Traditionally massive, and massively expensive, liquefied natural gas (LNG) export terminals are giving way to “new modular-style designs built to snap together like Legos”, responding to an emerging market “that wants smaller volumes on shorter, more flexible contracts,” Reuters reports.
The shift in business approach reflects changes in a market that has been roiled by unsteady prices (and is about to be roiled again by competing renewable energy and energy storage technologies).
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“In 2008, the average [LNG import/export] contract was for 18 years and more than two million tonnes per annum (Mtpa),” the news agency recalls. “By 2016, it had dropped to less than eight years and less than one Mtpa, with new buyers in emerging markets like China, India, and Pakistan seeking flexibility due to market uncertainty.”
These Lego-style facilities, whose far smaller liquefaction units are called “trains,” are being welcomed by many in the business because their modular nature “allow terminals to grow with the market.” Reuters notes that LNG demand “has taken off in recent years”, on “sharply lower” prices plus the (unfortunate) perception that gas is a cleaner fuel than oil or coal. The U.S. Energy Information Administration expects overall demand to grow 75% by 2027.
“With modular trains,” Reuters states, “companies hope to avoid the delays and cost overruns that have dogged custom megaprojects like Chevron Corporation’s Wheatstone and Gorgon projects in Australia.”
Questions remain about whether small, modular LNG terminals will truly be the little engines that could, and on the cheap, no less, with critics noting that the technology is still unproven. But that may change with the $2-billion Elba Island project, a Kinder Morgan terminal in Georgia’s Chatham County that will feature 10 trains and export capacity of 2.5 Mtpa. It is expected to begin operation in the summer.
