LNG revolution evolving

AS LNG exports from Australian CSG and US shale shake up global energy trading, US law firm Baker Botts says the commonly recognised 40-foot long shipping containers will help widen the LNG market over coming years as a cost-competitive solution.

For oilers steeling themselves for a "lower for longer" oil and gas glut affecting their bottom lines, the containerisation of LNG looms as a key factor in getting natural gas to "isolated" markets - and Asia, far from being one big landmass like Europe, is full of them.

The Singapore Exchange has used this logic as leverage to lend more credibility to its own Singapore SGXLNG Index Group (SLInG) launched last October with its subsidiary, Singapore-based Energy Market Company.

The SGX said the need for a robust LNG spot index for Asia was even more critical given the Asia Pacific's high dependency on LNG because it is not a connected land mass like Europe or North America, and lacks pipeline gas, although several have been studied over the years.

Likewise, Baker Botts' energy sector chair Steven Miles, who also heads up the firm's global LNG practice, said the reduced carbon emissions and lower energy cost benefits from the "natural gas revolution" have thus far largely been limited to residents of countries with access to a gas pipeline system or a deepwater port facility able to receive large tankers carrying LNG.

Miles said this had created geographically isolated gas "islands" not connected to natural gas sources.

"These pockets are typically left to use coal, petroleum, or other energy forms that are more expensive and less environmentally friendly than gas or LNG," Miles said.

"However, emerging commercial, legal and technological developments are now allowing LNG in ISO containers to be delivered to these previously inaccessible LNG market destinations."

The containers are typically 40-foot long forms that can be loaded with LNG and shipped by freighter, rail or truck, and delivered to a power plant.

"This containerisation trend will increasingly bring highly mobile, cost competitive additional LNG consignments into the overall energy market mix with the broader community gain of a much lesser negative environmental footprint through the phasing out of more intensive fossil fuels used in these previous ‘gas island' areas," Miles said.

The subsequent unloading and regasifying of container transported LNG was a relatively straightforward process that did not involve the degree of capital commitment needed for a conventional maritime-based LNG import terminal or pipeline.

The containerised route to market may also offer a reduction in regulatory and land-use requirements compared to those for siting a conventional LNG receiving, storage and regasification terminal, Miles noted.

Miles will address the LNG18 conference in Perth next month.

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