Page last updated at 08:49 GMT, Saturday, 21 March 2009

Q&A: Liquefied natural gas

The LNG terminal near Milford Haven in Pembrokeshire
The LNG terminal near Milford Haven in Pembrokeshire

The first ship carrying liquefied natural gas (LNG) has arrived in Pembrokeshire, marking the culmination of one of the largest UK engineering projects of its kind.

The carrier Tembek docked on Friday at Milford Haven.

It began supplying a pipeline which is capable of carrying a fifth of the natural gas needed in the UK, which runs 196 miles (316km) across Wales into Gloucestershire, and which took three years to complete.

Here are the answers to some questions about LNG, and the significance of the project for the UK and its energy supplies.

What is liquefied natural gas?

LNG is a liquid form of the ordinary natural gas which we use in homes and industry. It is almost entirely methane that has been cooled to -162C in processing plants called "trains". At that temperature it becomes a liquid, reducing its volume by a ratio of 600:1. Large amounts of LNG can then be transported across the globe at atmospheric pressure in insulated tankers. LNG is colourless and odourless but also highly flammable. It is approximately 45% as dense as water. When it reaches its destination, the LNG is reheated, turned back into gas and then distributed through pipelines.

Where does the gas come from?

Natural gas fields are found in many countries across the world, often associated with other fossil fuel reserves, such as oil. LNG is currently being produced from natural gas fields in a number of countries, including Australia, Algeria, Indonesia, Trinidad, Nigeria and Qatar. South Hook at Milford Haven will be supplied with gas from the Qatar North field. Dragon will receive LNG from Algeria, Egypt, Trinidad and Malaysia.

Map of tanker route

This is a global business?

The great advantage of LNG is that gas can be traded over huge distances and is no longer fixed by the length and geography of pipelines. For instance, gas from Trinidad can be shipped to Europe - or Middle Eastern gas sold in Japan or South Korea. The industry is undergoing a major boom. International trade in LNG is growing at about twice the rate of pipeline gas. In the UK, natural gas is traded as a commodity through what's called the OCM system. Gas prices fluctuate in response to changing supply and demand. For instance, after a spell of very cold weather, demand will rise and the price of gas go up. In 2008 European wholesale gas prices reached a record high. Vast sums have been invested in LNG. The Qatar Gas II project which will supply the South Hook terminal is costing $13bn.

So what is been built at Milford Haven?

LNG storage tanks
One of the huge insulated storage tanks, which keeps the liquid natural gas at -162C

Special terminals are required to accept the large tankers. Two such terminals have been built in Milford Haven, which is a large deep water anchorage. They will be run by different consortia. The LNG will be offloaded at a jetty through pipes and stored in giant tanks where it remains at cryogenic temperatures. It is then re-gasified in a vapourising plant before leaving the terminal as gas in a pipeline.

The South Hook terminal is the largest operation and is a joint venture between Qatar Petroleum, Exxon Mobil and Total. The Dragon LNG terminal at nearby Waterston is owned by the shareholders BG Group, Petronas and 4Gas. Both these terminals have their own jetties, storage tanks and vapourisers. They will feed into a new 48" pipeline which has been constructed 316km across south Wales into Gloucestershire by the National Grid. This pipe then connects into the UK gas transmission system (the NTS) to be distributed around the country.

Is Milford Haven the only source of imported LNG in the UK?

No. An LNG facility was opened at the Isle of Grain in Kent as long ago as 1982. Initially this was designed to top up the UK gas supply at times of unusually high demand. Acting as a giant bunker, it liquefied spare North Sea gas into LNG and then vapourised it when needed. This facility has now been developed into the UK's first importation terminal, with a tanker jetty on the River Medway. The Isle of Grain already handles 10m tonnes of LNG a year, smaller than South Hook in Milford Haven (which will have a throughput of over 15m tonnes per annum - making it Europe's largest LNG terminal).

The Dragon terminal in Pembrokeshire is much smaller with the capacity to handle 2.2m tonnes of LNG a year. Between them, these three LNG terminals could provide around a third of the UK's gas supply at current demand levels. There is also a smaller LNG facility on Teeside which can handle up to 11m cubic metres a day. Gas is also stored as LNG at various sites around the UK including Avonmouth, Partington, Dynevor Arms in south Wales and Glen Mavis in Scotland.

Does the UK need LNG?

For many years, Britain has had its own natural gas supply, with off-shore fields in the North Sea and other sites including Morecambe Bay. The first gas was brought ashore in 1967. UK gas fields reached their peak of production around the year 2000 and are forecast to decline steeply over the next 20 years. In 2002, Britain became a net importer of gas. Currently the majority of imported gas comes from Norwegian gas fields.

The world's longest undersea pipeline runs between the Norwegian Sleipner gas field and the BP gas terminal at Easington on the Yorkshire coast. There is also a pipeline between Bacton in Norfolk and Zeebrugge, which is then linked to the European gas network. Without a replacement source of natural gas, the UK could face shortages in future years. The Russian gas company Gazprom has become a major supplier of natural gas in European markets but highly political disputes with Ukraine have led to fears over the reliability. The security of gas supplies has become a major international issue. The LNG industry believes it can fill the gap in the UK market.

A protest by the Safe Haven group earlier this month Photo: Kevin Fitzmaurice-Brown
A protest by the Safe Haven group earlier this month Photo: Kevin Fitzmaurice-Brown

Is it safe?

On the whole, the global LNG industry has an excellent safety record but there have been serious accidents including explosions and spillages. In 2004 there was a catastrophic blast at an LNG liquefaction facility at Skikda in Algeria, operated by the company Sonatrach. Twenty seven workers were killed and 77 seriously injured. Also in 2004, a pipeline carrying gas from an LNG terminal in the Belgian port of Zeebrugge exploded, killing 23 people. The new LNG terminals in the UK are subject to control by the Control of Major Accident Hazards (COMAH) regulations.

Some residents living in and around Milford Haven are fearful of a potential accident. The local campaign group 'Safe Haven' points towards the Sea Empress disaster in February 1996 as an example of what can go wrong. The crude oil tanker lost an estimated 73,000 tonnes of its cargo after running aground on one of the reefs near the entrance to the Haven. Concerns have also been raised that the tankers, terminals and pipeline could be an attractive target to terrorists. The LNG tankers travelling from the Arabian Gulf have to travel through the Gulf of Aden - an area where piracy has become a major threat to shipping. In January a large liquid petroleum gas tanker was hijacked by Somali pirates.

What about the tankers?

There are around 230 LNG tankers operating across the world at the moment. They have double hulls for safety. Qatargas has recently built 50 new LNG tankers - 14 will be dedicated to the South Hook supply train. There are two sizes of these tankers - the Q-Flex and larger Q-Max tankers (the largest LNG tankers in the World). The Q-Flex tankers can carry 210,000 cubic metres of gas - the Q-Max tankers 260,000 cubic metres. The first tanker to deliver gas to Milford Haven will be the "Tembek" - a Q-Flex tanker.

Graphic of LNG ship

Will it harm the environment?

Natural gas has been described as the cleanest fossil fuel - producing roughly half the CO2 emissions of coal per Btu of energy output. But it still a rich source of carbon dioxide. The main products of the combustion of natural gas are carbon dioxide and water vapour. Environmental groups say a proposed 2,000 Mw power station to be built by RWE npower at Pembroke, using LNG as fuel, would be one of the largest CO2 emission sources in the UK.

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