Liquefied Natural Gas (LNG)

What Is Liquefied Natural Gas (LNG)?

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

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

How Liquefied Natural Gas (LNG) Works

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

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

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

Global Demand for Liquefied Natural Gas (LNG)

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

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

LNG Imports.

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

LNG Exports.

The Future of Liquefied Natural Gas (LNG)

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

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