However, there is no current large-scale effort being made toward commercially viable GTL operations at this time or in the near term future.
  • North American domestic production is declining. No matter how many new wells are drilled, declines continue. See Peter Dea's presentation from ASPO-USA (ppt, slides 1 to 10). Slide 5 is similar to Figure 1 (below the fold) while slide 3 asserts that a 63% increase in gas rigs has resulted in a production decline in the US of 2% since January of 2003.
  • North America is geographically isolated with respect to imports. Overseas pipelines are impractical.
  • US demand for natural gas continues to rise despite increasing supply shortfalls. Including hurricane disasters in the Gulf of Mexico, the price trend continues to rise just as the supply remains flat despite shorter term demand fluctuations due to warmer weather, seasonal adjustments and foreign demand reductions. Since North America is a "stranded" natural gas market, demand reductions overseas don't affect prices in the US much but may make spot LNG imports easier to get. But lack of LNG regasification capacity doesn't change rising prices.
  • Storing natural gas reserve stockpiles to mitigate short term shortages is much more technically challenging than maintaining crude oil SPR stock. It is, generally speaking, a matter of maintaining on-demand supply for natural gas via pipeline deliveries as opposed to oil storage. As HO said here
    Gas differs from oil in that it is not stored domestically in the same way that oil can be, but instead comes through pipelines with only limited storage capacity.
One additional point which won't be discussed here is unconventional sources of natural gas. The US may possess abundant unconventional natural gas resources, which include
  • deep natural gas
  • shale gas
  • tight natural gas
  • devonian shale gas
  • coalbed methane
  • gas from depressurized zones
  • methane hydrates--a fantasy, of course. I am reminded of Frank Sinatra's song Fly Me To The Moon.
As the cited article states, the issue for these sources is that "what is really considered unconventional natural gas changes over time, and from deposit to deposit. The economics of extraction play a role in determining whether or not a particular deposit may be unconventional, or simply too costly to extract". This post won't deal with these unconventional natural gas volumes and as far as I can see, only small volumes of coalbed methane are actually being extracted at the current time. Reserves for these sources mostly fall under the "undiscovered resources" (P5) reserves designation and won't be taken here as serious contributors to US natural gas supply in the foreseeable future. Nor will potential "stranded" natural gas deposits requiring GTL technology & investments be considered as major future contributors in the near term future out to about 2012.

In this story, we'll do an extensive analysis of the current LNG market along with the geopolitics and future problems associated with the ability of LNG to effectively increase future US natural gas supply and lower prices. The situation is very complex and becoming more fluid (no pun intended) as time goes by, so this post runs a bit long. Please bear with us here as we spell out this complicated and evermore worrying situation.

What North America (and the US in particular) is committed to is increased imports of LNG in the future to fill the supply/demand gap. This IHS Energy slide from a talk by Pete Stark entitled Role of Mature Fields in Meeting the Global O&G Supply Problem nicely illustrates the problem and policy.

Figure 1 -- Click to Enlarge

A second graph using some EIA data from the Annual Energy Outlook 2006 illustrates the forecast for new natural gas supply in the US.

Figure 2 (TCF = trillion cubic feet)

Note: LNG includes any natural gas regasified in the Bahamas and transported via pipeline to Florida in the future. (see below).

As you can see, LNG imports are expected to surpass pipeline imports from Canada in 2011 while domestic production declines and doesn't surpass 2003 production until 2012. Pipeline imports continue to decline thereafter while LNG imports increase. After 2012, US production increases are expected along with greater LNG imports to make up overall demand shortfalls as shown in the IHS Energy Figure 1 as pipeline imports continue to decrease in that timeframe. Obviously, the North American (and US) supply situation is precarious out to 2012 if the mysterious EIA predictions after 2012 can be trusted. Perhaps they assume increased volumes from unconventional dry gas resources after that date.

What's the Longterm Plan for LNG?

A good but oversimplified view of the current and future LNG situation comes to us from David J. Lynch, a reporter for USA Today (not one of my usual sources, reprinted at mywesttexas.com). Concerning the longer term view over the next 25 years, we learn that

Once global gas trading becomes more commonplace, U.S. natural gas prices should sink.

"As we're able to bring more supply into this country prices will, in fact, be lower," says Stacy Nieuwoudt, an analyst at Pickering Energy Partners in Houston....

As the gap widens between surging demand for natural gas and plateauing production from domestic wells, the scene at Cove Point [Maryland, an LNG terminal] will be repeated around the USA. LNG imports are expected to rise from about 1 percent of total gas usage in 2002 to 15 percent by 2015 and 21 percent by 2025, according to the Energy Information Administration (EIA). That year, total imports are expected to be almost seven times the current figure.

Energy companies have submitted dozens of proposals for new terminals along all three U.S. coastlines to receive the expected shipments, which will give the United States greater flexibility in meeting its energy needs. Dominion is awaiting government approval to almost double Cove Point's capacity by 2008.

"A global natural gas market will evolve to look very similar to the oil market. But it's not going to happen in the next five years. It just takes a lot of time," says Nieuwoudt.
The longer range plan is clear. There will be a build-out all over the world by suppliers to build LNG liquefaction plants just as natural gas consumer nations will carry out a large-scale build-out of LNG terminals for regasification and shipment by pipeline to meet demand. Thus, the natural gas market will eventually more and more resemble the global market for crude oil. It is this globalized plan for natural gas that the US is counting on to alleviate future supply shortfalls.

The Current LNG Situation

The situation for U.S. Natural Gas Imports and Exports: 2004 (pdf) is shown in this nice graphic plotted from EIA data.

Figure 3. Flow of Natural Gas Imports and Exports, 2004 (Billion Cubic Feet)

As you can see, there are currently only 4 LNG terminals serving the US and these are
  • Cove Point, Maryland (# 209)
  • Everett, Massachusetts (# 174)
  • Elba Island, Georgia (# 105)
  • Lake Charles, Louisiana (# 164)
The US exports some natural gas to Japan and Mexico-- even some back to Canada---this was a surprise. All imports come via pipeline from Canada and the very small percentage of LNG imports come from the countries listed in Figure 3. Note that Trinidad, Qatar, Nigeria and Algeria are on that list--see below. In the Bahamas, a number of regasification LNG terminals are under construction or proposed. See also Exxon Mobil Finds New Way Into US Market Via Bahamas Terminal. These would receive LNG from Trinidad & Tobago, Qatar and other suitable suppliers and then transport the gas to the US via pipelines to Florida.

The Nitty-Gritty Details About the LNG Future Market

This is the point where this post gets long but what follows also constitutes the most interesting part. A brilliant, thorough and expert examination of the LNG industry, Limited Availability for 'Cheap' LNG to the US, was written back in October of 2004 by Harold York, director of Reliant Industry. Let's summarize that article and state his conclusion first.
There is little hope the U.S. is able to import “cheap” LNG into the U.S. as a way to put downward pressure on domestic natural gas prices. Recent trends indicate Henry Hub prices must exceed $3/MMBtu to make it commercially attractive to bring spot LNG cargoes into the U.S. However, given the tight supply/demand balance in the U.S., current U.S. LNG regasification effective capacity is unlikely to deliver incremental volumes sufficient to displace the need for natural gas to price high enough to encourage demand conservation sufficient to balance the market.
Importantly, York is referring to the LNG market including only the 2004/2005 timeframe. However, it is reasonable that his assumptions and assertions made in 2004 about LNG constitute a fair characterization of the situation today. Furthermore, until the ecomomic globalization of the LNG market really gets off the ground and these markets evolve to resemble world oil markets--over the next 5 to 10 years--it is plausible that what he says will mostly hold true up to the 2012 period or so. Hold onto your hats, here's a summary of what he says, the nitty-gritty details.

As York notes, the world has entered a new era in natural gas pricing. Historically, Henry Hub prices must be above $3/MMBtu to make LNG imports attractive. As of this writing (1/20/06), the Henry Hub spot price is $8.78/MMBtu. So price is no object. However, just as for oil, the LNG supply/demand balance is tight with little or no spare capacity. There are many constraints on importing LNG into the US as listed below.
  1. LNG markets are dominated by long term contracts and the tight demand & supply balance in the market. There is a worldwide shortage of LNG liquefaction capacity and, in the US, of LNG regasification capacity.
    As long as LNG pricing in Asia and Europe continues to be on an oil basis (crude in Asia and residual fuel oil in Europe), high crude oil prices should prop up delivered prices to all three markets [including the US]....

    Because of the regulatory structure of European gas markets in the past, regasification developers had the financial ability to back signing long-term firm supply contracts. Demand conditions (e.g., mild weather, slow economic activity) in Asia and Europe play a key role in determining supply availability for the U.S.... [The] demand conditions allowing Europe and Japan to release cargoes for spot sale in the U.S. are typically in the spring and summer.
    Spot (shorter term contractual) import volumes are determined seasonally or by foreign demand drops but are generally hard to come by on the world market.
  2. As York asserts, A Price Diffential is Rarely Sufficient to Divert Cargoes to the US. In shipments to Asia and Europe, where prices have been historically higher than US import prices
    There usually were no competing supplies (e.g., no pipelines or indigenous supplies) so a long-term contract did not force the gas marketer to forego other supply options. The project also was selling into a tightly regulated (and physically short) market so delivered LNG prices into Asia and Europe tended to be higher than in the US.... LNG pricing in Asia and Europe continues to be on an oil basis (crude in Asia and residual fuel oil in Europe), high crude oil prices should prop up delivered prices to all three markets [including the US].
    Historically, US import prices have been lower than those in Europe (and Asia/Japan) but have surpassed European prices since 1999 for two reasons. 1) Rising US natural gas prices and 2) Reductions in its [Europe's] use of residual fuel oil and so its [natural gas] price relative to crude declines.

    However, the most important determinant making spot shipments to the US difficult to obtain is proximity to the LNG production facilites. Quoting York, "the sailing time and shipping costs for liquefaction facilities farther away than Trinidad make spot deals into the U.S. even tighter to fit into firm contract obligations". So, longer LNG transport distances affect the bottom line for LNG exporters. And add to this that there is a worldwide "shortage of spot LNG charter vessels [that] is likely to continue into the foreseeable future". For both these reasons, the Henry Hub price--even if it is attractive to exporters on the spot market--is not sufficient to increase shorter term spot contracts allowing the US to import greater volumes of LNG. So, this is one reason why LNG regasification terminals run at less than so-called nameplate capacity. But this is not the only reason, it gets worse. See the next item #3 below.

  3. Again, as York states, Contractual and Technical Issues Limit Spot Cargoes to US Terminals. There are two main issues here. First, from the contractual point of view, "smaller spot (merchant) players have to work with long-term US [regasification] holders to secure the necessary logistical arrangements to secure short-term [spot market] deals". This often means that these merchants must make contractual arrangements with LNG liquefication operators in foreign countries if they can secure some spot market supply from a tight worldwide market.

    But more importantly--this came as a surprise--there are technical constraints on what LNG can be imported to the US.
    Technical issues surround physical characteristics of an LNG cargo from a specific liquefaction facility to a specific regasification terminal. The heat content of LNG can range between 1,000 and 1,162 Btu per cubic foot (York's Figure 7). High heat content is incompatible with many U.S. appliances and industrial processes. Thus major interstate pipelines have a heat content specification of 1,035 Btu per cubic foot, with a range of plus or minus 50 Btu.

    On a spot basis, only three operating liquefaction facilities (Trinidad and Skikda, Algeria in the Atlantic Basin plus Alaska in the Pacific) produce LNG with a heat content within current U.S. gas pipeline quality specifications. Given that all four U.S. regasification terminals are in the Atlantic Basin and assuming Skikda is not operational, there is about 150 MMcfd of spare liquefaction capacity meeting U.S. natural gas specifications. Nitrogen or air injection processes diluting higher heat content cargoes at Everett and Cove Point allows the inclusion of spare capacity in Nigeria (100 MMcfd) and Qatar (100 MMcfd). So of the 2,200 MMcfd of spare liquefaction capacity in the world, at best 350 MMcfd (15%) could meet current U.S. quality specifications.
    In 2004, the Skikda LNG liquefaction plant in Algeria was damaged by an explosion and fire--these troubles continue there. But the bottom line conclusion is that currently only a few suppliers produce LNG that can be regasified in the few US terminals capable of the processing the liquids. Qatar and Nigeria along with the other suppliers shown in Figure 3 are the only options. And the situation is even worse. Look at this image from York's article.

    What is this chart showing us? First, and importantly, the total nameplate processing capacity of the few existing LNG terminals is contrained by the downstream pipeline send-out capacity coming from the terminals. Otherwise, the problem is that only some LNG liquefaction facilities like Trinidad meet the lower Btu heat content required by the US. The conclusion is that there is little actual spare capacity at existing LNG terminals in the US and these are under-utilized as a result.
So, none of this is very good news. This is the current situation and does not bode well in the near term for increased supply from LNG imports, let alone cheaper prices for natural gas in the US or North America as a whole. But, what of the future?

Geopolitics And Future Propects

In the The Geopolitics of Natural Gas, Michael Klare (writing for The Nation magazine) lays out a thorough and insightful analysis of the how the world is creating that wide-open, flexible natural gas market that mirrors the world oil market. Everybody is doing deals with everybody. Axis of Evil nations like Iran--with the 2nd largest natural gas reserves in the world--is doing deals with its Asian & Pacific partners. China & India are making deals with anyone it can including, of course, Iran. The US is dealing with Qatar, which has the 3rd largest untapped reserves. As we can see from the text above, dealing with Qatar and other countries like Algeria and Nigeria is critical. These are the countries that can currently supply LNG to the US based on the constraints outlined above in the York article. Supplier countries are starting to build out LNG liquefaction facilities like there's no tomorrow just as consumer countries likr the US and the Asia & Pacific nations embark on expansion of their LNG terminal receiving capacity. The market is expanding and wide-open. There's a lot of information to absorb here, so read Klare's article to get a good handle on the full story.

Beyond the geopolitics of natural gas, the Lynch article (link repeated from above) gives us other reasons for concern especially regarding expanding LNG regasification terminals in the US. Among these concerns are

  • There is "local resistence to new LNG terminals [nimby], steep capital (investment) requirements and even a shortage of tanker crews"
  • LNG terminals are seen as terrorist targets in this age of paranoia.
  • Approved new terminals are being built in the Gulf of Mexico (aka hurricane alley). Others are early on in the licensing process though there are many proposals on the table for building new regasification facilities. However, it is unclear how many LNG terminals will actually get built. Naturally, it takes some years to license, finance and build these LNG terminals given the political, economic and physical contraints involved. Many proposed projects will never come to fruition.
As Congressman Don Sherwood, republican from Pennsylvania says (quoted by Lynch)
"By setting our future policy, basing it on LNG, then we will be subject to the same forces that we're now subject to in oil supply - in other words, foreign disruptions, political events, growth of the energy sector in Asia," said Rep. Don Sherwood, R-Pa., at a congressional hearing last month.
So, given the greater dependence on foreign sources for a very important energy source and all the market & technical difficulties mentioned above in this post, it would appear that depending on LNG to meet the US natural gas demand/supply gap is very risky business and unlikely to be smoothly successful in the future. Congratulations if you've read this post and made it this far. In conclusion, these are the LNG prospects as far as I can see. The facts do not inspire confidence that LNG supplies of natural gas in North America--and particularly in the US--will meet demand in any timeframe we are concerned about. I see many years of hardship as we go forward in time.
Thanks for this Dave.

I hope everyone can remember the last scene of Syriana. What they don't show is that an LNG explosion would look like a small atomic bomb going off. Siting them will be a big battle if it's close to major population centers. This is where you find more "survival NIMBY" than "I don't like seein' windmills off in the distance" stupid NIMBY...

To play devil's advocate, LNG ships
have the safest records of any fuel
delivery ship at the moment.  We have
never seen a LNG ship explode into
pieces.  Because LNG ship accidents
are pretty minor, we do not really
know what happens when a LNG ship
is hit with a bomb like USS Cole
or a tragic accident like Exxon Valdez.

To claim it is too dangerous is without
evidence.  What is to say that a major
accident won't just make the ship into
a burning island?  Why does it have to
explode and destroy the port and the
people living nearby?

Actually, I have not come across a super
explosion that wiped out nearby buildings
for NG storage facilities.  Albeit, they
are mostly underground.

Unlike most bombs, an lng "exlosion" needs oxygen. So it first quickly burns oxygen in surronding air, causing a tower of hot air (actually, products of combustion) that rises, sucking in air at the base. Accordingly, at low levels it creates a partial vacuum and acts as an implosion, the opposite of a bomb.
I remember an influential article in the Los Angeles Times back probably in the 1970s when they were considering putting an LNG terminal in at Long Beach. The article vividly depicted the consequences of an explosion and fire at the transshipping facility. A wave of burning, evaporating methane gas would roll across the city, creating a fire miles on a side that would reach almost to city hall. The conflagration would be almost nuclear in its consequences. I don't know how accurate the story was (or my memory of it for that matter), it may be exaggerated, but it had an impact and that was the end of the idea back then.

Now they are trying again to put in an LNG terminal at Long Beach, and faced with opposition there they are looking at going about 70 miles up the coast to the Ventura/Oxnard area. The Ventura facility would be built offshore to avoid the fire risk, with an undersea pipeline bringing the gas inland (not sure if it would be liquified or vapor at that point). So far that plan is not exactly being welcomed either. It is a real NIMBY situation, nobody wants to get barbecued.

I don't have any hard data to back up this, but a professor of Energy Resources in the University of Barcelona told me once that there was a study that simulated the effects of an explosion in the regasification terminal here in the port of Barcelona, the effects were pretty similar to those described below. In any case, it depends on what is in the surroundings of the exploding tanker. Here in the Barcelona harbour we have a lot of gas and oil depots...
Cold boiling liquid escapes radially from a point source and flows along the ground or sea until it flashes into cool vapor.  Until it has mixed with sufficient atmospheric oxygen, its is not an explosive mixture.  If you light a match, the match is extinguished.  As the cool vapor expands on heating from surface contact and atmospheric mixing, it continues moving outward from the source until it is eventually heated to ambient air temp.  At that point it becomes lighter than air and starts rising.  As the gas  mixes with the oxygen in the air, it eventually reaches explosive limits and starts looking for an ignition source.  <At this point it is very important to extinguish all smoking materials>  If no ignition source is encountered, the gas rises into the air and <"harmlessly"> contributes to the greenhouse effect.  If ignition occurs, rapid combustion follows and heated expanded vapors quickly cause an updraft usually sufficient to pull back any remaining gas mixture in the surroundings near the ground and all is sucked into the updraft and rising fireball.  Consequently, surrounding gas now well mixed with atm O2 is rapidly displaced upward into contact with fireball causing even bigger and more spactular fireball that rises several hundred meters into the air, as radiated heat converts all nearby objects <if there are still any nearby> into melted crispy critters.  Just digging into a large pipeline with a backhoe can cause fireballs and flames that can easily reach 200 meters high and melt the backhoe and unfortunate operator in a few ms.  Happening on the scale of an LNG tanker would be a hell of a photo opportunity.
What about Algeria in 2004?

What about Cleveland in 1941?

Thanks.  I forgot about the Cleveland
incident, but Cleveland incident happen
in 1944.  It was not a LNG tanker accident,
but a storage tank not built to specification
due to war effort and shortage of metal.
The new storage tank was not air tight, so
the resultant LNG mixed into the sewage
pipes and exploded killing hundred plus people.
LNG tanks build with 9% nickel has never
display a crack in 35 years of history.
This example was not built to 1941 US gov't
code for proper storage tank.  Of course,
accidents will occur if people are not
building according to regulations.

Talking about accidents in US.  There are
at least 2 other accidents involving deaths.
None of them involve tanker explosions.

As for Algeria's accident, that didn't cause
a nuclear like explosion.  This accident
results in damage similar to refinery plants.
Those things explode, too.  None of these
severly damage towns, etc.

The Cleveland incident is the worse one.
Hopefully, today's regulators and inspectos
will do a better job.

FYI: I am not an advocate of LNG.  I was
just playing devil's advocate.

A local Boston TV program did a program on the facility in Everett, Massachusetts. They got a tour and interviewed one of the company big-wigs. Mayor Menino has actually expressed his view that he would like to get this thing out of here due to the "safety" concerns.

What the company representative said, however, contradicts some of what has been written here regarding an LNG tanker explosion.

I have done some quick, online research in the past and what I found out generally confirms what I heard on the TV show. However, I don't claim to be an expert on LNG - so if what I say is crap, please let me know.

LNG in liquid form is not flammable. It needs to be in the range of between 15-25% concentration of the atmosphere/oxygen around it to explode.

In the movie Syriana, the terrorists were using what appeared to be a shaped-charge armor-piercing SRAW anti-tank rocket. This round is fully capable of piercing the outer hull of the tanker. However, I am guessing that there is a gap between the outer hull and either a second hull, or the LNG cooling container within. It is doubtful that this round could penetrate the second wall, having exhausted it's charge on the first.

Even if the rocket did produce a hole in the LNG compartment allowing LNG to escape to the outer atmosphere, that liquid would have to completely regasify and drift into a cloud where the methane was between 15-25%(taking who knows how long) - and then be independently ignited by some other source for there to be an explosion.

Again, this is conjecture based on some things that I have heard and trust. Any contradictory info would be greatly appreciated since this is an issue of national security that deserves full discussion.

Don't know about the rocket, but the liquid would instantly gasify on contact with the water.  The water would eventually freeze into an ever-expanding ice floe, and the liquid methane would run out across the floe.  The flowrate through the tanker hole would essentially be gravity driven; the tanker would depressurize quickly.

What happens next depends on the wind speed and direction.  The cold methane will hug the ground; on land it will follow low points like valleys or streets.  As it starts to mix with the surrounding air an opaque cloud will form from the condensation of water vapor.  How fast it mixes depends on the wind turbulence.  You would first get a severe asphyxiation danger from the cloud and then an explosion danger.  If the cloud reaches the explosive limit then something like a automobile distributor could set it off.

Great info Dave!

Question: how much BCF can be on one tanker, and if there was a problem, what is the size that that gas would expand to? In other words, how big is a billion cubic feet of gas in the air? I assume 1 billion cubic feet is 1000x1000x1000 so is a cube the size of three lengths of football fields on each side (per bcf)

When the gas industry says cf of gas they usually mean standard cubic feet, which is at 60 deg F and 14.696 psia.  So a billion standard cubic feet of gas at normal ambients occupies close to a billion cubic feet of actual volume (or water volume).
Largest LNG tanker now holds 'bout 145K m3 of tank vol => 3 BSCF (billion standard cubic feet)

probably increasing in future to 200K m3 of tank vol => 4 BSCF

Tanks are thinner towards the top and looks like future tankers will be using aluminum tanks to save weight.

Sandia Labs study classifies a successful terrorist attack on an LNG tanker as a, "Low probability, high consequence  event." Radiated heat would be damaging within a 1 mile radius.

The tops of the LNG tanks are protrude about 30% above the deck.  Just shoot high and no hull to slow it down.  The spherical tanks are mostly well inside the hull, only getting near the hull at 3 tangent points, so a hit on a tank after hull impact would need accurate placement on the tangents.  The LNG tank itself is an outer steel shell, about 3 ? feet of expanded perlite type insulation, and an inner steel shell.  Shell thickness is about 50mm (2") steel. No way near like hardened armor.  I'm  no explosive expert, but seems like anything that can get through the first layer <rocket qualifies>, would still have enough momentum to make it the rest of the way, as the inner tank will have high specified Sharpy V-notch toughness, but at low temps could be pretty brittle for a head on impact from hi vel chunks.  I'd think you'd want to keep all the little rubber boats away from these things.    
I have not seen the movie Syriana yet, and I am a little dubious of Hollywood's representation of weaponry.  (These are the same guys who are trying to figure out how many shots are in a six-shooter.)

That being said, a SRAW (or Short Range Assault Weapon) would be an excellent choice, but a bit of an overkill (and kind of expensive given the price of RPG-7s).  The SRAW is American and RPG-7s are cheap, cheap, cheap.

Most hand-held rockets of this type use a shaped charged warhead.  If you think of the pointy end of an RPG rocket, this is actually a hollow, copper cone.  The explosive behind it is also hollowed out, so there is a cavity.  When the warhead explodes, this crushes the copper into a bit of plasma and shoots it forward (This is called the Monroe effect for those still reading).

The average RPG-7 will burn through about 330 mm of steel.  The good news is, it will burn through about 330mm of air too once the round explodes.  A common defense is to put a grate or something up to make the round explode before it hits the tank.  The latest upgrades to the US M-1s have a louver across the back to protect the engine.  So long as you have a foot or so for the plasma to burn up, you are good.  Reactive armor works in a similar fashion by using an explosion to disrupt the plasma jet.  (Friendly infantry don't care for this though).

The bad news is, a rocket can have 'stacked' warheads, so one explodes, disrupts the louvers, and the second one goes through.  Another solution is using multiple rockets.

Would an anti-armor rocket work against a LNG tank?  I don't know.  The insulation between the two tanks would certainly disrupt the plasma jet.  However, the explosion will make one hell of a hot spot on the tank and surely crack the tank.  I just know I don't want to be there when it happens.

I guess I won't ask what you do in your spare time...
I love TOD just for stuff like this!
Ya with a name like that; better you don't.
Everyone needs a hobby.
I just want to point out that LNG ships
are no longer in short supply.  It used to
be until as late as 2004, but because NG
 exploration and development are behind
schedule, this is no longer the case.  
Also, enough ships are on order where we
 will not see any ship issues in the near
For reference, please see this article.
That is not my source because my info is


I think that U.S. non-conventional gas is to conventional U.S. gas as non-conventional oil is conventional oil worldwide.

What  mean by this is while U.S. shale gas and coalbed methane production have increased significantly, they have only served to slow--and not reverse--the rate of decline of total U.S. gas production.  

We are seeing something similar in Canada, where oil from tar sands production year over year is only serving to offset the ongoing decline from conventional Canadian oil production.

The common connection between non-conventional gas and non-conventional oil is that they are both very capital and/or energy intensive, with relatively low rates of production compared to conventional oil and gas.

BTW, a newly opened LNG regasification facility in the UK is also only operating at partial capacity---because of insufficient LNG supplies.  

Does anyone else see the economic stupidity of importing even more fuel?
Is it all international trade in all commodities that you think is stupid? Or just energy?
I believe Tom's point is that we should be looking to reduce our appetite for fuels, not feed them.
It is akin to a smoker buying more cigarettes, rather than trying to cut back or quit.
The drop in constant dollar incomes of workers started in the mid 70s. This is the time when the US started importing significant amounts of oil and exporting significant amounts of dollars. The US trade deficit has tracked very closely with the value of oil imports. Without big changes in US farming and manufacturing practices this trade imbalance cannot be corrected.
Instead of importing LNG we should be reducing our need for NG as well as all fossil fuels. The auto plants that have closed and will close ought to be converted into factories building wind turbines, PV and solar thermal devices, lithium batteries, zinc fuel cells, insulating materials, and numerous other things that keep petrodollars home and create new export opprotunities for US factory workers.
It also tracks well with demographic changes. The baby boom and immigration boom (immigration into the US exploded about twenty years after the baby boom and comprised workers born at the same time as the US baby boom) increased competition for less skilled and unskilled jobs, and therefor decreased comparitive pay for those jobs.
If it were just that, then real wages (adjusted for inflation) should be increasing as the Boomers retire from the workforce, as is already occuring.  The fact that it is NOT occuring, that just the reverse is happening instead ('real' wages falling versus costs) speaks volumes.  
Our energy consumption continues to increase and trade balance soars, as the country goes ever deeper in debt.  Less skilled and unskilled jobs are moving overseas, or being filled by immigrant labor.  The end result is that there is far less $$ available, from far fewer sources, to pay middle class wages.
The oldest boomers are barely starting to retire, but the flow of immigrants is continuing. The echo generation from the baby boom is also now employed. The population goes up faster than capital is accumulated, so wages fall.
It seems to me that the net value of gtl will set a floor under lng prices fob the producer, with the significant cost of transport lng to the consuming country still to be added. If oil is $60 then gtl should be worth around $8-9/mcf net of costs, so imports would be around $11-12. I think lng will add to supplies, especially if us production falls off a cliff, but cheap lng is a fantasy.

It would be nice to see a study that compares the reduction in us ng demand that is in the process of occurring as those chemical consumers that use ng for a feedstock move overseas vs the coming decline in ng production based on hubbert curves.

Thanks Dave for the nice writeup.

I have one question.  I don't understand why in general nitrogen could not be pumped into a high heat content gas to dilute it.

I understand that some current facilities may not be set up for the nitrogen dilution.

But is there a technical reason why this couldn't be added to all the LNG input hubs?

WAG.  Nothing wrong with putting it in a pipeline, but if you don't separate before its burned, I believe that it can add  NOx to stack emissions.
PS. I had high N2 and CO2 gas content in some streams from western OK and we blended it with higher quality gas from other fields connected to the pipeline a couple of hundred miles downstream to get the resulting mix in spec.  If you had the right blend stock nearby, no technical reason I know would prevent that.
Not true! The gas ARE normally burned in the surrounding atmosphere, which supplies the oxygen, mixed with 4 times more nitrogen. If oxygen is supplied mixed with nitrogen and there is not a problem, why NG mixed with nitrogen will be a problem? But why diluting the heat content of a fuel? It defeats the whole point of making a fuel concentrate more and so as reduce transportation cost. Beside it does NOT help reducing fire hazard. As long as NG makes contact with oxygen, there is the danger.
Think its you that don't get it.


The air to gas ratio flow controller makes up the mix to be combusted <usually> using source 1 @ 100% AIR and source 2 @ 100% CH4 GAS.

Let's just say to keep the math easy, we want to burn a mix that will be 50% Air and / 50% CH4, OK?

Let's also say <for same reason> AIR is 30% O2 and 70% N2

I'm no chem engineer, so I'm ignoring the actual combustion product 'cause that's all by molewt and I don't feel like converting volumes to molewt right now, but just for talking purposes... can we assume the above is our max efficiency burn target mixture?

Now what's the mix composition entering the combustion chamber using Air and 100% high BTU LNG?
0.5*30 = 15% O2
0.5*70 = 35% N2
0.5*100 = 50% CH4

With excess N2 to the LNG stream as you suggest to be used to trim BTU content, let's say that takes 10% N2 and 90% L(CH4) to get the LNG into BTU spec compliance.

Now what enters the combustion chamber?
15% O2, 35% N2 + 50% Your Mix = 15% O2, 40% N2, 45% CH4

Note that your mix is high on N2 and short on CH4.

If the combustion mix is what we targeted above, you missed it and you have 5% more N2 entering the combustion chamber which <I think> simply has to come out as NO something not good.

To compensate, you would have to start dicking around with Mother Nature and adjusting the content of the Air, or compound the fuel makeup somehow?  If you change the "Air" and add more O2 and reduce N2, you still don't hit the target mix.

No. You can't make NO that way. The chemistry does not work. The oxygen either combines with the carbon or hydrogen, or not combine with anything at all. You won't get nitrogen oxide. If makeing NO is that easy you can simply ignite the fresh air and bingo you are in the business of making nitrogen fertilizers. Nitrogen is one of the vital life supporting element and producing nitrogen fertilizer is still a complicated process highly dependent on fossil fuel energy.

Even if a minuscule amount of NO is produced, it's likely will be washed down in rain water and fertilizes plantations on the ground. Not bad at all.


Quite correct: just having nitrogen present during combustion does not automatically mean that you will be generating large amounts of nitrogen oxides (NOx).  As pointed out, if that were the case, it would be a very cheap way to make nitrogen fertilizers. Unfortunately, no such luck.

 To form significant amounts of NOx, you need an extremely hot flame plus the right set of mass transfer conditions around that flame.  Transient combustion phenomena, such as what takes place during the propagation of the flame front in an internal combustion engine seems to encourage the formation of NOx. I believe it's the cyclical heating and quenching that plays an important part in NOx formation.  

I believe. I believe. I figured my chemistry would be a problem. Thanks. Now what about getting a given target mix, given that equipment is designed to standards assuming it will burn some mix of 100% CH4 with 100% Air without auxiliary O2 bottles attached, etc.?
Basically the same reason you can't use vaporized gasoline piped up into the kitched stove.
Maybe we could use some of the CO2 we produce to dilute the high heat content NG?
Combustion makes enough CO2 all by itself.  Let's don't go adding more fire to the flame.  That's an EPA emission problem and greenhouse gas too.
My reasons for using CO2 include:
  • We are making tons of CO2 anyway, why not use it? Otherwise, it is going out the stacks anyway. The idea is NOT to go out and burn additional coal just to create CO2 to dilute NG, so there is no adding, just redirecting.
  • Another reason to process post combustion gases helps nudge the industry towards processes needed for CO2 sequestration.  
  • Compared to N2, captured CO2 is a winner from the energy perspective. It takes considerable energy to separate out the N2 from the atmospheric oxygen.  The flue gas of a coal plant is way down in O2 and the CO2 is easier to separate out than the N2.
  • CO2 has minor advantages over N2 for reducing the range of explosive concentration, and also may slightly discourage production of CO during combustion (not sure about this last one)
A WAG from a chemical engineer, but I'd guess that the higher heat content is from a higher percentage of ethane and propane in the gas.  Even if you diluted the gas with N2 (which would be expensive), a lot of appliances might have a problem with the higher mol wt components.  For instance, they tend to form carbon deposits during combustion more easily then methane.
Also need to use different burners too; number and size of all the little holes, ya know? ... the ones where the fire comes out.  They're different for different fuels.  Check out the gas CH4 stove burner in the kitchen and compare that with the butane/propane burner in the Winnebago.
If this is so, then some sort of pyrolytic or catalytic cracking of ethane and propane could be used, or you could just separate those components out, bottle them up, and sell them.
With respect to the NIMBY issue that has come up here, I neglected to add in my story that the Energy Bill signed into law last August allows the federal government to override state & local objections to construction of LNG terminals. From the Washington Post Bush Signs Energy Bill, Cheers Steps Toward Self-Sufficiency.
The law also seeks to increase another kind of imported energy: liquefied natural gas. The legislation gives the federal government ultimate authority to approve new liquefied natural gas terminals, which supporters said would lead to more being approved.
Here's an excellent overview of the issues written in April of 2005 before the bill was actually passed. Liquefied Natural Gas Provisions in Energy Bill are a Power Grab by the Federal Government. Of course, once the bill passed, these concerns became moot.
Wow! I missed that. Now I'm sure they'll eventually put one in Bayonne, NJ next to all the other oil and gas refining in the NYC area. Goodbye NY Harbor if that ever gets hit.
I have a question about the economics of the brave new world of LNG.  In the 50s and 60s, when the infrastructure of world oil trade was being put in place, mostly it was financed internally by the Seven Sisters.  There was no spot market for oil.  The chief concern of oil company managers was to make sure that pipelines, tankers, storage facilities and so on were were being fully utilized (as that maximized company profit).  Accordingly, they handed out drinking glasses and green stamps at their retail outlets to encourage us to guzzle their gasoline.  As far as I can tell, those vertically integrated behemoths are gone; their children (ExxonMobil, ChevronTexaco) are structured differently even with respect to oil.  I don't see how the LNG infrastructure can be profitably built and managed in an environment of spot markets, local shortages and fluctuating prices.  I think what I'm trying to say is simply another way of looking at what has been explained above.
Great point, I agree. Look at the deregulated electricity markets in the US. These first started in 1997 with PJM (Pennsylvania, New Jersey, Maryland) Independent System Operator. Things have continued madly and now much of the US electricity supply is traded in bulk in real-time. The result?

Since deregulation, new generation and transmission infrasturcture construction has basically stopped. In other words, spot markets provide no incentive to invest.

The LNG situation looks intractable to me. Move somewhere warm (but not texas, they get all their electricity from natural gas these days).

Here's my analysis of why deregulated and spot markets in electricity result in episodic investment patterns:


Basically, electricity markets either operate with surplus capacity and therefore no rents, or in physical shortage, with high prices but someone doesn't get the juice they want.

The high prices give a build signal to every player so overbuild results and many lose money.  When the overbuild is absorbed with rising demand, outages result and prices skyrocket due to the inelasticity of demand.

It's turning vital real-time infrastructure into a pork belly market - boom or bust.

However, there is no current large-scale effort being made toward commercially viable GTL operations at this time or in the near term future.

Let me borrow HO's quiet cough, here, and mutter something about Chevron's Oryx project, with an initial capability of 34000 barrels per day due in 2006, Chevron's Escravos in Nigeria, scheduled to come on line in 2007, Shell's Pearl GTL project in Qatar (scheduled for startup in 2009), and Exxon's Ras Laffan project, also in Qatar in 2011.

I believe the operative word in the quote you cite is large-scale. But thanks for this information, I was unaware of some of these projects. For example, from the Pearl project
The Pearl GTL project [Qatar] comprises the development of upstream gas production facilities as well as an onshore GTL plant that will produce 140,000 barrels per day (bpd) of GTL products as well as significant quantities of associated condensate and liquefied petroleum gas. The project will be developed in two phases with the first phase operational in 2009, producing around 70,000 bpd of GTL products with the second phase to be completed less than two years later. The project includes the development of a block within Qatar's vast North Field gas reserves, producing substantial quantities of natural gas.
I wish I could say that I'm impressed by 140/kbpd by 2011 but that seems to me to be the proverbial drop in the bucket. LNG imports are still the primary imports strategy of the US. Perhaps GTL will really take off in the next 5 to 10 years and become a significant part of US liquids imports, who knows? But GTL liquids and dry natural gas are two different things. Here's a nice source Gas to liquids on the subject. I only mentioned GTL to emphasize that "stranded" gas has been left alone in the past because of the difficulties in transporting it to market.
I have a question about stranded NG in
offshore oil platforms.
With the introduction of new LNG tankers
with built-in liquification, will this solve
the problem?

I am not saying these tankers exist, but
can possibly be built.

No.  The problem with stranded gas at an offshore platform is if they produce it for sale, they need a place on the platform to put the liquification equipment and then a tank to store it until an LNG tanker can come 'round to pick it up.  Offshore platform space is SUPER HIGH cost real estate.  Some of the larger North Sea platforms with gravity bases have been designed to hold oil for temporary early production schemes, for tanker pickup until a pipeline was finished or something, but GOMex platforms... got skinney legs.   You'd still need to put the big refrigerator up topsides.  Anything stranded in the Gulf will eventually be connected by pipeline anyway, so really not a problem, except maybe in some highly isolated extreme cases, but I think even those are just a matter of time.  Most platforms are usually transporting the oil or NGLs by pipeline as well as the gas, sometimes separately in one pipeline, sometimes combined in two.  
sorry should read, "sometimes separately, with gas in one pipeline, oil in another pipeline and at other times with both gas and oil going into one pipeline."
They can probably be built but you will get:

A: Idling transporttaion capacity while the liquifcation equipment fills the tanks.
B: Idle liquification equipment while the tanker is in transit and unloading.

It would be a waste of capital unless the liquification plant on the tanker is used continuously and the tanker is used as a buffer storage for quickly filling regular LNG tankers.

I guess the capital cost still kills the idea untill you reach a fairly large flow of natural gas since you more or less regardless of size needs a lot of technical functions and personell. While you wait for the tank to fill upp to be unloaded on a LNG tanker you loose energy to regasification of the boil off, this gives large losses for low fill rates of large tanks.

My guess is that the best might be to reinject the natural gas and cap the well to come back 10-20-30 years later when the natural gas is worth a lot more.

(Dont hit Post too fast.)

Then you can probably produce the gas much faster then as a contaminent in the oil flow and can get good capital and operational efficiency for a special production ship with liquification equipment touring old oil wells with saved gas.

But this is only a fairly obvious idea, I do not know if it will work.

I didn't get it.

I think we're all <myself included> talking BS here, because the actual definition of "STRANDED" gas is that, no matter how you might be able to get it to the surface, store it, transport it or whatever, a market for the stuff is still too far away to get it there and make a profit from its sales value.  I mean, that's what they call it "stranded" in the first place.

What is stranded is limited by price and technology.

I thought the problem was oil wells producing economically unusable natural gas along with the oil flow.

The idea was then to spend money and energy on reinjecting the gas into the oil well wich helps with preassurising the well. And then come back at a later date and quickly and efficiently produce the gas with equipment that can be used for draining gas out of manny previously oil producing wells.

This is of unfortunately pure speculation.

Thinks. If ships could be equipped with a liquifaction plant and adequate LNG storage (or could pump it to an LNG tanker)....

Is a mobile ship based LNG liquifaction plant feasible?

Could it make economic sense? Maybe a small fleet of LNG barges to carry the stuff from the ship based plant to land? Perhaps even a trailed pipeline for the LNG (getting a bit unreal there, maybe)?

It's technically feasible.  You need compressor(s), heat exchangers (sizable plate and fin), turbo-expanders, and some sort of driver for the compressors.  On a ship it would probably be a gas turbine.  Why you would want to do this is another question, unless there's a free ship floating around somewhere.  It would be cheaper to just put an extension on a platform.
The ship could be a longer term investment with a usable life for several platforms / fields, also could probably be situated at a safe distance from the platform to reduce risk. Many sea platforms have a relatively short oil pumping life and I am presuming the profitable gas producing period would be shorter still.

Thanks for the tech and feasibility info, it sounds (superficially) easier than I expected.

Exactly. The "Stranded" definition changes at any given time with both advances in technology and the economic conditions of the potential market area(s). If a potential market area lacks an LNG terminal (for ex.) the gas is "stranded" until a terminal is built. North Slope gas will be stranded until a gas pipeline is constructed to connect it with the lower 48. While flaring was an old time practice in the US, it is prohibited now, except during well tests or emergency situations. Associated gas (gas produced from a well with high oil & low gas output) must be reinjected back into the well for (hopeful) recovery at some future date, when presumedly an extensiton to an existing pipeline finally gets within field connection range, or the gas price goes up enough to build a new pipeline directly to that field. In the meantime, injection helps keep oil flow up, since the gas pressure is thereby replaced.
in view of dave's excellent LNG review.....what is worth more...NG from canada, delivered via existing pipelines...no boats....or syncrude from tar sands....i think heating will be more important than gas for the buggy...and with NG depleting faster...which would you choose?

I think another topic is what it will be used for.

If much of it is used for electricity production, as advertised, over 50% of the LNG energy vanishes.
Heating homes is less than 10% energy wasted.
I'm not sure about the numbers for fertilizer, but I bet it's better than LNG to electricity.
Also the NIMBY issue is basically BS, we have 4 proposals here and the developers are advertising in oil and gas mags. because they can't find partners.
The main issue is the worldwide LNG market, which to me does not pencil out.  It appears to be a heavily tax-payer subsidized boondoggle.  The US has already invested 14 billion in Qatar LNG, not to mention grants for "un-conventional" gas production and tax breaks for pipelines, along with FERC having total control over the placement of LNG facilities.

I can understand why over the last several decades utilities favored going with gas-fired modularized generating units when adding electrical generating capacity (i.e., low capital cost, few air emission problems, short lead-time, etc.), but I think in the long run we will regret it. Perhaps we already are.

As pointed out, due to thermodynamic reasons, any electrical generation using a heat engine will necessarily lose 50% or more of its heat input as rejected heat. No easy way around that basic fact.  Therefore, from a strictly energy standpoint, it would seem more prudent to use  our lowest-value fuel, such as coal, for electrical generation, and save natural gas, a high-value fuel, for domestic heating, fertilizer production, and petrochemicals.

Maybe the rising price of NG will correct this, and maybe what appears to be the growing (though grudging) acceptance of nuclear power plants will also help. But there is still a great deal of inertia in the system to continue generating large amounts of electricity via NG.

Gas turbines are more efficient than steam turbines.  ^The natural gas plants have better thermal efficiencies and lower capital costs than coal.  We should heat homes with coal and save the natural gas.

Of course we should also use the waste heat from power plants as a heating source.  This is still done in NYC.

'Heat homes with coal and save the natural gas'......save it for what? Burning it in a power plant?

With a coal-fired power plant at least it's technically and economically feasible to install particulate and SO2 removal systems.  But it is absurd to think you can do the same with a coal furnace in your house. So if we go back to coal for a significant amount of home heating, we will have very sooty and acidic air pollution problem. Think Pittsburgh air quality circa 1946.

I thought we were talking efficiency here.  Besides, a case can be made that burning coal in large chunks in a small furnace emits much less particulates than how it's done in a power plant.  And an add-on for SO2 and CO2 removal would be doable.  At that size a biological unit might even work.
When you burn coal in a fluidized bed it does indeed emit more particulants than when you burn it in a home furnace. However, it is much easier to trap the particulants in a large central station power plant than in your furnace at home. Ditto for sulfur and nitrogen oxides. And someday for CO2 and mercury.
I've been begrudged towards burning natural gas for electricity production for decades!

Here's an article I did detailing the costs of baseload generation from imported LNG vs a comparable output of nuclear power plants:


In fact, our lowest cost fuel, on a $/BTU basis is uranium.

As to the safety of LNG terminals, I will abstain from comment and allow others to research and judge for themselves.

BTW, the cost of nuclear heat in the reactor is about 50 cents/million BTU.  That includes mining, conversation, enrichment, fabrication, transport, interest, and waste disposal.

Also, heat content is not they only specification for pipeline gas quality.

Note that the octane number of natural gas will decrease with increasing amounts of ethane, propane, butane, etc which the liquifaction process concentrates.  This also affects flame speed.  Dilution with N2 doesn't materially affect this and could weakly increase NOX production which is a function of combustion temperature and N2 concentration.

I think France has the cheapest electricity in Euroland and is up to supplying about 80% via nukes, no?
One difference between an LNG terminal and a nuclear power plant is that when you lose an LNG terminal you only kill a few thousand people.
I had hoped to NOT get in a discussion of relative safety of nuclear power plants and fuel cycle vs. the LNG fuel cycle.  I can point to a perfect track record for the US commercial nuclear power industry over the last 50 years.

Not only has NO member of the public suffered physical injury but no WORKER inside the plants has suffered radiation sickness or death.

Some one will surely add that the media scared the bejeezus out of millions at Three Mile Island and Karen Silkwood had a one bad auto accident but those are stretches.

As to LNG terminals, I will leave it to others to describe the effects of a 100 kiloton energy equivalent tanker load of liquid methane going up as a pillar of fire inside some harbor near you.  I will remind people that that makes for crispy critters at a one mile radius.

Still, I support additional LNG terminals because I think them worth the risk, I think we need the gas, and because there are none proposed in my backyard.

Apologies in advance for this frivolous, utterly tasteless, insensitive and politically incorrect comment...

Crispy critters sound almost appetising, but I wouldn't be happy eating the leftovers of a radiation accident party.

But radiation is a food preservative!
I have a newby question.  Is it posible that the natural gas we get these days is beng diluted with more nitrogen/or of lower methane content then previously?  I ask because I have been very impressed with natural gas storage surviving the declines in supply we have had, and wonder if it is all due to demand destruction primarily in fertilizers.


We have so far had one of the mildest winters on record. Out of a typical 7 quadrillion BTUS of home heating usage 5 quads of that comes from natgas. As prices were high going into winter alot of people switched and used electricity, wood, etc. On top of that switching, its been incredibly warm, so NG withdrawals from system have been negligible. Eastern europe and asia have had very cold weather however -nat gas, unlike oil is not yet a global market in the sense that their cold does not cause drawdowns in our stocks.
There is a chance, but its not likely it is happening. Every time gas is exchanged between owners or important segments along the pipeline, from gas producer to gas gathering line, at compressor stations, between gas pipeline companies, delivered to the town border station or local distribution utility, it passes quality analyisis and BTU content instruments to make sure that basically only BTUs content is paid for. There is not economic advantage for a pipeline to ship a lot of gas at low BTU content, because shipping the volume costs money, but they only get paid for BTUs delivered. Therefore they have a natural incentive to keep BTU content high. Pipeline gas quality standards are also set within a narrow range so the "standard" equipment where it eventually gets burned can count on getting something it knows it will can burn efficiently when mixing with standard air. While BTU content near a field with high nitrogen, carbon dioxide, hydrogen sulfide content may vary, it is quickly corrected to pipeline quality specs. by blending with higher quality streams from surrounding fields. I think NG is always within about 990 to 1050 BTUs/CF by the time it arrives at the consumers point of use.
The Canadian election will have an impact on the USA. Harper's minority govt. will have a more friendly oil affect on USA, but still some diplomacy on fishing and soft timber issues.

Europe and Japan (China and India?) will be worst off on the approaching Iranian crisis.

That "Stranded Natural Gas" article mentions a company that doesn't seem to make a lot of profit, yet tries to make synfuel.

" One aspirant to this royal achievement is a tiny R&D company in Tulsa, Oklahoma called Syntroleum Corp. In 20 years of struggling Syntroleum hasn't made a dime (last year it lost $34.6 million on revenues of $19.2 million). But it says it has refined a gas-to-liquids process to the point that it's now cheap and safe."

I think that if you would want to make (a lot) of money after peak oil you should invest into those companies.

Here I find myself in the rare position of commenting on my own post. I am greatly appreciative of the thoughtful discussion here but I'm bit concerned that my main points have been largely overlooked. Perhaps I did not make myself clear. Here's a succinct summary of what I was trying to convey to TOD readers and contributors.

The policy of increasing NGL supplies in the next 10 years (and further out) is fraught with peril.

  • If you look at Figure 1 and Figure 2, you can see that there is no immediate relief in sight for increasing dry natural gas supplies to the US in the next decade even if the world plan to open up the natural gas market by means of LNG is reasonably successful. However, this means at least 5 more years of shortfalls in supply.
  • Aside from the LNG heat content issues and the accident dangers presented by the LNG terminals or liquefaction facilities themselves, the entire worldwide build-out of both terminals and liquefaction facilities requires large lead times, massive investment and presumes that unfavorable trade agreements or geopolitical events will not disrupt imports. Already, we see that Russia is using natural gas as a weapon. This is a trend that is likely to continue.
  • Note that the headline of a Washington Post article I cited above is "Bush Signs Energy Bill, Cheers Steps Toward Self-Sufficiency. You don't have to be a genius to see that a policy designed to increase gas imports via LNG is a policy that is designed to make our foreign dependence on energy and our trade deficits even worse than they already are. I can not emphasize this point enough.
Development of "stranded" natural gas by conversion to GTL using Fischer-Tropsch or some other process to convert dry gas to liquids does not alleviate future US natural gas supply shortfalls but may marginally increase world liquids production. Altering heat content by various means may help increase the supply of gas that can be imported by the US but does not affect how much supply will be available for export in a highly competitive world market. No matter how you slice it, North American natural gas prices will be high and getting higher from here on out.

These were the main points I was trying to make when I wrote this post.

I think most realized these points and agreed with them.  So posters moved on to other topics about LNG.
LNG is not going to save the US, but is a small piece of the energy puzzle, but LNG backers (I'll say it, Republicans) already have their talking points that LNG will save this country from the upcoming energy crisis...this is very dangerous.
I don't know how many times I have heard this line:
"If it wasn't for NIMBY's and their radical environmentalist buddies, we could import all the LNG we need for decades and wouldn't be forced to subsidize renewable energy."
This whole line is a complete lie.  And I hear it on the radio a couple times a week.
Sad part is 40% of the population believes it and it just so happens to be the 40% that make all the choices for the US.
LNG terminals are in harbors, harbors are near the ocean at some point, ocean land is valuable and costs money, so the zoning board is not going to let you build a bomb near their vacation homes.
Unless the feds overrule them, which they have. Bush, Junior's regulators have approved building lots of LNG terminals. Which ones are built is going to be an interesting political question.
BioDiesel's reference to "talk radio" is important.  It's always worthwhile to step out of the cocoon of people who already agree with you and hear what others are saying.  The right wing is preparing for the energy crunch (possibility of skyrocketing prices) by developing the storyline that energy shortages are the fault of environmentalists (won't let us build LNG terminals, gasoline formulations; anti-nukes, etc.)  "Peak oil" is not only a geologic problem and an economic challenge, it is a political issue: as voters feel the energy noose tightening, politicians will need someone to blame.  Enviros are being set up to take the fall.  The Bush Administration announced last week that our Number One domestic terrorist threat was who?  Enviros and animal rights folk.  Or did you really think that President Bush was going to take responsibility for failing to tackle our nation's energy security problem?
They will certainly try, but I'm not sure how well it's going to work.  It's quite hard to pass the buck when you control all four of the main parts of government.  When gas went to $3, Bush's approval ratings went in the tank.
The other problem is that if Canada ramps up its Tar Sands operations to 5 million barrels per day then it is not going to have as much gas to export.

In-situ tar sand oil takes 1000 cu feet of gas per barrel.  5 million barrels per day could take 5000000 X 1000 X 365 cu feet of gas per year = 1 825 billion cu feet of gas.

Currently the USA imports approx 3 600 billion cu feet of gas per year from Canada.  Tar sands would take half of this out.

Will the USA choose the oil or the gas?

I've had this same thought.  Rumor has it there is going to be an LNG facility, to run gas from the coast
to Alberta.


Yep, that is the generally accepted definition of insanity....continuing to do the same thing yet expect a different result or outcome.
One word:

Nuff said (NOT).

To make oil from oil sands, you need tons of heat and steam. So power and WATER. Nuclear power answers the heat.

Water? Gonna be hard to come by. Even if you wanted to ramp up production massively using NG, you still need the water.

I've heard many times of the coming New Lake Ontario of Toxic Sludge. But where is all that water gonna come from?

The melting polar ice-cap.