DWP -- Transportation of Liquefied Natural Gas

8/12/2019 DWP -- Transportation of Liquefied Natural Gas

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Honorable Warren G. MagnusonChairman, National Ocean Policy StudyU.S SenateWashington, D. C. 20510

.

Honorable Ernest F. HollingsVice-Chairman, National Ocean Policy

StudyU. S. SenateWashington, D. C. 20510

Gentlemen:

On behalfwe are pleasedTransport at ion

of the Board of the Office of Technology Assessment,to forward the results of this assessment of Theof Liquefied Natural Gas which was requested by your

Commit tee.

This report provides a concise analysis of current LNG tech-nology and possible t rends in the use of LNG. I t a l s o i d e n t i f i e s

and d iscusses the major po l icy i ssues . We hope this report willbe a useful resource to your Committee and to the Congress whenit debates energy questions in which LNG is a factor.

S i n c e r e l y ,

S i n c e r e l y ,

. . .

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Foreword

This repor t i s an assessment of thetransportation of liquefied natural gas (LNG).The assessment was requested by the SenateNational Ocean Policy Study for use in con-sideration of major new projects for the im-portation of natural gas, and of the competingalternatives for transporting natural gas from

Alaska through Canada (pipeline all theway), or through Alaska only and thence viaLNG tankers to the lower 48 States.

This report is divided into three parts:Chapter I presents a factual description of theLNG systems and facilities and the Federalregulatory process governing the developmentand operation of such systems. Chapter IIpresents a critical review of key portions of theLNG system where technological or politicalproblems may occur. Chapter III outlines thekinds of actions desired by interested parties.

The report identifies nine areas which maybe of concern to the Congress as it considerspossible new legislation, oversees Federalagencies, and appropriates funds for agencyoperations and research. The areas of near-term concern are: the design and constructionof LNG tankers, the regulation and inspectionof LNG tankers and their operation, theregulation and inspection of LNG terminalsand their operation, the Federal decisionmak-

ing process in the certification of LNG importprojects, and the status of current research onLNG and the need for further inquiry.

The areas of longer range interest are:regulations and criteria for the siting of LNGfac i l i t ie s , l iab i l i ty for LNG acc idents ,reliability of foreign suppliers of LNG, andpolicies for pricing LNG.

One LNG import terminal is currentlyoperating in the United States. By early 1978,two others will be operational. As a result ofthese operations and other projects now pro-posed, LNG could make up 5 to 15 percent ofthe total U.S. natural gas consumption by1985. Several pieces of legislation to regulatethis growing industry are now before the Con-gress. Hence the timeliness and importance ofthis assessment for the Congress.

Two related studies for Congress are cur-rently in progress: a safety study by theGeneral Accounting Office, and an energyfacility siting study by the Office of Tech-nology Assessment.

This assessment was performed by PeterJohnson, project director, and the OceansProgram staff, under the overall direction ofRobert W. Niblock, the Program Manager.

DANIEL De SIMONEActing Director

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OTA Oceans Program Staff

Robert W. Niblock, Program M anagerPeter A. Johnson, Project Director

Prudence S. Adler Anne FennKathleen A. Beil Emilia L. GovanThomas A. Cotton Judith M. RoalesRenee M. Crawford Bennett L. Silverstein

Karl Vischer

Consultants

Gary Baham

Richard C. RaymondRalph Smalley

Ad H oc Pan el o n T r a n s p or t a t i o n o f LN G

Irvin BuppHarvard University

Gene CosgriffBring Legal Action to Stop the Tanks

Robert DevoreAmerican Gas Association

Martin EnglerEl Paso LNG Company

Mike EatonSierra Club

Max LevyColumbia LNG Corporation

Ruth MathesMaryland Conservation Council

O.W. MoodyAFL-CIO Maritime Trades Department

Gene SchorschSun Shipbuilding and Drydock Company

Bruce Terris

AttorneyRobert WestreichNew Jersey Department of Public Advocate

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It is possible that during the next twodecades 5 to 15 percent of the U.S. naturalgas consumption could be filled with LNGfrom Alaska or foreign countries. This wouldbe a major increase over present LNG importlevels. This gas will reach the United Statesby means of a complex and expensive systemconsisting of liquefaction facilities, specialized

cargo tankers, and regasification and storagefacilities.

To date, there have been few seriousproblems in the operation of small-scale LNGfacil i t ies exist ing in the United Sta tes .However, new ships and plants will be con-siderably larger than exist ing ones, andproblems of scale and limited experiencemake it difficult to predict with any degree ofcertainty the safety of the LNG system.

It appears that the most serious incidentscould occur as a result of an LNG tanker acci-dent. Therefore, while the tankers appear tobe well designed and constructed, better con-trol of vessel traffic in U.S. ports and water-ways, improved inspection procedures afterthe ship has been commissioned, and man-da tory c rew and inspec tor t r a in ing a reneeded.

At the onshore facilities where LNG isreceived, stored, processed and sent into a gasdistribution pipeline, improved inspectionprocedures are also needed to enhance thepublic safety. However, the major issue sur-

rounding the onshore facilities is the questionof where they should be located. There arecurrently no Federal guidelines for choosingsites of LNG or any other energy facility.There is considerable public pressure for suchguidelines, particularly criteria which wouldlimit facilities to unpopulated areas.

Summary

Regulation of LNG systems is hampered byjurisdictional overlaps (particularly betweenthe Federal Power Commission and the Officeof Pipeline Safety Operations), some gaps inenforcement (particular the lack of inspec-tion to assure compliance with stipulations inFPC permits), and the lengthy Governmentprocedures which do not result in timely deci-

sions for the applicant and do not give thepublic adequate participation in decisions(particularly in the FPC licensing of LNGprojects).

In addition, the lack of firm Governmentpolicy on such matters as LNG import levels,pricing mechanisms to be used, and theFederal role in siting of facilities makes plan-ning difficult for both the gas industry and thepublic.

Past research has produced conflictingresults and predictions about the safety ofLNG and it is unlikely that future researchwill resolve the differences and come to firmdecisions. For that reason, public policy deci-sions about LNG systems will probably bemade principally on the basis of nonquantita-tive approaches. These decisions should resultin prudent siting of facilities and strict design,construction and operation standards.

This report identifies nine areas which maybe of concern to the U.S. Congress in its con-sideration of possible new legislation, over-sight of Federal agencies with responsibilities

for LNG systems, or appropriation of funds foragency operations and research.

The first five areas are concerns about ex-isting equipment and procedures for facilitieswhich are already operating or will be operat-ing in the near future. Regulatory changes in

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these areas must be such that they can be ap-plied to ongoing projects. These areas are:

tanker design and construction (pages42-45);

tanker regulations and operations (pages46-49);

regulation of terminal operations (pages50-52);

decisionmaking process in certification ofimport projects (pages 53-57);

safety research on LNG (pages 58-62).

The second four areas addressed have morelong-range implications and will affectpolicies and facilities for future projects.These areas are:

. LNG facility siting (pages 63-67).

. liability for LNG accidents pages (68-70).

. reliability of supply (pages 71-75).

pricing policy (pages 76-78).

. . .

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Acknowledgments

The staff wishes to acknowledge the help and cooperation of the follow-ing groups and individuals during the preparation of this study:

Algonquin G as T r an s mi s si o n Company(Massachusetts)

Roy Alper, California Citizen Action GroupAmerican Gas Association (Washington, D. C.)Rober t Apple , The S tanwick Company

(Virginia)Larry Ask, Southern California Gas CompanyHoward Bertolucci, Massachusetts Depart-

ment of Public UtilitiesBarbara J. Bockert, New Jersey Coastal Zone

Management OfficeJoe Bodovitz, California Coastal Zone Con-

servation CommissionTim Brick, Campaign Against Utility Service

Exploitation (California)Pat Brown, California Council for Environ-

mental and Economic BalanceJohn Callahan, Rhode Island Public Utilities

CommissionJames Carroll, California Council for En-

vironmental and Economic BalanceGordon Carruth, Georgia Coastal Zone Com-

missionJohn Chadwick, (California)Columbia LNG Corporation (Delaware)Rev. Thomas D. Corrigan, Massachusetts

Fair ShareJ im C ro ml ey , N a ti o n al P a rk R e si d en t s

Organization (New Jersey)Department of Commerce: Maritime Ad-

ministration (Washington, D. C.)Department of the Interior: Bureau of Mines(Washington, D. C.)

Department of State (Washington, D. C.)Department of Transportation: Office of

Pipeline Safety Operations (Washington,D. C.)

Department of Transportation: U.S. CoastGuard (Washington, D. C.)

Distrigas Inc. (Massachusetts)Frank Dorrigan, Providence City Council

(Rhode Island)

Energy Research and Deve lopment Ad-ministration (Washington, D. C.)

James Fay, Massachusetts Institute of Tech-nology

Federal Power Commission (Washington,D. C.)

Larry Forelich, Central Power and LightCompany (Texas)

Harry Fritz, New Jersey Public Utilities Com-mission

General Dynamics Corporation (Massa-chusetts)

John C. Gerard, Los Angeles Fire DepartmentRobert Gresimer, United Gas Pipeline Com-

pany (Texas)Edwin Hood, Ship Bui lde rs Counc i l o f

America (Washington, D. C.)John Howard, First State Bank and Trust

Company (Texas)Frederic John, California Public Utilities

CommissionTsujio Kate, Mayor of Oxnard, Calif.Mrs. Terry King (New York)Elizabeth Kleban, Sewaren Civic Association

(New Jersey)

Helen Linker, Natural Resources DefenseCouncil (California)Hank Marcus, Massachusetts Institute of

TechnologyPhilip W. Marking, Point Conception Preser-

vation Committee (California)K e s h a v a n N a i r , Woodward-Clyde Inc .

(California)

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Joe D. Porricelli, ECO Inc. (Maryland)Louise Potter, Concerned Citizens of Cumber-

land (Rhode Island)Eldred Rich, New York Department of En-

vironmental ConservationHerman Rhodes, Gulf Coast Conservation

Association (Texas)

Charles Romick, Gloucester County PlanningDepartment (New Jersey)

Adm. N. Sonenshein, Global Marine Develop-ment Inc. (California)

David Lee von Ludwig, Bring Legal Action toStop the Tanks (New York)

Andrew Wall, Al Larson Boat Shop (Califor-nia)

Harold R. Wesson, Wesson and AssociatesInc. (Oklahoma)

Mrs . Raymond West , Washington Park

Citizens Association (Rhode Island)Sidney Wolf, Environmental Policy Center

(Washington, D. C.)


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Contents

ChapterPage

I. Description of LNG Technology and Import System . . . . . . . . . . . . . . . 1

Volumetric Conversion Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Supply and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Description of LAG...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Safety Record of Early Use of LNG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Regulation of Import Projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9LNG Tanker Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10LNG Tanker Certification and Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . 18LNG Terminal Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20LNG Terminal Siting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23LNG Terminal Regulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Trends in LNG Use and Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Existing and Proposed LNG Projects, In Brief . . . . . . . . . . . . . . . . . . . . . . . 29

.

II. Critical Review of Components of LNG Import System . . . . . . . . . . . . 39

Paper 1LNG Tanker Design and Construction.. . . . . . . . . . . . . . . . . . . . 42Paper 2LNG Tanker Regulations and Operations. . . . . . . . . . . . . . . . . . 46Paper 3Regulation of Terminal Operations . . . . . . . . . . . . . . . . . . . . . . . . 50Paper 4Decisionmaking Process in Certification of LNG Projects . . . . 53Paper 5-Safety Research on LNG Facilities . . . . . . . . . . . . . . . . . . . . . . . . 58Paper 6-LNG Facility Siting . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . 63Paper 7Liability for LNG Accidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Paper 8-Reliability of LNG Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71Paper 9LNG Pricing Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

III. Public Awareness and Concerns About LNG. . . . . . . . . . . . . . . . . . . . . . . 79

Actions Desired By Gas Utility Companies . . . . . . . . . . . . . . . . . . . . . . . . . . 82Actions Desired By Organized Labor Groups . . . . . . . . . . . . . . . . . . . . . . . . 83Actions Desired By State and Local Officials . . . . . . . . . . . . . . . . . . . . . . . . 83Actions Desired By Related Industries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84Actions Desired By Public Interest Groups . . . . . . . . . . . . . . . . . . . . . . . . . . 85

IV. Appendixes .***... .**.**.*. ******** ***.**.* ***.**.* .***..... . . 87

A.B.c.D.E.

Cove Point, Md., Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89Federal Agencies Involved in LNG Import Projects . . . . . . . . . . . . . . . 96Laws and Cases Relevant to LNG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97Congressional Hearings Conducted on LAG...... . . . . . . . . . . . . . . . . 99Pending Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

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L IST

F igure

. .

1.

2.

3.4.

5.6.

7.

8.

9.

10.11.12.

13.14.15.16.17.18.19.20021.22.

123.24.25.26.27.28.29.30.31.32.33.

34.35.

36.

37.

38.

O F F I G U R E S

N o. Page

U. S.-Natural Gas Consumption 1971 -1976 . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

World Proportional Natural Gas Reserves By Major

Supplier Country . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Existing International LNG Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4U.S. LNG Import Projection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Status of U.S. LNG Import Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Sources and Destinations of Major Planned LNG ImportProjects/1978-1985 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6International LNG Trade Routes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Total Capacity of World LNG and LPG Tanker Fleet . . . . . . . . . . . . . . . . 12LNG Tankers On Order or Under Construction in U.S.Shipyards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Profiles of Typical LNG Ships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Comparison of LNG Tanker and Crude Oil Tankers . . . . . . . . . . . . . . . . . 14Inboard Profile of LNG Tanker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Free-Standing Spherical LNG Tank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Free-Standing Prismatic LNG Tank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17LNG Membrane Tank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Comparative Characteristics of Some LNG Tank Systems . . . . . . . . . . . . 18Specially Constructed Tankers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21Aboveground LNG Storage Tank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Layout of Cove Point, Md., LNG Receiving Terminal . . . . . . . . . . . . . . . . 23Cove Point, Md., Facility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23Storage and Diking at Onshore LNG Plant . . . . . . . . . . . . . . . . . . . . . . . . . . 25Projected Future LNG Imports (Based on ProposedProjects and Reasonable Approval Time) . . . . . . . . . . . . . . . . . . . . . . . . . . . 27Artists Rendering of Offshore LNG Terminal . . . . . . . . . . . . . . . . . . . . . . . 28Project Data Sheet:Project Data Sheet:Project Data Sheet:Project Data Sheet:Project Data Sheet:Project Data Sheet:Project Data Sheet:Project Data Sheet:

Distrigas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30Phillips/Marathon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31El Paso I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32Trunkline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34Pacific-Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35El Paso II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36Pacific Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37El Paso-Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Average Vessel Capacity of World LNG Tanker Fleet. . . . . . . . . . . . . . . . 44Procedure for FPC Certificate of Public Convenienceand Necessity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56Typical Fault Tree for Leak Which Is Not Listed . . . . . . . . . . . . . . . . . . . . 61Distances a Vapor Cloud May Travel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

States Dependent on Companies Using LNG as Part ofGas Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73Percent of LNG in State Consumption and CompanySupplies (Imports from Foreign Countries Only). . . . . . . . . . . . . . . . . . . . . 74Percent of LNG in State Consumption and CompanySupplies (Including Alaskan Gas) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

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Volumetric Conversion Table

VOLUME RELATIONSHIPS

LNG Gas/Liquid Ratio 619.8 to 1

1086 Btu/Cu. Ft. Spec. Grav. 0.465

LNGConversion

Factors

1 MCF

1 Gallon

1 Imp, Gal

1 Cubic Foot

1 Barrel

1 Cubic Meter

1 Metric Ton

1 Therm

Gas

CubicFeet MCF

1000.0 -

8 2 8 5 0 0 .0 8 2 8 5 0

9 9 5 0 3 0 .0 9 9 5 0 3

619.80 061980

348008 3.48008

21,886 21,886

4 7 ,1 0 3 4 7 1 0 3

9 2 0 8 1 0 ,0 9 2 0 8

Liquid

Imp. Cubic Cubic MetricPounds Gallons Gal. Feet Barrels Meters Tons

46758 1 2 0 7 0 1 0 .0 5 1 1,6134 0.28735 0.045692 .02123

3.87390 - 0.8327 0.13367 0,02380 0,003785 0001759

4.6526 1,201 - 0 16 05 4 0.028 58 0, 004546 000211

28.981 7.4811 6.229 - 0.17810 0.02832 0.01316

162,72 42,005 34,97 5,6148 - 0,15901 0.07388

1023,3 264.16 220,0 35314 6.2888 - 0.46463

2202,4 568,53 473,4 75.996 13.535 2.1522 -

4,3055 1.1114 0,92546 0, 14856 0.02646 0,00421 0.00195

10.860

0.89975

1,08059

6.7311

37,794

32768

511 54


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Chapter I

S UP P LY AND DEMAND

Description of LNG Technology

and Import System

Natural gas is a major source of energy forthe United States, supplying 20 trillion cubicfeet, more than one-quarter of the total energyconsumed in this country, during 1976.1

Although U.S. production of natural gashas been declining since 1971 (figure 1), thereare significant supplies of natural gas inseveral regions of the world where there is lit-

Figure 1. U.S. Natural Gas Consumption 1971-1976

Yearly

Total 25Consumption

Trillion

CubicFeet 20

15

10

5

1971 1972 1973 1974 1975 1976

U S Production

Source Federal Energy Administration Monthly Energy Review, March 1977

1Federa] n r~ Administration, Mon th l y Ene rgyReuzew, March 1977.

Figure 2. World Proportional Natural Gas ReservesBy Major Supplier Country

Country Percentage

USSR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Iran . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Algeria*. . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Abu Dhabi* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Total 75

Countries with little or no gas demand.

Source Department of the lnterior World Natural Gas Annual 1975

tle or no gas demand (figure 2). To date, muchof this natural gas has been wastedin 1975,6.5 trillion cubic feet were vented or flaredworldwide. z

To use the natural gas which would other-wise be untapped or wasted, importation ofnatural gas is one of several supplementalsupply schemes used by those areas of theworld with large energy demand, primarilythe Uni ted S ta tes , Europe , and Japan .Natural gas has been carried overland by con-ventional pipelines, and about 1 trillion cubicfeet of natural gas is imported in that mannerfrom Canada to the United States each year.However, in order to import natural gas in aform practical for water transportation fromEastern Hemisphere nations, a system has

been developed to convert the gas to liquidform at about l/600th the volume. The lique-

U.S. Department of the Interior, Bureau of Mines,Worl d Natur al Gas Annual (Washington, D. C.: U.S.Department of the Interior, Bureau of Mines, 1975).

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4 CH. I DESCRIPTION OF LNG TECHNOLOGY AND IMPORT SYSTEM

fied natural gas (LNG) is then shipped inspecially constructed tankers, introducing amarine link in the supply and demand ofnatural gas. This marine link is a large com-ponent, consisting of the liquefaction facility

Figure 3. Existing International LNG Trade

Amount per Day

Date Started Supplier to Importer (million cubic feet)

1972

1977

1964

1969

1969

1969

1964

1971

Brunei to Japan

Indonesia to Japan

Algeria to France

Libya to Italy

Libya and Algeria to Spain

Alaska to Japan

Algeria to United Kingdom

Algeria to Boston, Mass.

737

550

400

235

160

135

100

44

Source Pipeline and Gas Journal, June 1977

Figure 4. U.S. LNG Import Projection

at the source of the gas, the LNG tanker, andthe receiving terminal and regasificationfacility at a location near a gas distributionnetwork. It is a very capital-intensive system,which can cost more than $1 billion to con-struct. A large 500 million cubic feet per dayproject with four ships could require a $2bil l ion capita l expenditure for l iquefac-tion/export facilities ($1 billion), ships ($150million each), and import/regasificationfacilities ($300 million to $400 million). Im-plementation of all announced LNG projectscould require capital expenditures in excess of

$35 billion worldwide. In the United Statesalone, construction of facilities and ships forthe import of LNG could require $20 billion. a

:1 LNG Rep rt, Pipel ine and Gas Journ al 204 June1977).


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S u c h h u g e c a p i t a l e x p e n d i t u r e s a r egenerally financed by a multinational mix ofgovernments and private firms. The U.S.Government has already provided about $716million in subsidies, loans, and loan guaran-tees in connection with LNG projects. Morethan two-thirds of that support has been givento the foreign portions of the projects. A

Europe became the first steady market forLNG in 1964 (figure 3). Japan took over as thekey market about 1972, receiving about 49percent of the LNG moving in internationaltrade. However, the United Stateswhich hasused very limited imports of LNG only since1971is projected to become a major LNGcustomer if ventures now planned go for-ward. b

The United States is presently a net ex-porter of LNG. More than 32 billion cubic feetof natural gas in the form of LNG has beensent to Japan from southern Alaska each yearfor the past 5 years, while only about 15billion cubic feet per year is imported fromAlgeria to Everett, Mass. The LNG importedto Everett is a very small amount, less thanone-twentieth of 1 percent of the U.S. con-sumption of natural gas in 1976.

6According to

industry representatives, however, LNG couldbe 5 to 15 percent of the total U.S. gas con-sumption by 1985 (figure 4).

7Projects are now

proposed which could bring as much as 3.5trillion cubic feet of LNG per year to theUnited States from foreign sources within thenext 10 to 15 years (figure 5).

41nterview with Officials of Export-Import Bank ofthe United States, Washington, D. C., June 16, 1977.JDavid Hawdon, World T ran sport of Energy 1975to1985 (London: Stanil and Hall Associates Limited,April 1977), p. 39.

6Federa1power commission, TableofLNG Importsand Exports for 1976, News Release, June 3, 1977, andFederal Energy Administration, Monthly n rgyReview, March 1977.TOffice of Technology Assessment LNG panel meet-ing, Washington, D. C., June 23, 1977.

Figure 5. Status of U.S. LNG Import Projects

Project Start-up Date Supply Source Status (AGA/FPC) Quantity(billion cubic feet/y r.)

Existing & Firm Foreign Imports

Distrigas I 1972 Algeria Existing/Operational 1,6

Distrigas IV 1978 Algeria Firm/Pending 42*

El Paso I 1978 Algeria Firm/Approved 365Note -- Eascogas project IS deleted here because of 407recent questions regarding approvals and project viability

Probable Foreign Imports

Panhandle Eastern

Pacific Lighting Int

El Paso II

Possible Foreign Imports

Tenneco-N B. Canada

Occidental-El Paso

Brown/Root-Tenneco

Kalingas

El Paso-Iran

Shell-BP

1980

1980

1980-82

1985

1985 +/-

1985 +/-

1985 +/-

1985 +/-

1985 +/-

Algeria

Indonesia

Algeria

Algeria

USSR

USSR

Iran

Iran

Nigeria

Probable/Approved

Probable/Approved

Probable/Pending

Possible/Filed

Possible/Not Filed

Possible/Not Filed

Possible/Not Filed

Possible/Not Filed

Possible/Not Filed

179

197

365

741

397

365

547

285

547

2372,378

Grand Total 3,526

Replaces Distrigas 1. Sources American Gas Association and the Institute of Gas Technology,

9 6 - 5 9 7 0 - 7 7 - 2


16/108

.

Note Other possible future sources of LNG include Iran, Russia, and NIgerIa

Bcf/y = billion cubic feet per year

Source OTA.

Ultimately, the supply of natural gas islimited, But since it is currently an under-utilized resource in many foreign countries,importing it as LNG could satisfy a significantportion of the U.S. energy demand for at leastthe next 20 years.

Imports of LNG could be particularlyuseful in alleviating near-term fuel shortagesin certain sectors of the economy or parts ofthe country. In California, which accounts for11 percent of U.S. natural gas consumption, s

LNG could help to alleviate projected energyshortfalls and air quality problems.

If presently planned and approved projectsmove forward, Algeria would be the majorsource of the increased imports (figure 6). Asmaller amount of LNG would come from In-donesia, and there is a possibility of suppliesfrom the U.S.S.R, Iran, and Nigeria after1985.

9The stability of these foreign supplies

and likely results of possible curtailment ofLNG shipments to the United States has beenidentified by this study as one of the potentialproblems of the LNG system. Foreign supply

is discussed further in the critical review sec-tion which follows this chapter.

~Douglas M . Considive, cd., Energy TechnologyH andbook (New York: McGraw-Hill, 1977).

gAmerican Gas Association, Gas Supply Review, 5(February 1977).


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CH. I DESCRIPTION OF LNG TECHNOLOGY AND IMPORT SYSTEM 7

In addition to foreign natural gas, new gasdiscoveries in Alaska could be transported tothe west coast as LNG. This possible supply ofgas from the North Slope and southernAlaska could be more than 1 trillion cubic feeta yea r a s ea r ly as 1984.10

The North Slope is by far the largest of thetwo Alaskan supplies of natural gas. Themethod of transportation to be used to bringthe North Slope gas to the west coast was to bedetermined by the President in September? Aproposal to transport this gas by pipelinethrough Canada was being weighed against aproposal to use an LNG system.

DES C R I P TI ON OF LNG

Liquefied natural gas is not the only haz-ardous cargo transported in the United Statestoday, or is it necessarily the most dangerous.Other cargoes which pose unique hazardswhen transported in large volumes includeliquefied petroleum gas (LPG), chlorine,acids, and gasoline.

Liquefied natural gas and LPG are similarin many ways and are treated together as liq-uefied gases by most regulators. Liquefiedpetroleum gas, however, appears to be betterknown and accepted by the public. In 1976, 10

million tons of LPG were moving in worldtrade, most of it going to Japan from the Mid-dle East countries. It is estimated that by1980, LPG trade will more than double, andthat U.S. demand will be as much as 12

*NOTE: On September 8, 1977, the Presidentannounced that an agreement had beenreached with Canada for a pipeline to carrynatural gas across that country from Alaskato the west coast of the United States. TheCongress has 60 days after formally receivingthe Presidents plan in which to disapprove

the choice if it so desires.

IOFedera] power ~o~missio~ Recomme~da~~on tothe President Alaskan Natural Gas Transportation

Systems (Washington, D. C.: Federal Power Commis-sion, May 1, 1977) p. I-44.

million tons.11

In 1977, there were 441 LPGtankers operating worldwide with a capacityof 3.5 million cubic meters. In comparison, 30LNG tankers were operating worldwide at thesame time with a capacity of 2.2 million cubicmeters.

Some unique properties of LNG whichaffect the design of tankers or terminals are:

it has an extremely low temperature of259 F;

it weighs about 28 pounds/cubic foot,slightly less than half the weight ofwater, and would therefore float;

a t normal ambient tempera tures , i tevaporates very rapidly and expands toabout 600 times its liquid volume;

in the vapor state, and when still verycold, the gas is heavier than air and, inthe event of a spill, would hug to theearths surface for a period of time untilsubstantially dissipated;

when the vapor warms up, reaching tem-peratures of about 100 F, it is lighterthan air and would rise and dissipate inthe air;

in the vapor state, it is not poisonous, butcould cause asphyxiation due to the ab-

sence of oxygen;in the vapor state, concentrations of 5 to15 percent natural gas are flammable.

Liquefied natural gas is odorless and color-less. It looks much like water. Except for itsextremely cold temperature, which requiresspecial handling techniques and materials,the liquid is relatively safe. In bulk form itwill not burn or explode. Momentary contacton the skin is harmless although extendedcontact will cause severe freeze burns, On con-tact with certain metals such as carbon steel

ship decks, LNG can cause immediate crack-ing.

IH. Magelssen, LPG-Transportation Cost, MarketPotential and Future Charterers, Gastech 76 Proceed-ings L N G and L PG Con ference, N ew York, Oct. 5-8,1976, (Herts, England: Gastech Exhibitions, 1977).


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The behavioral patterns of LNG vapor inthe atmosphere, however, are not so well un-derstood and may create hazards. If spilled onthe ground, LNG would boil, (vaporize)very rapidly for 2 or 3 minutes unti l theground was frozen and no longer emittingheat to the LNG on top of it. This would slowthe rate of vaporization and minimize cloudformation dangers.

If spilled on water in a large-scale accident,it is unlikely the water would freeze. Insteadthe water would continue to warm the floatingLNG, vaporizing it and forming a spreadingcloud. Researchers currently disagree on theshape, size, movement, and composition of thevapor cloud and the factors which will affectit. It is believed that the concentration of LNGvapor within the cloud is not homogeneous. At

the edge of the cloud, where the greatest mix-ing with ambient air occurs, the concentrationof gas is lowest. At the core of the cloud, theconcentration is highest. Where the concentra-tion falls within the flammable limits of 5 to15 percent, the cloud may be ignited and burnback toward the source of the spill. It isgenerally agreed that, if the vapor from alarge LNG spill ignites, it would be beyond thecapability of existing firefighting methods toextinguish it.

12Therefore, the key to reducing

the hazard of an LNG fire is a strong preven-tion program.

The hazards of transporting LNG are some-what similar to those of LPG, if the two areconsidered in equal volumes. However, LPG issomewhat more dense than LNG vapor atcomparable temperatures. In the event of aspill of either liquid on water, the liquidwould rapidly spread by gravity until a largevapor cloud would form. LNG would vaporizeconsiderably faster than LPG because LNG ismore volatile. Thus, the LPG vapor cloudwould evolve over a longer period of time, andwould be more cohesive than the LNG cloud.

LPG has the greatest potential for detonationboth in open air and confined. LPG stored in

1 ~Society of Naval Architects and Marine Engineers,Pr oceedi ngs of Second Sh i p Technol ogy and R esear chSTAR Symposium (San Francisco, Calif.: May 25-27,1977), p. 396.

tanks continually heated by a surroundingflame causes a rise in pressure which leads todetonation. Open-air detonations of LPG

13

have been demonst ra ted by exper imentwhereas the same is not true of LNG. 14

Research into the behavior of spilled LNGand an LNG cloud is another critical area dis-cussed in the next chapter.

SAFETY RECORD OF EARLY

USE OF LNG

Liquefaction of natural gas is achieved bycooling the gas to 259 F. The process wasdeveloped on a large scale during the firstquarter of the 20th century to simplify thetransportation and storage of natural gas,

since the liquid state is l/600th the volume ofthe gaseous state.

Until recently, LNG was utilized primarilyin operations which produced the liquid andstored it for use only during peak demand, forexample, in cold winter weather. There are 89of these facilities operating in the UnitedStates today to produce and/or store domesticLNG. Known as peak shaving plants, theyhave a combined storage capacity of 2 millioncubic mete r s .

15In addit ion, one plant in

Boston imports and stores foreign LNG. Its

capacity is 146,000 cubic meters. The peakshaving plants have existed safely for years,without much public attention to either theirlocation in heavily populated areas or theiroperations. Only one major incident has mar-red the safety record of these plants.

That accident occurred at the first LNG in-stallation in 1944. At that time, a storage tankowned by East Ohio Gas Company in Cleve-land ruptured, spilling 6,200 cubic meters ofLNG into adjacent streets and sewers. The liq-uid evaporated, the gas ignited and, whereconfined, exploded, The disaster remains the

l~elephone interview with staff of the Bureau ofMines, Pittsburgh, Pa., Sept. 7, 1977.ldl_elephone interview with staff of Naval WeaponsLaboratory, China Lake, Calif,, Aug. 25, 1977,15A~ericanGa s Associat ion LN G Informa tion o o1973 (Arlington, Va.: American Gas Association, 1973).


19/108

.


most serious LNG accident anywhere in theworld. It resulted in 128 deaths, 300 injuries,and approximately $7 million in propertydamage .

l6

Based on investigations made by the U.S.

Bureau of Mines after the accident, it wasgenerally agreed that the tank failed becauseit was constructed of 3.5 percent nickel steel,which becomes brittle on contact with the ex-treme cold of LNG. Since the Cleveland dis-aster, it has become standard practice in theLNG industry to use 9 percent nickel steel,aluminum, or concrete and to surroundstorage facilities with dikes capable of con-taining the contents of the tank if a ruptureoccurs.

The only other significant accident related

to LNG to date occurred at a Staten Islandimport facility in 1973; where 40 workmenrepairing an empty LNG tank were killedwhen the roof of the tank collapsed as a resultof a fire.

While the Staten Island tank disaster pre-cipitated active local opposition to LNG, thegas industry has repeatedly argued that theaccident was not due to any characteristic orhandling of LNG

17, but was an industrial ac-

cident involving an insulation fire. However, aBureau of Mines study of the accident indi-cated that there was enough LNG in the in-

sulation that it could have been released veryquickly into the tank once ignit ion hadstarted.

18

The only other accident in the UnitedStates mentioned in connection with LNG

IGU.S. Department of the Interior, Bureau of Mines,Report on th e I nvesti gati on of th e Fi re at th e L iqu efac-ti on, Storage and Regas i f i ca t i on Plant of the East Ohi oGas Company, Cleveland, Ohio, Oct. 20, 1944.(Washington, D. C.: U.S. Department of the Interior,Bureau of Mines, February 1946)[email protected] Systems, Inc., Environmental Im-pact Report for t he Proposed Oxn ar d L N G F acil i t i es,Safety, Appendix B (Los Angeles, Ca.:Socio-EconomicSystems, 1976), p. 10.18U.S,ConWess, House, Staten I s l a n d Exp los ion :Safety I ssues Concer ni ng L N GStorage Facil it ies. Hear-ings before the Special Subcommittee on Investigationsof the Committee on Interstate and Foreign Commerce.93rd Cong., first sess., July 10, 11, 12, 1973, pp. 143, 145.

took four lives in Oregon. This accident,however, took place during construction of thestorage tank before LNG had ever been in-troduced into the facility.

l9

Over the past 10 to 20 years, the peak shav-

ing facilities have been engaged in all phasesof LNG handlings: liquefaction, regasifica-tion, loading and unloading, storage, andshipment by pipeline, truck, rail, and barge.However, new LNG projects involve muchlarger scale facilities entirely dependent onmarine shipment, and these are the focus ofthis study.

R EGULATI ON OF I MP OR T

P R O J E C T S

Before any LNG import or export projectcan begin operation, more than 130 permitsmust be obtained from Federal, State, andlocal agencies (see appendix A), and 12different Federal agencies are involved in ap-provals and controls. The Federal PowerCommission (FPC), the Coast Guard, and theOffice of Pipeline Safety Operations (OPSO),are the agencies most involved in LNG andare discussed in appropriate sections of thischapter. The others are explained in appendixB.

The most crucial agency in this milieu is theFederal Power Commission, which under theNatural Gas Act of 1938, has power to ap-prove or reject any proposed project in threeways:

20

it must determine whether of not thepublic interest will be served by LNG im-portation;

it must authorize construction or exten-sion of any facilities to be used in thet ranspor ta t ion or sa le of in te r s ta tenatural gas;

it has the authority to establish the priceat which the gas is sold.

lgLNGScorecard, I peline and Gas Journal 204(June 1977): 22.2015 U.S.CO ~717 f (c) (1970).


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The Federal Power Commission has broaddiscretionary powers in determining what isand what is not in the public interest and instipulating conditions which must be met inorder to meet the public interest.

To date, the FPC has been asked to rule onone LNG export project and 10 LNG importprojects (see figure 5). The export project, withliquefaction facilities in Kenai, Alaska, hasbeen approved and is operating. Of the importprojects, three have received final approval;one has received initial approval, subject toreview. One import project with its terminaland regasification plant in Everett, Mass., isin operation. Another, with import facilities inCove Point, Md., and Savannah, Ga., isscheduled to begin operation later this year.Facilities for the approved project at Lake

Charles, La., have not yet been constructed,nor have facilities for the Oxnard, Calif., ter-minal which has received only initial ap-proval.

The FPC approves the import projects bymeans of an express order authorizing impor-tation and certificates of public convenienceand necessity (authorization and stipulationsfor construction and operation of facilities).The approvals are obtained by means of acomplicated quasi-judicial procedure whichroutinely takes several years from the time an

application is filed until it is approved. First,an evidentiary hearing is held before an ad-ministrative law judge, in which the appli-cant, staff, and interveners each present theirviews of the nature of the project, cost esti-mates, the need for additional supply of gas,and environmental consequences of the proj-ect. The evidence presented also includes anenvironmental impact statement prepared bythe FPC, an engineering and safety review bythe cryogenics division of the National Bureauof Standards, and a risk analysis by the FPCstaff. On the basis of this evidence, the FPC

administrative law judge makes an initialdecision.

Second, there is a period of review duringwhich any of the parties may file exceptions tothe decision. At the end of the review period,the commissioners make a final decision

which may uphold the initial decision orchange it completely. The final decision is sub-

ject to an appeal in one of the U.S. Courts ofAppeal.

Since the historic role of FPC has been to

regulate the entry of suppliers into the inter-state natural gas market and to ensure thatinterstate sales of gas take place at prices thatare just and reasonable,

21the agency has

limited its activities to licensing and ratemak-ing. There is little onsite inspection to assurecompliance with stipulations contained in thelicenses. The exception to this general rule oc-curs when a company wishes to expand exist-ing facilities and submits a new application.In that context, FPC engineers inspect thefacility to judge its operating performance.

22A

critical analysis of the decisionmaking process

which leads to certification of LNG projectsand the difficulties of pricing policies are dis-cussed in the next chapter.

LNG TANKER TEC HNOLOGY

Liquefied natural gas import projects in-volve a complex consortia of energy andtransportation companies. The gas supplier isusually represented by a foreign governmentor State-owned subsidiary company. Therecipient of the gas at the import terminal is

generally a consortia of gas utilities and/orpipeline companies, which use the gas in theirown systems and sell to other distribution orutility companies. The supplier and receiverare connected by a transportation company,the subsidiary of an oil, gas, or pipeline com-pany, which owns and operates the LNGtankers.

Liquefied natural gas tanker technologyhas been developed over the past 20 years tothe point where, currently, about a dozenworldwide trade routes are either in opera-tion, planned, or proposed for LNG shipping

(figure 7). Growth in the world LNG fleet has

2115UOS.C, 717 ~ (a) (1970).221n~rvi~w~withFederalPowercommission s t a f f ,

Washington, D. C., May 31 and June 24, 1977.


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o

& i Q

a


22/108


Figure 8. Total Capacity of World LNG and LPG Tanker Fleet

26 51 39 28 32 44 34 22 30 67 66 60145 172 209 242 274 307 339 352 379 404 418 441

vessels 4 6 9 13 23 24 28 45 49 42 43

5 5 5 5 8 11 14 17 20 27 35 39

Total 176 232 259 284 327 385 411 419 475 547 561 583

8,000

been rapid (figure 8). Seventy-two ships willbe operational by 1980, with a possibility that

33 more would be required if all planned LNGprojects go through.23

Source Liquid Gas Carrier Register 1977

Currently, only one LNG tanker is engagedin regular import trade with the United

States, that is the French ship, the Descartes,which has brought 25 shipments from Algeria

23Edw ard Far i dany, LN G: 1974-1990 M ar in e Opera-

tions and M arket Prospects for Li quefied N atur al Gas,(London: Economist Intelligence Unit Limited, June1974), p. 69,


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Figure 9. LNG Tankers On Order or Under ConstructionIn U.S. Shipyards

No. of ContainmentShipyard Vessels System Design

Avondale 3 Conch

General Dynamics 10 Kvaerner-Moss

Newport News 3 Technigaz

Sun Shipbuilding 2 MacDonaldDouglas/GasTransport

Self-supportingaluminum alloyprismatlc tanks,British design

Spherical aluminumalloy tank,Norwegian design

Stainless steelalloy membraneFrench design

Invar ( nickel-steel),American/Frenchdesign

to the Distrigas peak shaving plant in Bostonsince July 1975.

24Nine more LNG tankers will

join the U.S. trade early next year when im-port terminals under construction at CovePoint, Md., and Savannah, Ga., begin opera-tion, and five more when an import terminalat Lake Charles, La., is online about 1980(figure 9). If other projects now proposed areapproved, it is possible that 12 additionalLNG tankers will be required for imports tothe United States and 14 for shipments fromAlaska to the continental United States. By1985, a total of 41 tankers could be calling atcontinental U.S. ports. (In addition, twotankers are involved in export of LNG fromAlaska to Japan through 1985).

25

ziInterviews with Officials of Distrigas Inc., Boston,Mass.,

2 5 a ,

b.

c.

d,

.June 15, 1977.LNG Scorecard, Pipeline and Gas Jour nal 203(June 1976): 20.American Gas Association, Update of Status ofLNG Projects, Gas S u p p l yReview 5 (February1977): 8.U.S. Department of Commerce, Maritime Ad-m i n i t r a t i o n , S t a t u s of N Ve s s e l s (Washington, D. C.: U.S. Department of Com-merce, Maritime Administration, March 15,1977).U.S. Department of Commerce, Maritime Ad-m i n i s t r a t i o n , S t a t u s of LNG P r o j e ct s (Washington, D. C.: U.S. Department of Com-merce, Maritime Administration, September1976).

Liquefied natural gas tankers are bulkcargo ships which require unique design andmaterials to handle the very low-temperaturegas.

Most LNG tankers range in size from about

40,000 cubic meters to planned ships of165,000 cubic meters (figure 10). The industrystandard has become the 125,000- to 130,000 -cubic meter ship. Each ship this size carriesenough LNG to heat a city of 100,000 popula-tion for 1 month.

26

Figure 10. Profiles of Typical LNG Ships

METHANE PRINCESS27,400 cubic meters

DESCARTES50,000 cubic meters

Source National Maritime Research Center

zGInterview with official of General Dynamics Com-pany, Boston, Mass., June 15, 1977.


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By comparison to the better known crudeoil tankers, the largest LNG ships are one-halfto one-fourth the total size of the very largecrude carriers (VLCC or supertanker )(figure 11), some of which are more than400,000 deadweight tons. A 130,000 cubic

meter LNG tanker with a 143-foot beam and a900- to 1,000-foot length is roughly equivalentto a 100,000-deadweight ton oil tanker.

The LNG tanker is a shallow draft vessel,about 36 feet, on which the cargo-carryingcapacity is increased by adding to the lengthinstead of the depth. It has an unusually largeamount of freeboard, rising about 50 feet outof the water. Because of its visible length andheight, the LNG tanker appears larger thansome VLCCs.

The LNG tanker is a high-powered, high-speed ship, with an optimum service speed inthe 20-knot range, about 5 knots faster thanmost oil tankers.

New LNG tankers are fueled by their owncargoes. Immediately upon being loaded inthe tanker, LNG begins to evaporate and con-tinues to do so throughout the entire voyage.In a typical design, the vapor produced duringthe voyage is used as the ships fuel and maybe sufficient to meet 100 percent of the fuel re-quirements. However, safety regulations re-quire that the ship carry, and be equipped touse, fuel oil as well. After the ship is unloaded,

a small percentage of the LNG cargo is re-tained in the tanks for cooling purposes andthis supplies part of the fuel requirements forthe return trip.

The tankers are equipped with specialized

systems for handling LNG and for combatingpotentia l hazards associa ted with l iquidspillage and fire. These include high-expan-sion foam and dry powder fire protectionsystems, water-spray systems for floodingdeck piping, and pressure-, temperature-, andleak-monitoring systems. Cargo handlingsystems are provided for loading and dis-charging LNG, for cooling down and warmingup tanks, for transmittal of boiloff gas to theship boilers and, most importantly, to provideinert atmospheres in the spaces surroundingthe cargo tanks and in the tanks themselves

prior to and after aeration at the time of dry-docking.

Each LNG tanker is a complicated vessel,representing approximately a $100- to $150-mil l ion investment.

27Most U.S. flag LNG

tankers are financed with a variety of aidsfrom the Maritime Administration, includingconstruction differential subsidies, operatingdifferential subsidies, and ship mortgageguarantees.

zTGeneral Dynamics Gets Tanker Job for $310million, Wall St reet J our nal, July 28, 1977.

Figure 11, Comparison of LNG Tanker and Crude Oil Tankers

A comparison of the Principal Dimensionsa, Cargo Deadweight

b, and Full-Load Dlsplacement

cof a 125,000 Cubic Meter LNG Ship and a Variety of Crude

Oil Tankers

80,000 dwt 100,000 dwt 137,000 dwt 125,000 cu/m 476,000 dwt 554,000 dw tOil Tanker Oil Tanker Oil Tanker LNG Ship Oil Tanker Oil Tanker

Length 811 848 974 936 1,243 1,359

Breadth 125 128 134 144 203 207

Depth 57 65 85 82 118 118

Draft 44 50 54 36 93 94Dwt 80,459 100,300 137,010 63,100 476,025 553,700

Full-Load Displacement 105,000 128,500 172,500 94,500 509.000 631,000

IN FEETblN LONG TONS

CIN LONG TONS Source Engineering Computer Opteconomics Inc


25/108


To date, the Maritime Administration hasauthorized approximately $270.3 million forsubsidy of all LNG tankers.

28(Federal finan-

cial aids are also provided by the Export-Im-port Bank, although that aid is made availa-

ble to foreign governments in order to promotethe use of U.S. goods and services in their proj-ects. To date, the Export-Import Bank hasprovided approximately $483 million in loansand loan guarantees to Algeria to support

28 ubsidized Shipbuilding Contract AwardsStatistical Quarterly (First quarter 1977),

construction of liquefaction plants and re-lated facilities.)

29

The construction cost of an LNG tanker isroughly twice that of an oil tanker of similarsize. Most of the increased cost for LNG

tankers is due to special design features of thecontainment system which holds the low-tem-perature, low-density cargo.

The standard 125,000 cubic meter LNGtanker usually has five cargo tanks, each witha capacity of about 25,000 cubic meters (figure12). An eight-story building could fit inside

zgInterview with officials of Export-Import Bank ofthe United States, Washington, D. C., June 16, 1977.

Figure 12. Inboard Profile of LNG Tanker

Liquefied natural gas tankers con-structed by General Dynamics use fivespherical tanks of about 25,000 cubic meterseach Tanks for the ships are constructed inSouth Carolina and towed by barge to theshipyard at Ouincy, Mass , where they aremounted into the ship hull


26/108


each of these large cargo tanks, which func- ters which are welded to the ship structure.tion in the same way as the common Thermosbottle. A cold productLNGis introduced With the membrane design (figure 15), the

into the container and the insulation sur- ships hull, in effect, becomes the outer tank.I n s u l a t i o n i s i n s t a l l e d t h e r e o n , a n d arounding the tank (comparable to the vacuum

jacket in the Thermos bottle) is the sole means membrane placed on the inside to retain the

by which the cargo is kept cold. No refrigera- liquid. The inner surface of this double hulltion is employed on the LNG carrier. is either high nickel steel or stainless steel.

From the 15 or more cargo tank system The unique design problems associated

designs, two basic types have become most with LNG tankers stem primarily from the

common: the freestanding tank and the need to contain and insulate the extremely

membrane tank. cold LNG cargo and from the fact that manymaterials such as mild steel will become brit-

The freestandin g tanks are self-contained, tle and fail at very low temperatures. Specialusually spherical or prismatic in shape, made materials used for the interior of cargo tanksof aluminum alloy or 9 percent nickel steel must be able to withstand both the very lowwith layers of insula t ion on the outside temperatures when filled with LNG and the(figures 13 and 14). The tanks are welded to normal temperatures when empty. Whencylindrical skirts or otherwise tied to suppor- metals are subject to these temperature

Figure 13. Free-Standing Spherical LNG Tank

Source U S Maritime Administration


27/108


28/108


29/108

CH. I DESCRIPTION OF LNGT ECHNOLOGY AND IMPORT SYSTEM 19

U.S. flag LNG tankers and foreign flag LNGtankers entering the 3-mile territorial watersof this country. It does so by letters of com-pliance for foreign vessels and certificates ofinspection for U.S. vessels.

The criteria used for both are essentiallythe same, however, Federal regulations whichare specifically applied to U.S. flag ships aresimply used as guidelines for foreign ships.

The Letter of Compliance program which isnow in operation requires that the CoastGuard review the vessel with respect to cargocontainment, cargo safety, and the safety oflife and property in U.S. ports. Featurescovered by the review include:

30

design and arrangement of cargo tanksand cargo piping and vent systems;

arrangement and adequacy of installedfire extinguishing system and equipment;

safety devices and related systems whichcheck the cargo and surrounding spacesto give warning of leaks or other disor-ders which could result in a casualty;

isolation of toxic cargoes;

compatibility of one cargo with anotherand with the materials of the contain-ment system; and

suitability of electrical equipment in-stalled in hazardous areas.

The review is accomplished by inspection ofdetailed plans and specifications submitted inwriting by the vessel owner, inspection ofdocumentation that the vessel is accepted by arecognized foreign classification society whosestandards provide the same degree of safety ascomparable U.S. standards, and inspection ofthe ship itself on its first visit to a U.S. port.Coast Guard boarding parties examine thevessels arrangement and cargo systems,

tanks, piping, machinery, and alarms. Theyalso observe the condition of the vessel, vesseloperation, cargo handling operations, fire-

tollepartxnent of Transportation, U.S. Coast Guard,L iqu efi ed Natu ral Gas, Vi ews and Practi ces Po l i cy an dSafety (Washington, D. C.: Department of Transporta-tion, U.S. Coast Guard, Feb. 1, 1976), p. III-B (2).

fighting capability, and personnel perform-ance. Serious problems, such as any involvinginoperative safety equipment, leaking cargopiping, or nonexplosion-proof electrical in-stallations, may require immediate correction.Minor problems may require correction prior

to a return trip to the United States.

If the vessel meets all applicable require-ments, a Letter of Compliance will be issuedand the vessel must continue to meet thestandards of the first visit on all subsequentcalls at U.S. ports. To assure continued com-pliance, the Coast Guard makes a less exten-sive examination of the vessel each time it en-ters U.S. ports.

The Coast Guard requirements for thedesign, construction, and testing of U.S. flagvessels are contained in 46 CFR 38. Newregulations are being drawn up but are not yetcomplete. The Coast Guard has also proposedregulations which would set minimum stand-ards for persons employed on U.S. flag LNGships and is working with internationalgroups to develop standards for foreign crews.The regulations now in effect cover ships t a b i l i t y a n d s u r v i v a b i l i t y , s h i p h u l lmaterials, gas dangerous areas, electrical ar-rangements, firefighting arrangements, ven-tilation, cargo containment systems, tem-perature and pressure control, and instrumen-

tation of the ship. They also cover systemsrelating to the transfer of LNG, such as themeans of loading and offloading the cargo,piping materials, piping insulation, valving,instrumentation, construction, and testing ofthe systems.

Inspections for compliance with thesestandards are carried out during constructionof the vessels. In general, requirements resultin the design of ships which the Coast Guardbelieves to meet a consistent and reasonablelevel of safety and provide for means of deal-ing with casualties such as tank overfilling,overpressuring, and emergency shutdowns. Ingeneral, the vessels are designed tO Survivetwo-compartment flooding from collision orstranding with reserve stability. They are notdesigned to withstand a major collision orstranding without cargo release, but the


30/108


design does limit the release to the tanksdirectly involved in an incident.

In addition to minimizing the possibility ofcollisions, strandings, or other incidents, theCoast Guard has specified operational con-

trols on the vessels while entering, moored, orleaving a U.S. port. By regulations promul-gated under 50 USC 191, Executive Order10173, and the Ports and Waterways SafetyAct of 1972, the Coast Guard Captain of thePort has control over any vessel within theterritorial sea and may prescribe conditionsa n d r e s t r i c t i o n s f o r t h e o p e r a t i o n o f waterfront facilities.

31Under the regulations,

the Captain of the Port in Boston has drawnup an Operations/Emergency Plan

32for LNG

shipments coming into the Everett, Mass.,LNG facility. Similar plans will be drawn up

for all LNG import terminals. The plan takesin to account the ind iv idua l geographicfeatures and environmental characteristics ofeach import terminal and surrounding water-way as well as the unique nature of the LNGcargo. The result is a set of operational con-straints on LNG vessels in order to enhanceport safety. These constraints may includesuch things as the requirement for a CoastGuard escort; enforcement of a sliding safetyzone, which is an area around the LNG shipfrom which all other vessels are excluded asthe LNG tanker proceeds to its berth; restric-

tion of operations to certain times of day;prohibitions against certain other types ofwork, such as welding, or the transfer of othertypes of cargo, such as LPG, during dischargeof LNG; and others.

33

The regulation of LNG tanker constructionand operations is discussed in the followingchapter.

3 1 3 3 C FOR $ $ 6 . 0 4 . 8 , 6.14.1 ( 1976) ,qz~p r tm n t of Transportation, U.S. Coast Guard,

Th e Port of Boston, L N G - L P G Operat ion/ Em ergencyPlan (Boston, Mass.: Department of Transportation,U.S. Coast Guard, Mar. 29, 1977).qqwpartment of Transportation, U.S. Coast Guard,L iqu efi ed N atu ral Gas, Vi ews and Pr actices Policyan dSafety, p. IV-3.

The Coast Guard claims jurisdiction overthe entire portion of the LNG system that con-nects the tanker to the distribution system.Existing regulations give the Captain of thePort authority to control and monitor LNGwaterfront operations. However, there cur-

rently are no Coast Guard regulations whichspecifically apply to the terminal facilities.Development of these regulations is under-ways

34and publication is expected in the fall of

1977.

LNG TER MI NAL TEC HNOLOGY

The proposed LNG import projects andprojects to receive LNG which may come fromAlaska require the construction of large ter-minals to receive and store the product andgasification plants to return the liquid to itsvapor form. A large terminal capable of sup-plying 500 million cubic feet of gas per day canrepresent an investment of more than $350million by the sponsoring companies.

The technology for these terminals is an ex-trapolation of many small LNG peak shavingplants which have been operating for years.This technology has been proved opera-tionally satisfactory for the small plants.Even so, baseload LNG import terminals,which are intended to provide a continuousflow of gas into commercial pipelines, are

designed to meet much more stringent re-quirements than smaller peak shaving units.

35

Offloading of the LNG tankers is ac-complished at a specially constructed pierwhere the tanker is connected to pipelines byarticulated unloading arms and the cargo ispumped ashore (figure 17).

The LNG is stored in large insulated tankson shore and later pumped to regasificationfacilities before it enters the distribution

Wbid., p. IV-4.ssConversation with officials of Columbia LNG Cor-poration, Cove Point, Md., June 8, 1977.


31/108

CH. I DESCRIPTION OF LNG Technology AND IMPORT SYSTEM 21


32/108


Figure 18. boveground LNG Storage Tank

Source Scientific American.

system (figure 18). The storage capacity of thetanks is roughly equivalent to twice thecapacity of a single LNG ship, butunlikepeak shaving storage tanksthe import ter-minal tanks are intended to hold LNG onlybriefly.

In either type of facility, the storage tanksrepresent a significant portion of the costs,and the gas industry has spent much time and

money in research to develop effective storagesystems.

Currently, there are four storage concepts:double-wall metal tanks, prestressed concretetanks, frozen holes, and mined caverns. Tech-niques for storing liquids in abovegroundtanks are well established and the LNG in-dustry has drawn on these techniques. In ad-dition, the tanks are surrounded by earthendikes. These dikes are a safety measure, inthat they could contain the entire contents of atank in the event of a spill. However, they in-crease the land requirements for abovegroundstorage several times over. Much research hasfocused on the idea of underground storagetanks because little or no insulation otherthan the earth appears to be needed and thereis no need for diking to contain spills.

Underground storage tanks have been builtfor LNG in the United States, Algeria, Eng-

land, and Japan. The U.S. tanks were built forpeak shaving operations in New Jersey andMassachusetts, but have since been aban-doned in favor of other types of storagebecause the units failed to perform satisfac-torily.

In any type of tank, the one hazard mostof ten mentioned in connection with thestorage of LNG is a phenomena known asroll over.

Peak shaving plants have a greater poten-tial for rollover due to weathering of the LNGand/or introduction of new LNG into a par-tially filled tank.

Rollover refers to the convection or motionof fluid which occurs when liquids of differentdensities exist in a storage tank. If different

densities or stratification do occur within atank such that a denser and warmer liquid isat the bottom of the tank and subject to heatleak, that liquid can ultimately becomeheated to the point that it is less dense thanthe liquid above it, and it will be rapidlymoved by buoyant forces up the tank sidewalls to the surface. At this point, it ex-periences a sudden decrease in pressure andbeing above its normal boiling point vaporizesvery rapidly in large quantities causing a sig-nificant pressure rise in the tank. As a resultof this rapid expansion, cracks or even tankrupture can occur.

However, industry research on rollover hasbeen extensive, resulting in deliberate con-trolled mixing of the tank contents, selectedtop, side, or bottom filling, careful monitoringof the temperature of the LNG contentsthroughout the tank, higher design tankpressures combined with low normal operat-ing pressures, and improved venting. In addi-tion, the potential of the phenomena occurringat a baseload plant is further reduced by anoperational practice of unloading tankers into

empty tanks, not partially filled tanks as canoccur at peak-shaving plants.

From the storage tanks, LNG is pumped tothe regasification plant where it is vaporizedby heating it. Frequently, the LNG is heated insystems using the naturally occurring heat innearby seawater. Other systems use process


33/108


heat from other equipment or have heat ex- LNG TERMINAL SITINGchangers fueled with oil, electricity, gas, orambient air. None of the vaporizer systems is There are several factors related to pro-obviously the most economical or technically posed LNG import terminals that set themsuperior. The choice depends primarily on the apart from the existing peak shaving plants.location and design of a specific terminal and The proposed terminals are large-scale opera-environmental regulations. tions located in the coastal zone and major

The regasification facility is one of the leastshipping channels, some in major harbors-or

costly sections of the terminal, but is con-near large population centers (figures 19 and20). They require large

sidered important because if it should fail tooperate, the entire purpose of the plantto

capital, and represent a

provide natural gaswill have been defeated.energy at a single site.

amounts of land andlarge concentration of

Figure 19. Layout of Cove Point, Md., LNG Receiving Terminal

Source Columbia LNG Corp


34/108


35/108


36/108

-


possible to use either of two methods of con-trol:

In the event of an LNG spill, the liquidcan be contained within the dike and therate of evaporation slowed by the use of

high expansion foam. All sources of igni-tion can be eliminated. In this way, theLNG can dissipate in harmless con-centrations into the atmosphere.

Or, in the event of an LNG spill, the liq-uid can be contained within the dike andits evaporation controlled or even ignitedso that it immediately burns in the con-fined space where the fire can be con-trolled by known firefighting methods.

The NFPA 59(A) regulations currentlyadopted by OPSO specify the size and con-

struction of the dike and the design of relatedequipment necessary for the diking system.

The other technique used to enhance safetyis to establish the distance which must lie be-tween the dikes around the storage tanks andthe property line. The distance required is onewhich would assure that heat from an LNGfire inside the dikes would not be severeenough at the property line to cause death orthird degree burns.

Current regulations require that this dis-tance be 0.8 times the square root of the areainside the dikes.

Regulations also require that the facility bedesigned to meet the maximum earthquakespecifications of the Uniform Building Code.

New LNG terminal standards have beenproposed by OPSO and are being circulatedfor public comment. Generally, the proposedstandards are more strict and cover moreaspects of terminal design than do currentstandards, but in many cases they are lessdefinitive. The standards increase the dis-

tance between dikes and property line, requirea vapor dispersion zone or a redundantautomatic ignit ion system, and se t morestringent seismic design criteria.

38It is ex-

pected that the proposed standards willseriously limit the choice of sites for LNG ter-minals.

The Coast Guards responsibility for ter-minal facilities is an extension of the Captain

of the Ports jurisdiction over waterfrontfacilities. The Coast Guard maintains that itsjurisdiction, with regard to LNG vessel move-ments and waterfront facilities, is sufficient topromulgate and enforce safety requirementsfor the LNG transfer operations at the receiv-ing terminal and, in that light, considers thepipelines between tanks and loading orof f loading equipment , the loading andoffloading equipment, storage tanks, and theentire portion of the LNG system which con-nects the tanker to the distribution system tobe under its jurisdiction. The inland distribu-

tion system is not the responsibility of theCoast Guard.

The Coast Guard currently has no regula-tions specific to LNG terminals but has under-taken development of such regulations to im-plement appropriate sections of the Ports andWaterways Safety Act of 1972. In the mean-time, the Captain of the Port in each areawhere LNG is handled exercises authority bydeveloping contingency plans for operations.

A critique of the Government role in theregulation of LNG terminal siting and opera-

tions is included in the following chapter.

TRENDS IN LNG USE AND

F A C I L I T I E S

Liquefied natural gas could be an impor-tant short-term energy supply for the UnitedStates over the next few decades and couldhelp alleviate some near-term fuel shortagesin selected sectors of the economy. Ultimately,however, the supply of natural gas which maybe sold to the United States as LNG is limited.LNG is not a major new source of energywhich will allow unrestrained use of naturalgas, and it is unlikely that many import proj-ects will be forthcoming beyond those alreadyproposed.

SNU.S. llepartrnent of Transportation, Office ofPipeline Safety Operations, Liquefied Natural GasFacilities (LNG); Federal Safety Standards, FederalRegister 42, no. 77, April 21, 1977, 20776-20800.


37/108

CH. I DESCRIPTION OF LNGT ECHNOLOGY AND IMPORT SYSTEM 27

In the future, it can probably be expectedthat U.S. consumption of natural gas will con-tinue to decline slightly and it is possible asmuch as 15 percent of the total natural gasconsumed could be transported as LNG by1985-95 (figure 22). This figure may be lowerif a pipeline is used to transport Alaskan gasto the continental United States.

Imports of LNG to the United States cur-rently come from Algeria, and there is someconcern about the wisdom of becoming de-pendent upon any one country as the majorsource of supply. However, several other coun-tries also control major portions of the worldsnatural gas reserves. For example, liquefac-tion and export facilities are being developed

Figure 22. Projected Future LNG Imports (Based on

Proposed Projects and Reasonable ApprovalTime)Trillions Percent of 1976

of cubic feet U.S. Natural Gas

per year Consumption

4 20%

15%

1977-80 1980-85 1985-90

Projects Planned Possible

Constructed Projects New

or Operating Approved Projects

or Pending

Before FPC

El Paso IDistrigas

El Paso IIPanhandle

Pac/lndonesia

Possible Future Supplies From

USSR, Iran, and Nigeria

10%O

5 %

in Chile, Nigeria, and Colombia and there is apossibility of additional export projects iftechnology and reserves are proven in Russia,Iran, China, and Australia.

39It is likely that

sponsors of some U.S. import projects willturn to these exporters for additional suppliesof LNG, thus reducing the dependency onAlgeria.

Changes are also likely to occur in the siteschosen for U.S. import terminal facilities, insome types of equipment which may be used,and in the onshore distribution of LNG.

Currently, public pressure exists for, andthe industry trend is toward, remote sitingof LNG terminals and storage facilities. Con-troversy over the meaning of remote and thecharacteristics which make a site acceptable

for an LNG facility, coupled with the difficultyfirms may have in finding acceptable sites,have led to the suggestion that LNG facilitiescould be located offshore, away from popu-lated areas and congested harbors and water-ways.

Several designs have been proposed foroffshore platforms to house LNG facilities, butno detailed design has been developed for anyspecific site. At the present time, thesepreliminary designs limit site selection tolocations with water depths of 600 feet. Mostof the design concepts are self-containedfacilities which look like large floating bargesinstalled to a mooring system (figure 23).Other concepts propose that the platforms befloated to a site, then grounded to the beach orseabed. There are also two other, more elabor-ate concepts: One would make use of subseastorage structures, similar to those used in theNorth Sea to store oil, with a semisubmersibleor tension-leg concrete platform mooredabove for the liquefaction or regasificationplant. The other features separate moored or

jack-up platforms for the process plant and

the storage structures.According to industry figures, offshore

facilities will require 3 to 4 years constructiontime. Crude estimates range from $175 million

Source OTA

39JJLNG Report, ~pelineand Gas Journal 204(June 1977).


38/108


39/108


,

baseload import terminals have no specificprovisions for truck and rail shipment ofLNG, such shipments appear to be possibleand permissible in the future. Shipment bytruck is already a reality at most peak shavingoperations and from the import terminal atEverett, Mass.

Prior to 1969, only a few LNG truckingoperations had been attempted in this coun-try, using equipment originally designed forliquid nitrogen service. Based on the successof the operations, equipment was designedand fabricated especially for LNG. It is esti-mated that there are 75 LNG trucks currentlyin operation in the United States.

41Typical of

the trucking which has taken place was theshipment of nearly 4.5 million gallons of LNGfrom Philadelphia, Pa., to Lowell, Mass., dur-

ing the winter of 1969. Since then largevolumes have been transported all over theUnited States to help supply outlying com-munities, to provide temporary supplies whenservice is interrupted, and to provide smallquantities for experimental work.

Liquefied natural gas could also be movedfrom import terminals or liquefaction plantsby barges or railway tank cars.

The use of barges was first proposed totransport LNG up the Mississippi River to theChicago Union Stockyards, and one barge wasconstructed and tested for this purpose in the1950s. It was never used commercially.Another barge, the 297-foot M assachu set t s ,was constructed by Distrigas for distributingLNG from a Staten Island import terminal.However, that barge has been taken out ofservice because of opposition.

Railway tank cars have been proposed as ameans of carrying LNG to isolated areaswhich do not justify construction of pipelines.Tank cars now in use hauling liquid oxygen,nitrogen, and hydrogen would be suitable for

LNG service, but the economics are such thatit is unlikely there would be much emphasison rail movement of LNG.

I Interviews with officials of Distrigas Inc., Boston,Mass., June 15, 1977.

EXISTING AND PROPOSED

PROJ ECTS, IN BRIEF

There are two operating LNG marinetransport projects in the United States today,the Distrigas project importing gas fromA lg er ia i n to E v er e tt , M as s ., a n d th ePhill ips/Marathon project export ing gasfrom Alaska to Japan. Construction of thefirst large baseload import project to be ap-proved by FPC, El Paso I, is nearing com-pletion, and the facility is expected to becomeoperational early in 1978 importing gas fromAlgeria to both Cove Point, Md., and Elba Is-land, Ga., (near Savannah).

42

One additional large import project has re-cently been given final approval by FPC, butno construct ion has begun. This is the

Trunkline project to import LNG fromAlgeria to Lake Charles, La.

43The Pacific-

Indonesia project to import LNG from In-donesia to Oxnard, Calif.,

44has received only

initial FPC approval and no construction hasbegun.

Three additional projects have been filedwith the FPC for some time and decisions orapprovals are expected soon. These are: theEl Paso II* project to import LNG fromAlgeria to Port OConnor, Tex., the Pacific-Alaska project to transport LNG from Cook

Inlet in southern Alaska to California; andthe El Paso-Alaska project to transport thehuge North Slope Alaska gas reserves fromGravina Point, Alaska (after pipelining fromthe North Slope) to California.

45

Since these eight projects have a reasonableprobability of being operational in the future(the early 1980s), a brief description of each isincluded in this section. Other planned or pro-

q~Dean Hale, Cold Winter Spurs LNG Activity,Pipeline and Gas J our nal 204 (June 1977): 30.q:~Federal Power Commission, T r u n k Z i n eL N G Corn-p a n y etal., Opinion No. 796-A, Docket Nos .CP74-138-140 (Washington, D. C.: Federal Power Com-mission, June 30, 1977).~~Federal Power Commission, FPC Judge ApprovesImportation of Indonesia LNG, News Release, N o.23292, July 22, 1977.~~Dean Hale, Cold Winter Spurs LNG Activity,:31.


40/108


41/108


been delivering LNG from Skikda, Algeria, tothe terminal at Everett, Mass., at the rate ofabout 15 trips each year. The terminal is lo-cated on the Mystic River, up from the mainBoston harbor and less than one-half mile

from the Boston city limits, in a highly in-dus t r ia l ized reg ion wi th both LPG andgasoline terminals adjacent to the property. so

The Everett facility has operated withoutmajor incident for 6 years.

The principal market for this LNG is theNortheastern States with distribution madeby both truck and pipeline. At present 40 per-cent of the LNG is distributed by trucks andmore than 60 trucks operate out of the facilityto other satellite storage tanks in the North-east.

51The Distrigas project has contracted

for a supply of 16 billion cubic feet of gas peryear, and in 1976 actual imports totaledslightly over 10 billion cubic feet.

52

While this project has received FPC ap-proval, a modification to expand the terminal

~t}Interviewswith officials of Distrigas Inc., Boston,Mass., June 15, 1977. I Ibid.

~~Federalpower Commission, United Sta tes 77 pOr~ Sand E xport s of Natur al Gas 1976 (Washington, D. C.:Federal Power Commission, May 1977).

and total import volume has been filed and ispending approval by FPC. Under the terms ofa new 20-year contract with the Algerian Na-tional Gas Company, Distrigas would import42 billion cubic feet of gas per year beginning

in 1978.

53

This contract would replace the ex-isting one and a new 125,000 cubic meter ship,the M ostefa B en Boulai d, would be used inplace of the Descar tes. Additional unloadingfacilities, but no new storage tanks, areplanned for this expansion.

54

2. The Ph i l l i p s/Ma r a t h o n P r o j ec t ( f i gur e 25)

The oldest operating marine LNG project inthe United States is the project now exportinggas from fields in Cook Inlet in southern

Alaska, through a terminal at Kenai, toNeigishi, Japan. This project has been oper-ated by the Phillips Petroleum Company andMarathon Oil Company since 1969.

Two 71,500 cubic meter LNG tankers, the

~:~DeanHale, Cold Winter Spurs LNG Activity,:30.~qlnterViews with officials of Distrigas Inc., Boston,Mass, June 1

Figure 25.

Project Data Sheet: Phillips/MarathonLNG Export Source: Kenai, Alaska (Plant at Nikiski)

LNG Export Terminal: Neigishi, JapanKenai to Neigishi 3,280 nmi I -

Contract FPC Number Ships/ Estimated Investment ($10)Location Expected volume status Shipyard/

Companies Involved of u s Project operational

Bcf/yrfacility

(as of Capacity m3/ Receivingdesignation date (MMcfd)

Exported price9/1/77) Tank design Tankers terminal ($)-1976 /MMBtu

Gas Supplier: Phillips.

and Marathon Plant.Operator: Phillips

Petroleum Kenai. Phillips/ Operational 49,3 Approved 2/K, M,

Shipper: Marathon Oil. Alaska Marathon

since 1969 (135) Verkstads 1 66Importers Tokyo Electric, 1 5-year (Sweden)/Tokyo Gas. contract) 7 1 , 5 0 0 m

3/

membrane

CURRENT EXPORT SOURCE CHARACTERISTICS

Storage capacity Liquefaction Type of storage Number of Facility( MMc f) capacity (M Mcfd) containers storage tanks acreage

2300 185 Aboveground 3aluminum

Source OTA


42/108

32 CH. 1 DESCRIPTION OF LNG TECHNOLOGY AND IMPORT SYSTEM

Ar cti c Tokyo and the Polar Al aska, were builtin Sweden and operate under the Liberianflag with Italian crews.

55

The contract to supply Tokyo Electric andTokyo Gas companies is for 135 billion cubic

feet of gas per year, and in 1976 about 50billion cubic feet were actually delivered.

56

This project has operated without a majorproblem since initiation.

During the extreme winter of 1977 a specialdelivery of one shipload of LNG was made toEverett, Mass., from Alaska, after a waiver of

MU.S. Ilepartrnent of Commerce, Maritime Ad-ministration, Statu s of L N GVessel s.sGFederal Power Commission, Unit ed States Im port sand E xport s of Natu ral Gas 1976.

Figure 26.

Project Data Sheet: El Paso IImport Source: Arzew, AlgeriaImport Terminal: Cove Point, Md. and Elba Island, Ga.

Companies involved

Suppliers: Sonatrach

(Algerian National

Gas Co. )

Shipper: El Paso AlgeriaCorp.

Cove Point purchasers:

Consolidated System

LNG Co and ColumbiaLNG Co. (also operators)

Elba Island purchasers:Southern Energy Co(also operators)

Drstributors Columbia GasTransmission Corp.,Consolidated GasSupply Co., SouthernNatural Gas Co

the Jones Act prohibiting the use of foreignflag tankers in U.S. trade. A French-built3,5,000 cubic meter tanker, the Kenai Mul t ina,flying the Liberian flag was used.

57This proj-

ect contract expires in 1985. Beyond that, ap-

plication may be made to bring the gas tosouthern California.

3. Th e E l Paso I P r o j ec t ( f i g u r e 26)

The agreement between El Paso NaturalGas Company and Sonatrach (Algeria) willlead to the ini t ia l t ranspor t of the LNG

s~ean Hale, Cold Winter Spurs LNG Activity ,:21 .

Arzew to Cove Point 3,570 n miArzew to Savannah 3,77o n mi I

Locationof u s Project

terminals designation

Cove Point,Md

El Paso I

Elba Island,Ga.

Contract FPC Number Ships/ Estimated Investment ($106) Estimated

Expected volum

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