Replies to This Discussion

Permalink Reply by Jack Straw on October 3, 2012 at 8:32pm

RE: "WHY are Heating Oil inventories so low?"

That is an easier question to ask than it is to answer.

I have opinions as to why it might be the case, I think that it is due to the confluence of a number of changes underway:

1). Europe has been changing their fuel of choice for automobiles - moving from gasoline to diesel.  A given barrel of oil will refine into a variety of products. The refiner can influence the ratio in the mix to a limited extent (the amount that they can influence that mix is a function of the particular crude and the particular crude that a particular refinery is designed to handle).

European refineries have been exporting gasoline to the U.S.; retaining and importing the distillates (diesel and heating oil).

We are receiving less in the way of diesel and heating oil from Europe and we are competing with Europe with respect to the import of diesel and heating oil.

2). We are importing less oil, as we are currently producing more domestic oil from the unconventional shales. This oil tends to be light oil, displacing the import of heavier oil. The crack of the lighter oils produces a greater proportion of gasoline and less heating oil, when contrasted with heavy oil.

3). We have had two refineries closed on the East Coast. One of these was purchased by Delta Airlines and has shut down while being reconfigured to produce a greater proportion of jet fuel. Loss of this refining capacity has reduced the amount of product available.

4). The holdup of the Keystone pipeline has meant that the crude from the Athabasca Tar sands is not heading South to the upper Midwest and Midcontinent refineries.

5). A number of Gulf Coast refineries were temporarily closed as a result of the flooding associated with the recent hurricane. In some cases they were closed for several weeks.

6). Many of the Gulf Coast refineries are designed to handle heavy crudes (Maya Mud from Mexico and Orinoco Tar Belt Crude from Venezuela. Less crude is being exported by Mexico (as their major field is in decline and their internal consumption increases).  Less crude is being exported by Venezuela, due to field decline and the incompetence of Pedevesa (the national oil company). Also, oil that would be coming to the U.S. from Venezuela is increasingly going to China & Cuba (as Chavez plays kissy-face with China and Fidel). The Gulf Coast refineries are substituting and mixing some lighter crude in exchange for the unavailable heavy crude; producing a lesser proportion of heating oil.

7). Environmental rules discourage refiner use of heavy sour crude; thus a lesser proportion of heating oil is included in the final refined product.

8). The U.S. is increasingly competing with China, India, Japan, Indonesia, etc. for refined product.

I do not see any collusion to raise prices … other than actions taken as the result of the current administration’s prejudice against fossil fuels.

It is likely that I missed a couple potential contributing situations.

The good news is that we now have plentiful Clean Green natural Gas which should be displacing the use of heating oil.

 

All IMHO,

                   JS

 

Permalink Reply by Samuel J. Orr on October 3, 2012 at 10:39pm

If we really developed natural gas, would we really need this Keystone Pipeline? This stuff from Canada is nasty and really environmentally problematic. With technology available to convert trucks from diesel to natural gas, or to allow them to run on either fuel; could we not in theory go in that direction? I wonder if similar technology exists to convert furnaces that use heating oil to natural gas. Or is heating oil largely required, because there are so many geographical areas where gas lines do not exist? If this is the main problem, seems to me that a lot of jobs could be created to extend the natural gas supply lines. Years ago my grandparents had an oil furnace. When the natural gas pipeline was extended, they bought a gas furnace  and lived happily ever after. Such conversions would I believe reduce the amount of greenhouse gases released into the atmosphere. (Jack, I concede that i may be "all wet " with this post. If you or others with more technical knowledge can enlighten me I will much appreciate it.) My environmental concerns extend to what happens to the areas in Canada from where this "yucky gucky" stuff is extracted? Thanks in advance for any answers you may be able to provide.

Permalink Reply by landlubber on October 4, 2012 at 7:57am

40 years ago gas lines were extended to our street and I simply removed the burner from my boiler and put in a replacement gas burner very easily. The electric utilities can do that same thing. A boiler doesn't care how the fire is produced. And I would think that a simple gas burner is cheaper than any other type to manufacture and to maintain long term.

Permalink Reply by Jack Straw on October 4, 2012 at 12:56pm

RE: “If we really developed natural gas, would we really need this Keystone Pipeline?”

Oil has a much greater energy density and there are many products that can only be produced from the longer hydrocarbon chains. We need any and all available sources of energy.

Oil from Canada (shipped via Keystone Pipeline) would displace oil imported from other sources. I prefer to keep our money in North America, I prefer to send our money to “friends” that share our basic values, I prefer to send our money to “friends” that openly trade with us (sending many of those Dollars back, supplying employment when they purchase our goods and services).

Also, the Keystone Pipeline will also move oil from the Bakken Shale of North Dakota and Montana.

RE: “This stuff from Canada is nasty and really environmentally problematic.”

The Athabasca tar sands are large deposits of bitumen or extremely heavy crude oil, it is primarily exploited through surface mining. The bitumen is extracted from the sands and “upgraded” to essentially a crude oil. What is shipped to the U.S. is not particularly nasty; it is a grade of oil required by many existing U.S. refineries. The environmental issues are primarily associated with mining and water usage; effects limited to Northern Alberta. If the U.S. should choose to not import via pipeline, China has shown an eagerness to purchase this crude via a proposed pipeline from Fort McMurray, Alberta to the Pacific Coast at Kitamet, B.C.. The Athabasca tar sands will be exploited; the only question is – will they be exploited for America’s benefit or for China’s benefit?

RE: “With technology available to convert trucks from diesel to natural gas, or to allow them to run on either fuel; could we not in theory go in that direction?”

I agree, I feel that all fuels should compete on the basis of economics and environmental benefits. Natural Gas should be the winner for many applications. It will take time to realize that goal as we “go in that direction”.

RE: “Or is heating oil largely required, because there are so many geographical areas where gas lines do not exist? If this is the main problem, seems to me that a lot of jobs could be created to extend the natural gas supply lines.”

You are preaching to the choir. Rather than squandering 90 Billion dollars on failed/failing un-economic “pseudo-green” projects. I would much rather have seen (at least) some of those monies supporting the build up of infrastructure to get Clean Green Natural Gas into the homes of those who currently do not have access.

I would prefer that help be given in loans, loans that we can realistically expect to be repaid (unlike all those Solyndras). This would very quickly provide real jobs for real work, for real Americans, using real available technology – all at a time when we desperately need real jobs for real Americans. Any incentives to provide productive jobs would result in fewer food stamps and more payroll taxes; rather than handouts, pull people up by the boot straps. In addition to producing jobs, it would clean the air, water and leave more money in the pockets of consumers.

RE: “My environmental concerns extend to what happens to the areas in Canada from where this "yucky gucky" stuff is extracted?”

The Athabasca tar sands represent the largest accumulation of oil in the World. As a sovereign nation, what happens to areas in Canada is a matter for Canadians to determine. Whether we purchase our crude or whether China purchases their crude, it will still be produced. Canadians kind of get mildly annoyed when we meddle in their internal affairs (they are too polite to get angry).

 

Right now there is one entity that is benefiting greatly from the delays in building the Keystone Pipeline – Burlington Northern Railroad (also known as Warren Buffet). It is widely appreciated that the cleanest, safest and most efficient means of transporting oil is via pipeline (much cleaner, safer and more efficient than transport by rail).

 

All IMHO,

                      JS

Permalink Reply by Samuel J. Orr on October 4, 2012 at 1:37pm

Jack: Once again, I  thank you for your very informative answers. I wish I had posted my questions as a new thread, because I believe that a lot of people share some of the questions that I posed to you. I am clearly pro natural gas development. I nevertheless hope that the Canadian tar sands can be developed with the minimal amount of damage to wild life and other aspects of the environment as may be possible, while still making the project commercially viable. There have been and there are numerous on going environmental disasters in the world, many entirely unrelated to O&G. Especially in some South American countries such as Ecuador, O&G companies have done a lot of unnecessary environmental damage. I think this is somewhat sad. I find all of your answers persuasive and I am happy that you have written such a comprehensive and convincing response. I am gratified that you believe that natural gas should be used as an alternative to other hydrocarbon fuels such as gasoline, diesel, heating oil and even coal, when it is economically and techologically feasible to do so.  I think we agree about 99%, but you are a better writer than i am. 

Permalink Reply by 2s72s0k9mm8gd on October 8, 2012 at 9:15am

Jack, I have read some about our local history and back in the 1850's or 1860's , when coal was first commercially mined here , alot of it was being converted to "coal oil". This is the Darlington , PA (Cannellton to be specific) area and the coal type called Cannell coal. I wonder if technological advances could possibly make this a viable process today? I remember the old timers referring to coal oil lamps they used back in the day. Would you happen to know if any other useful substances can be extracted from this bountiful resource? Thanks.

Your mentioning of Bitumen above sparked the thought that if the Canadians can  do this with sand , why can't we do the same with our coal? We sit on millions of tons of bitumenous coal.

Perhaps we could get back to EATING our corn instead of burning it......?

 

Permalink Reply by Jack Straw on October 8, 2012 at 11:12am

RE: “Your mentioning of Bitumen above sparked the thought that if the Canadians can do this with sand , why can't we do the same with our coal? We sit on millions of tons of  bitumenous coal.”

 

All old news.

In the 19^th Century and the first half of the 20^th Century, “Coal Gas” illuminated our cities.

During WWII, the Germans developed the technology to convert this “Coal Gas” to Synthetic Oil (using Fischer–Tropsch synthesis) to fuel their war efforts (as their other sources of oil were progressively cut off.

During South Africa’s Apartheid boycott years South Africa’s national oil company (SASOL) used the Fischer–Tropsch process to get around the boycott of oil exports to South Africa.

Today SASOL (now privitized) is one of the two leaders in the technology.

Coal to Oil (Coal to Gas, Gas to Oil) is not economical at current oil prices.

SASOL are now involved in several Natural Gas to Oil projects in areas where there is stranded gas; but, economics are questionable.

 

Coal to Oil has a long history, but economics are its biggest enemy; it tends to only make sense when you are desperate.

 

Coal Gas

http://en.wikipedia.org/wiki/Coal_gas

“Coal gas (also town gas and illumination gas) is a flammable gaseous fuel made by the destructive distillation of coal containing a variety of calorific gases including hydrogen, carbon monoxide, methane and volatile hydrocarbons together with small quantities of non-calorific gases such as carbon dioxide and nitrogen. It was the primary source of gaseous fuel both the United States and Great Britain until the widespread adoption of natural gas during the 1940s and 1950s in the US, and the late 1960s and 1970s in the UK. It was used for lighting, cooking and heating and was often supplied to households via a municipally-owned piped distribution system.”

 

Fischer–Tropsch synthesis

http://en.wikipedia.org/wiki/Fischer%E2%80%93Tropsch_process

“The Fischer–Tropsch process, or Fischer–Tropsch synthesis, is a collection of chemical reactions that converts a mixture of carbon monoxide and hydrogen into liquid hydrocarbons. The process, a key component of gas to liquids technology, produces a synthetic lubrication oil and synthetic fuel, typically from coal, natural gas, or biomass.[1] The Fischer–Tropsch process has received intermittent attention as a source of low-sulfur diesel fuel and to address the supply or cost of petroleum-derived hydrocarbons.”

 

SASOL

http://en.wikipedia.org/wiki/Sasol

“Sasol Ltd. (Afrikaans: Suid Afrikaanse Steenkool en Olie, English: South African Coal and Oil) is a South African company involved in mining, energy, chemicals and synfuels. In particular, they produce petrol and diesel profitably from coal and natural gas using Fischer-Tropsch process. The company has factories at Sasolburg and Secunda (Secunda CTL) and has taken a stake in projects under construction in Qatar (Oryx GTL), Iran (Arya Polymers) and Nigeria (Escravos GTL). Sasol senior officials are also from time to time involved in senior level negotiations with their China counterparts with the view on establishing a chemical plant in China, being the fastest growing economy in the world.”

Permalink Reply by Jim Litwinowicz on October 4, 2012 at 2:31pm

I'll add two more reasons for low inventories. Major fires at the California Chevron refinery and a huge explosion/fire at one of the world's largest refineries in Venezuela. The other reason is the fall shut down for the seasonal change over period to winter fuels.

Permalink Reply by Jack Straw on October 4, 2012 at 6:58pm

Source: http://www.hardassetsinvestor.com/features/4130-natgas-prices-buoye...

 

Written by Sumit Roy  |October 04, 2012

NatGas Prices Buoyed By Cold Start To Winter, More Upside Remains As Rig Count Hits 13-Year Low

Natural gas may continue to rally despite a larger-than-expected increase in inventories last week.

Natural gas prices fell after the Energy Information Administration reported that operators injected 77 billion cubic feet into storage last week, slightly above the 70 to 74 bcf that most analysts were expecting.

The injection was well below last year’s 97 bcf build, but close to the five-year average build of 76 bcf.

Inventories now total 3653 bcf, which is 244 bcf above the year-ago level and 296 bcf above the five-year average (calculated using a slightly different methodology than the EIA).

In our view, the year-over-year inventory surplus remains on track to be eliminated by the start of the winter withdrawal season. A forecasted cold start to the heating season raises the possibility that inventories could move into a deficit versus the year-ago levels sometime in November.

NOAA 6 To 10 Day Weather Outlook

 

A cold winter would be in sharp contrast to last year, which saw the fourth-warmest winter on record.

At these prices, the natural gas market looks largely balanced, as evidenced by injections that have come in close to the five-year average in recent weeks. The move to near $3.50/mmbtu has surely reversed some of the coal-to-gas-switching demand-boost from earlier this year.

However, the increasing trend of electricity generators using more natural gas at the expense of coal is structural, owing to environmental and economic factors; thus, gas demand in the segment will likely continue to grow steadily.

Regarding the outlook for prices this winter, we see a bias to the upside. The EIA’s latest survey of producers showed that U.S. output rose by almost 300 mmcf/d in July to 72.58 bcf/d. That’s the ninth-straight month that output has hovered between 72 bcf/d and 73 bcf/d. In other words, U.S. natural gas production has flattened.



While a flattening of production is a far cry from the precipitous drop that many bulls had hoped for, it’s obviously better than rising output. Given that we expect demand to continue to increase gradually—particularly in the electricity generation segment—prices will need to rise to spur producers to increase output.

Currently, operators are still moving away from natural gas drilling and toward oil drilling. The numbers of rigs drilling for natural gas fell to another 13-year low at 435 last week, according to Baker Hughes.



Bottom Line: We expect natural gas to rally toward $4/mmbtu, as inventories move into a deficit versus the year-ago level. Higher prices are necessary to encourage producers to ramp up natural gas drilling.


NATURAL GAS

 

Permalink Reply by Jack Straw on October 7, 2012 at 12:46am

Published on Arcticgas.gov (http://www.arcticgas.gov)

Home > The cold facts about a hot commodity: LNG

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The cold facts about a hot commodity: LNG

 

By: Bill White    bwhite@arcticgas.gov [1]

Release Date: September 18, 2012

Photo courtesy of ConocoPhillips.

A tanker docked at the Nikiski, Alaska, LNG plant.

 

Liquefied natural gas is an odorless, colorless, non-toxic, non-corrosive and non-flammable form of methane. As fuels go, it's pretty cool.

Actually, LNG is colder than Antarctica on winter solstice. Methane is chilled to about minus 260 degrees — a temperature that transforms it from a vapor to a liquid, compressing its volume 600 times to make it more economical to store for later use or to ship long distances from countries endowed with natural gas to those starved for the fuel.

That's the broad story of LNG — a case of Adam Smith capitalism at work.

But in the details, the LNG story is a tale of brilliant physicists, savvy government engineers and entrepreneurial risk takers. LNG's back story includes a Nobel Prize, anxiety about U.S. air defense and a disaster that destroyed part of Cleveland.

LNG touches only a small portion of the world's gas supply, but it's the fastest-growing portion. Since 2000, global demand for LNG has grown 140 percent and now accounts for roughly 10 percent of the methane consumed worldwide. The rest moves to market by pipeline.

LNG is exported from 19 countries, including from one U.S. plant in Nikiski, Alaska.

Since 2006, Norway, Russia, Yemen, Peru, Angola and Equatorial Guinea all have started making LNG, while Qatar, Nigeria, Australia, Oman and Indonesia have expanded production.

Qatar's expansion was an act of sheer audacity. Qatar tripled its LNG production capacity to over 80 million metric tons a year — about 11 billion cubic feet a day — leaping past Malaysia and Indonesia as the world's largest LNG maker. Last year Qatari plants exported almost one-third of the LNG traded across the globe. In the mid-2000s, with construction under way, Qatari officials thought they'd be selling much of their LNG to the United States. The Lower 48 shale-gas boom blew apart that plan. But last year, as Japan idled nuclear power production after the Fukushima disaster, Qatari exports to Japan soared 56 percent over their 2010 level, according to the BP Statistical Review of World Energy [4]. That dulled Qatar's pain of losing the U.S. market.

Meanwhile, more countries are clamoring for LNG to quench their growing energy appetite.

Since 2006, China, Brazil, Chile, Dubai, Kuwait, the Netherlands and even Canada and Mexico all became first-time importers of LNG. They joined the mainstay LNG consumers of Japan, South Korea and Taiwan, according to the International Group of Liquefied Natural Gas Importers [5].

In all, 25 countries took LNG shipments last year, the gas importers group said.

As the world's demand for LNG grows, more locations are mulling entry into the production game. Export projects in Western Canada [7], Eastern Africa, Russia and the U.S. Gulf Coast are under consideration.

One other possible contender: Export of LNG made from Alaska North Slope gas. The main North Slope producers — ExxonMobil, ConocoPhillips and BP — jointly are at an early stage [8] of considering such a project.

HOW IT WORKS

Chemical engineers have known for years how to liquefy vaporous methane.

And for decades LNG tankers — essentially massive thermos bottles that keep the gas cold and liquid — have sailed the oceans safely.

Like many great inventions, liquefied natural gas [9] emerged as an industry via a progression of events over many years, responding to both commercial and geopolitical pressures.

A key development was learning methane's "boiling point," a temperature below which methane is a liquid and above which it's a vapor.

Most people likely are familiar with the boiling point of water: 212 degrees. Heat water above that temperature and the liquid becomes a vapor.

Methane's boiling point is about minus 260 degrees. Above that frigid temperature it's a vapor. Below it and you have a liquid.

But liquefying natural gas involves more than superchilling it and maintaining the temperature.

That's because a natural gas stream rising out of the ground contains more than just methane, although methane usually is the main component. The ethane, propane, butane, pentane, carbon dioxide, water and other components each have separate boiling points.

Ethane liquefies at minus 127, propane at minus 44, butane at plus 31 degrees, and so on. Like water at 32 degrees, these gases also have "melting points," a temperature below which they become solid. (Dry ice is nothing more than solid carbon dioxide, whose melting point is minus 109.)

Boiling and melting points of gases
	Boiling point1	Melting point2
Methane	-260 F	-297 F
Ethane	-126 F	-278 F
Propane	-44 F	-306 F
n-Butane	+31 F	-217 F
n-Pentane	+97 F	-201 F
Water	+212 F	+32 F
1 Approximate temperature at which liquid turns to vapor at atmospheric pressure
2 Approximate temperature at which solid turns to liquid at atmospheric pressure
Source: National Center for Biotechnology Information

These gases have different boiling and melting points because although they're all hydrocarbons — composed of hydrogen and carbon atoms — the number of atoms differs. The more carbon atoms a molecule contains, the heavier it is. That weight determines the temperatures and pressures that make the gas a vapor or liquid.

Methane has the fewest carbon atoms — one — so it has the coldest boiling point of these gases. If the entire produced natural gas stream were liquefied, some components — such as butane with its four carbon atoms and pentane with its five — would freeze solid before the methane vapors got cold enough to become liquid.

Chilling the entire gas stream to minus 260 to liquefy methane thus could produce a slushy slurry of product that would muck up the machinery. This is why the heavier hydrocarbons mostly are stripped from the gas stream before liquefaction.

THE PROCESS

Here's a quick walk along the LNG value chain:

Step one: Clean the natural gas stream so that mostly methane is being processed. The residual ethane and other components left behind after processing are in quantities too small to matter.

Sometimes this cleansing occurs before the gas reaches the liquefaction plant. More typically cleansing occurs at the plant.

Buyers in Japan and Europe typically like their LNG to be spiked with a little ethane or other carbon-rich gases because their mainstream gas burns hotter than mainstream gas in North America. Ethane, propane, butane, etc., have higher Btu contents than methane and serve as the spiking agents.

Step two: Superchill the methane.

A variety of techniques will liquefy methane. A Pennsylvania company called Air Products [10] licenses the technology that dominates the industry.

Air Products uses several variations on the same process. Essentially, it starts by using propane to precool the methane. Propane is compressed and condensed, then its pressure is eased in steps to provide refrigeration that cools the methane. (Gas warms as it is compressed and then cools as the compression eases. This principle is applied throughout a typical liquefaction process.)

Next, the cooled methane enters the main stage, a heat exchanger where the gas comes in contact with a blend of refrigerants that transforms the methane vapor into a liquid. Air conditioners work in a similar way: warm air passes over coiled tubing filled with a cold gas.

A new variation uses nitrogen as a final superchilling refrigerant. This allowed much bigger LNG plants to get built, and it partly explains how Qatar could construct so much capacity in recent years.

A technology that's a distant second in the market to Air Products' is licensed by ConocoPhillips. The company's Nikiski, Alaska, plant as well as plants in Trinidad and Tobago, Egypt, Angola, Equatorial Guinea and one site in Australia use it.

ConocoPhillips routes cleansed methane first into a propane heat exchanger to initially drop the temperature. Ethylene is used to drop the temperature more (you can make ethane colder than propane before it boils into a vapor). Then the gas enters a methane cold box connected to mighty compressors to cool the gas to near a liquid state. A final "flash blast" finishes the job.

Most LNG plants have on site more than one processing unit — called trains. The trains operate independent of each other, running in parallel to liquefy methane. Qatar hosts the world's largest trains — the biggest can handle about 1 billion cubic feet of natural gas per day. Qatar's most massive plant, at the Ras Laffan complex, features two such trains plus four smaller ones that together can process about 5 bcf a day. That's about twice the volume as has been discussed for an LNG plant that could process Alaska North Slope gas. Alaska's Nikiski plant is relatively small, with capacity to handle about 200 million cubic feet a day.

One final point about liquefying methane: About 10 to 15 percent of the gas gets consumed during the process. Much of it to run the plant's turbines, compressors and other machinery.

Step three: Store the LNG until it's shipped to market. Special insulated metal tanks keep the gas liquid. A small fraction will "boil off" — warm into a vapor — and this gas can be reliquefied or used to power the plant.

Storage tank dimensions vary widely, depending on whether the LNG is stored for truck fueling, peak shaving or import-export. The largest storage tanks stand as tall as a 14-story building (about 170 feet tall), are nearly as wide as a football-field length (280 feet in diameter) and can hold up to 200,000 cubic meters of LNG — the equivalent of roughly 4 billion cubic feet of vaporous methane, or about one-15^th of daily U.S. gas production last year. In short: They can be big.

Step four: Ship the gas. Special tankers with insulated chambers keep the gas below minus 260. Again, a small volume of liquid methane vaporizes on the trip to market; this gas typically is used to power the ship or is reliquefied.

At the end of 2011, 360 ships comprised the global LNG fleet, according to the International Gas Union [12]. Ships typically get built in tandem with LNG plants and get contracted to sail between the plant and its customers. Just as the capacity to make LNG has skyrocketed in recent years, so has the tanker capacity, growing 150 percent since 2006, the IGU said.

The average tanker capacity is about 3.1 bcf of gas (after the liquid gets converted back into a vapor). South Korea is the big builder of tankers. An average one can cost at least $150 million. The largest tankers were built for the Qatar expansion. They can carry about 5.5 bcf, but the tankers are too big for some LNG receiving ports.

Step five: Convert the liquid back into a vapor, called regasification.

This happens in the LNG destination port. LNG is offloaded into storage tanks. The LNG then is warmed into vapor as needed before entering the local gas pipeline system.

THE CRYOGENICS CRAZE

As an export product, LNG dates back less than 50 years, to 1964.

That year, as Ford rolled out its new sports car, the Mustang, a British shipyard launched the Methane Princess, a tanker that carried the first commercial load of LNG, from a new plant in Algeria to a gas-hungry United Kingdom.

Within a few years, Algeria was sending LNG to France, too, and Libya was exporting it to Italy and Spain. In 1969, a new Phillips and Marathon plant in Nikiski, Alaska, started shipping LNG made of Cook Inlet natural gas to Japan, inaugurating LNG trade to Asia. Japan is the world's top LNG consumer today.

But the true history of LNG dates to 100 years earlier as scientists studied how very low temperatures changed matter, a specialty called cryogenics.

Carl von Linde

In the 1870s, German engineer Carl von Linde's pioneering work in compressed refrigeration found a ready market among breweries and slaughterhouses. Von Linde's technique for chilling air to extract the oxygen, developed around the turn of the century, also was a transforming moment. Isolating oxygen led to development of a torch that revolutionized metal cutting as well as welding for skyscrapers.

Other scientists and engineers hopped aboard the cryogenics craze.

Ethane for plastics, chlorine for sanitizing sewage, oxygen for hospital patients, nitrogen for cryosurgery are among the thousands of products and uses that trace their origins to chilling gases to isolate their components.

THE GAS THAT WOULDN'T BURN

The birth of liquefied methane stemmed from work that used cryogenics to isolate helium.

Helium is a marvelous gas that has been adapted to many uses [15] today, such as cooling superconducting magnets in medical MRI scanners.

If helium isolation has a Eureka! moment, it arguably is a 1903 event [16] in a small flatland town called Dexter, Kan.

A driller hit a "howling gasser" of a well there. Nine million cubic feet of gas spit to the surface each day before the well could be capped. Dreams of riches infused the locals. Ore smelters. Brick and glass plants. Soon they would be wildly prosperous.

To celebrate, the town tossed a huge party, the climax of which was to be lighting the gas jet. After speeches, a bale of burning hay was nudged to the escaping gas to produce a promised "great pillar of flame." But the gas failed to ignite. To everyone's surprise, the burning bale got snuffed instead.

A geologist and a chemistry professor soon teamed to solve the mystery of the gas that wouldn't burn.

They discovered the gas was mostly nitrogen. The amount of methane present wasn't enough to combust given all the non-flammable nitrogen — just as trace quantities of methane in the Earth's air don't burst into flame every time someone lights a cigarette.

They also found "inert residue" present in the Dexter gas. After further analysis, they learned this residue included helium.

This discovery was astonishing. To that time, helium was considered a rare element. But now it seemed helium could be found in an ordinary natural gas stream. As for Dexter, it was located in the planet's great cradle of helium: The natural gas deposits of the U.S. plains.

The scene then shifted to the lab of Dutch physicist Heike Kamerlingh Onnes. In 1908, he was the first to liquefy helium, chilling helium through a series of stages until getting it to minus 452 degrees, at which point the vaporous helium transformed into liquid helium, reaching its boiling point. It was the coldest temperature ever achieved on Earth. Onnes won the Nobel Prize in Physics [19] five years later for his work.

World War I, with cryogenic isolation, became the great leap forward for helium and led eventually to the liquefaction of methane.

During the war, airships — dirigibles, zeppelins and the like — became an novel innovation of combat [20]. Germans dropped bombs from them. The British hunted U-boats. A downside was hydrogen, the lighter-than-air gas used to float most airships. Hydrogen is spectacularly flammable, as the famous 1937 Hindenburg disaster [21] demonstrated.

But helium isn't flammable. The U.S. launched a crash research program in 1917, as the country entered World War I, to find cheap ways to extract large volumes of helium from natural gas and stockpile it.

This research led the U.S. Bureau of Mines in 1924 to produce the first liquid methane as a byproduct of helium separation.

LNG'S EARLY YEARS

During the ensuing years, techniques for liquefying methane were refined and ideas for storing and transporting LNG were patented.

A public revulsion toward flaring natural gas as a waste product of oil production helped propel the industry. Better ways had to be found to move the gas from where it was produced and not needed to where it could be used. The solutions included long-distance pipelines for domestic transport and, much later, LNG for cross-ocean transport.

By 1941, science and capitalism converged to make commercial use of LNG.

That year the East Ohio Gas Co. built a plant in Cleveland that could process about 4 million cubic feet of gas per day into LNG. The company installed three insulated storage tanks to keep the LNG cold. The gas utility regasified LNG when customer demand peaked during winter.

This "peak shaving" concept is a key function of LNG today, the little publicized cousin of making large quantities of LNG for export. Small peak-shaving liquefaction plants [22] and storage sites exist across the world.

The Cleveland operation ran smoothly for three years, until 1944 when the utility installed a fourth storage tank. It was war time, and many metals were in scarce supply for civilian use. The metals on this tank were inferior and failed on Oct. 20, 1944.

An estimated 1.2 million gallons of LNG spilled, so much that it flowed over the protective dike.

The liquid spread like batter on a griddle. Some dropped into the sewers, which filled with methane vapor as the LNG warmed above methane's boiling point. Gas seeped into basements. Houses blew apart as the gas contacted hot-water heater pilot lights.

The Cleveland catastrophe killed 128 people; 14,000 became homeless.

The LNG industry went dormant, except for a liquefaction plant Dresser Industries built for the Soviet Union in 1947.

HEADED TO SEA

The idea of water-borne LNG deliveries started to get traction in the mid-1950s.

A joint venture of Continental Oil Co. (Conoco) and Union Stock and Transit Co., a Chicago stockyards operation, did pivotal work on how this idea could work. The venture's name was Constock, a blend of the partners' names.

Union originally wanted Gulf Coast methane barged as LNG to Chicago for refrigeration at its slaughterhouses. But in the late 1950s, with the United Kingdom, Japan and other countries expressing interest in LNG, the focus turned to trans-ocean shipments.

Constock worked on designing the entire system, from liquefaction to regasification. In 1959, a test shipment of LNG left a new plant near Lake Charles, La., and sailed to a new receiving terminal on Canvey Island, down river from London. The ship — and its LNG cargo — weathered the rough Atlantic well. More test shipments ensued, proving that international trade of LNG could work.

New gas discoveries in Algeria made that country the first mover in LNG exports. The Methane Princess, carrying the world's first commercial load to Canvey Island, was small by today's standards. It could carry up to about 500 million cubic feet of gas (after regasification). The average LNG tanker today is five times larger.

But the Methane Princess proved to be a workhorse through the early years of LNG export. The vessel was finally scrapped in India during the mid-1990s. Another tanker with the same name sails in the LNG trade today.

-By Bill White, Researcher/Writer for the OFC. [24] bwhite@arcticgas.gov [1]

More Pipeline Topics > [25]

LNG industry says today’s operations are safe

As tragic as the Cleveland disaster was, it did imbue the LNG industry with a culture of safety.

If you’ll give them time, people from the industry will talk endlessly about safety within the entire LNG value chain, from liquefaction to storage, tankers and regasification. These operations are heavily regulated [26] for safety across the world, and industry members will even boast [27] about that regulation and insist that potential hazards are manageable.

To illustrate the concept of safety, visitors to ConocoPhillips’ plant in Nikiski see a series of demonstrations aimed to demystify LNG, including:

• · A plant manager pours LNG on the floor. Instantly, the gas forms into clear beads then — poof — vaporizes as it warms while absorbing heat from the carpet and air.
• · The manager dunks graham crackers in LNG then invites guests to eat them. They do so warily, misty vapor wafting from their mouths as they chew. This stunt can be an acutely effective in LNG-leery towns when the people consuming the crackers are children of community leaders and opponents.

The LNG industry does have a strong safety record, marred mainly by the Cleveland disaster, a fire and death at a Maryland import plant in 1979 and an explosion that killed 27 people at an Algeria liquefaction plant in 2004.

As an industry website [28] puts it: “LNG is transported many miles as it crosses the ocean, transferred to storage tanks, converted back to natural gas and then sent to market. The LNG industry has spent a considerable amount of time analyzing and assessing the hazards along the way and has either eliminated or developed mitigation techniques to reduce risks. As a result, in more than 50 years of commercial LNG use, no major accidents or safety or security problems have occurred, either in port or at sea.” (The Maryland accident actually was 33 years ago.)

The site stresses that “LNG is not explosive.” But the vapors are flammable — if they comprise 5 to 15 percent of the air and something ignites them. U.S. regulations require safety zones around LNG facilities so that any vapors accidentally released get fully diluted before they reach the property line.

University of Texas researchers [29] concluded that although “LNG operations are industrial activities,” LNG can be safely transported and used if regulators hold the industry to the safety standards and protocols that have developed over time.

-- Bill White

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