North America tackling liquefaction bottlenecks with new infrastructure

Ice covered thermometer, close-up. Credit: Erik Von Weber / Getty images

Liquefied natural gas (LNG) is not only one of the most abundant fossil fuels, but also a vitally important transitional fuel on the way to a low-carbon economy.  

Demand for LNG has growth from near zero in the mid-1970s to now forming an integral part of the global energy mix. And its importance is set grow as major economies move away from oil and coal, but still require an easily accessible energy source.  

It is considered a cleaner alternative to other fossil fuels, thanks to its relatively low sulphur content, no particle emissions during combustion and lower overall CO2 emissions.  

When pipeline transportation of LNG (a simpler and generally preferred method) is not available, there are two main methods of large-scale liquefaction: the cascade process (the cooling of one gas by another gas, resulting in a cascading effect; and the Linde method (a form of regenerative cooling, involving repeated compression and expansion). 

Once it has undergone regassification and been transported, LNG has a huge range of functions, from heating homes, electricity production, to personal and public transport. But its transportation requires a complicated process of both liquefaction and regasification. 

However, the process of liquefaction – converting the gas, via intense cooling, from its normal state into a liquid to ease movement – remains an energy intensive and expensive element of the LNG value chain. 

Global LNG liquefaction capacity is expected to more than double by 2028, potentially increasing from 473 million tonnes per annum (mtpa) in 2023 to 968mtpa in 2028 through new build and expansion projects, according to information collected by GlobalData, Offshore Technology’s parent company.  

North America still dominates globally, at least in terms of new build and liquefaction capacity growth, contributing around 54% of the total global capacity additions, or 268mtpa, by 2028. The Middle East and the Former Soviet Union (FSU) follow someway behind, with capacity additions of 78mtpa and 71mtpa, respectively. 

In terms of new build and expansion capital expenditure (capex) outlook for liquefaction projects out to 2028, North America continues to lead globally with a proposed capex of $240bn. 

In 2022, Australia had the highest liquefaction capacity, followed by Qatar and the US, with the US set to continue to lead global LNG liquefaction capacity additions, contributing 46% of the total LNG liquefaction capacity additions to 2027.  

“Abundant shale gas and strong demand for LNG in Asia and Europe have been primarily encouraging investments in the LNG liquefaction projects in the US,” said Himani Pant Pandey, Oil & Gas Analyst at GlobalData, with the aftermath of Russia’s invasion of Ukraine giving “further impetus to the US liquefaction projects.” 

Energy Information Administration (EIA) data from February this year revealed that US was again the largest supplier of LNG to Europe (the 27 nations of the European Union and the UK) in 2023, accounting for nearly half of total imports.  

“The technology that is transforming the industry is only indirectly related to liquefaction: it is focussed on the unconventional gas revolution in the US,” said Paul Everingham, CEO, Asia Natural Gas & Energy Association, which represents natural gas producers, buyers, suppliers across Asia. 

Everingham added that the technology that has allowed the extraction, processing, and eventual liquefaction of shale gas “has given the US an almost unlimited natural gas resource base.”

“LNG demand is expected to continue to grow strongly in the medium term, in the 4-6% per annum range, and while there may be some short-term bottlenecks or location-specific restrictions, the industry is well positioned to provide the necessary infrastructure,” he said.

Everingham added there is a “significant amount of construction ongoing or planned in all parts of the LNG value chain to accommodate this level of growth.”  

Liquefaction equipment and technology is usually the most expensive part of the LNG chain, he added, with liquefaction capacity costing around 10-15 times more than the same regasification capacity.  

“Costs can be reduced in a number of ways, such as economies of scale and better thermodynamic efficiency, but improvements like these are incremental,” he said.  

Louisiana’s CP2 LNG plant is one of the key upcoming LNG liquefaction projects in the US, with LNG producer and exporter Venture Global Partners holding the entire equity.  

The plant will be located next to Venture Global's existing Calcasieu Pass liquefaction plant, and will have 18 liquefaction blocks, each with a capacity of about 1.1mtpa of LNG, and also four 200,000-cbm full containment LNG storage tanks. 

The project is expected to start operations in 2026 with a capacity of 10 million tonnes per year (tpy), which is likely to be doubled to 20 million tpy by 2027. 

Pandey added: “In March 2023, Venture Global LNG also announced a final investment decision for phase two of the Plaquemines LNG export plant, covering over 600 acres, and secured $7.8bn in financing. Phase II of the project is likely to increase the liquefaction capacity of the Plaquemines project to 19.8 million tpy by 2026.” 

Meanwhile, GlobalData’s Global Small–Scale LNG (SSLNG) Liquefaction Capacity and Capital Expenditure Outlook report indicated SSLNG liquefaction capacity is expected to grow by 26% over the next four years. 

The research indicated that the growing importance of SSLNG for decarbonization of marine and road transport – and other applications such as off-grid power generation – will drive such substantial growth. 

Once again, the US is expected to lead capacity additions with 3,790 kilo-tonnes per year (ktpa) by 2028, followed by China and Nigeria with 2,460ktpa and 1,990ktpa, respectively. 

Globally, an additional 13,720ktpa of SSLNG liquefaction capacity is expected to come online by 2028 from new build capacities and capacity expansions in existing terminals across 16 countries. The US will likely account for 28% of the total capacity additions by 2028. 

A total capex of $8.3bn is expected to be spent globally on new build and expansion of SSLNG liquefaction terminals during the period 2024 to 2028. 

The report also indicated that North America will be at the forefront of the global liquefaction capacity growth – accounting for about 36% of the total LNG liquefaction capacity – in 2028. The US and Canada will drive the capacity additions in the region, with the US alone accounting for 80% of the region’s total liquefaction capacity in 2028.