Natural gas liquefaction dates back to the 19th century when British chemist and physicist Michael Faraday experimented with liquefying different types of gases, including natural gas. German engineer Karl Von Linde built the first practical compressor refrigeration machine in Munich in 1873. The first LNG plant was built in West Virginia in 1912 and began operation in 1917. The first commercial liquefaction plant was built in Cleveland, Ohio, in 1941.17 The LNG was stored in tanks at atmospheric pressure. The liquefaction of natural gas raised the possibility of its transportation to distant destinations. In January 1959, the world's first LNG tanker, The Methane Pioneer, a converted World War ll liberty freighter containing five, 7,000 barrel equivalent aluminum prismatic tanks with balsa wood supports and insulation of plywood and urethane, carried an LNG cargo from Lake Charles, Louisiana to Canvey Island, United Kingdom. This event demonstrated that large quantities of liquefied natural gas could be transported safely across the ocean.
Figure 3. British Gas Canvey Island LNG Terminal, A World First
Over the next 14 months, seven additional cargoes were delivered with only minor problems. Following the successful performance of The Methane Pioneer, the British Gas Council proceeded with plans to implement a commercial project to import LNG from Venezuela to Canvey Island. However, before the commercial agreements could be finalized, large quantities of natural gas were discovered in Libya and in the gigantic Hassi R' Mel field in Algeria, which are only half the distance to England as Venezuela. With the start-up of the 260 million cubic feet per day (MMcfd) Arzew GL4Z or Camel plant in 1964, the United Kingdom became the world's first LNG importer and Algeria the first LNG exporter. Algeria has since become a major world supplier of natural gas as LNG.
After the concept was shown to work in the United Kingdom, additional liquefaction plants and import terminals were constructed in both the Atlantic and Pacific regions. Four marine terminals were built in the United States between 1971 and 1980. They are in Lake Charles (operated by CMS Energy), Everett, Massachusetts (operated by SUEZ through their Distrigas subsidiary), Elba Island, Georgia (operated by El Paso Energy), and Cove Point, Maryland (operated by Dominion Energy). After reaching a peak receipt volume of 253 BCF (billion cubic feet) in 1979, which represented 1.3 percent of U.S. gas demand, LNG imports declined because a gas surplus developed in North America and price disputes occurred with Algeria, the sole LNG provider to the U.S. at that time. The Elba Island and Cove Point receiving terminals were subsequently mothballed in 1980 and the Lake Charles and the Everett terminals suffered from very low utilization.
The first exports of LNG from the U.S. to Asia occurred in 1969 when Alaskan LNG was sent to Japan. Alaskan LNG is derived from natural gas that is produced by ConocoPhillips and Marathon from fields in Cook Inlet in the southern portion of the state of Alaska, liquefied at the Kenai Peninsula LNG plant (one of the oldest, continuously operated LNG plants in the world) and shipped to Japan. The LNG market in both Europe and Asia continued to grow rapidly from that point on. The figure below shows worldwide growth in LNG since 1970.
Figure 4. Worldwide Growth in LNG Demand
In 1999, the first Atlantic Basin LNG liquefaction plant in the western hemisphere came on production in Trinidad. This event, coupled with an increase in demand for natural gas in the U.S. particularly for power generation and an increase in U.S. natural gas prices, resulted in a renewed interest in the U.S. market for LNG. As a result, the two mothballed LNG receiving terminals have been reactivated. Elba Island was reactivated in 2001. In October 2002, the Federal Energy Regulatory Commission (FERC) gave approval to Dominion Resources fo r its plans to re-open Cove Point LNG facility in 2003; first shipments to the reactivated terminal were received in fall 2006. In April 2005 the world's first offshore, ship-based regasification facility was set in operation in the Gulf of Mexico by Excelerate Energy. Additionally, a number of approved, planned, and proposed import receiving projects are under development (see www.ferc.gov for updates).