What Is Liquefied Natural Gas (LNG)?

Liquefied natural gas (LNG) is natural gas that has been converted to a liquid form for the ease and safety of natural gas transport. Natural gas is cooled to approximately -260 F, creating a clear, colorless, and non-toxic liquid that can be transported from areas with a large supply of natural gas to areas that demand more natural gas.

In its liquid state, natural gas takes up 1/600th of the space, meaning that natural gas is shrunk 600 times, making it much easier to ship and store when pipeline transport is not feasible. As world energy consumption increases, experts anticipate that the LNG trade will grow in importance.

Key Takeaways

  • Liquified natural gas (LNG) is natural gas that has been cooled into a liquid form for ease of transportation.
  • LNG demand is growing as the world turns towards cleaner sources of energy.
  • The largest exporters of LNG are Australia and Qatar, with the U.S. expected to overtake them in the next few years.
  • The largest demand for LNG comes from China.
  • LNG is being looked at as an alternative source of fuel for automotive vehicles and other uses rather than just a means of transport.

How Liquefied Natural Gas (LNG) Works

Liquefied natural gas is primarily used to transport natural gas from one source to another. Exporters use this method when shipping to different countries and across bodies of water when pipelines aren't available.

There are two main approaches to liquefying natural gas in large quantities

  • The cascade process
  • The Linde Method

The cascade process refers to the cooling of one gas by another gas, resulting in a cascading effect. The Linde Method is regenerative cooling, where it is compressed, cooled, and expanded, until it is eventually cooled into a liquid.

Liquefied natural gas is best known as a transport tool, but it is starting to gain mainstream adoption. The automotive industry is evaluating the usefulness of gas as fuel for internal combustion engines in over-the-road trucking, off-road vehicles, marine vessels, and railways.

Global Demand for Liquefied Natural Gas (LNG)

Despite having one of the world's largest reserves of natural gas, the United States imports a small percentage of its natural gas as liquefied natural gas from France and Trinidad. In fact, as of 2019, the United States was the third-largest exporter of LNG and is expected to become the largest exporter by 2025, surpassing Australia and Qatar.

In 2020, the largest importers of U.S. LNG were South Korea, Japan, and China. Future demand growth will come from Asian countries, as they look toward LNG as a replacement for coal as an energy source.

Once the natural gas is liquefied, it is then stored in special tankers and transported to its point of destination. There is no possibility of LNG exploding if there is any sort of leak or spill. LNG and the gases that it consists of do not explode in an open-air environment. Once LNG is delivered, the natural gas is allowed to expand and convert back to its gaseous form by reheating, a process known as regasification. Once regasified, the natural gas is distributed via pipelines to consumers.

LNG Imports
LNG Imports.

Other major exporters of LNG include Indonesia, Nigeria, Russia, and Malaysia. Russia has the world's largest supply of natural gas, followed by Iran and Qatar. As of 2020, Japan is the world's largest importer of natural gas primarily through increases in LNG purchases.

LNG Exports
LNG Exports.

The Future of Liquefied Natural Gas (LNG)

Global demand for LNG experienced rapid growth from near-zero levels in 1970 to a meaningful market share today. 51% of that demand came from China, Japan, and South Korea in 2019. The LNG industry is booming as the world aims to break away from traditional and polluting energy sources such as oil and coal to focus on clean energy.

McKinsey and Company estimates LNG demand to increase 3.4% per year till 2035. Gas will be the fastest-growing fossil fuel with an estimated growth rate of 0.9% from 2020 to 2035, and in 2020, the gas demand decreased by 3.0% while the LNG demand grew by 1.0%.