Proceedings Of The Marine

FALL 2015

Proceedings magazine is a communication tool for the Coast Guard's Marine Safety & Security Council. Each quarterly magazine focuses on a specific theme of interest to the marine industry.

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Page 13 of 94

11 Fall 2015 Proceedings The U.S. uses natural gas (methane) and its constituent gases, including ethane, propane, butane, and pentane, for energy production and manufacturing. Until recently, the U.S. was a net energy importer — in addition to oil, the U.S. imported liquefed natural gas (LNG), liquefed petroleum gas (LPG), and others. The shale gas boom has transformed the U.S. from a net importer to a net producer, and in the near future, America will become a net exporter, as America's Energy Renaissance, which also includes crude oil production, is set to position the U.S. as a key player in meeting the global demand for natural gas products. The Gas Boom New technologies, including horizontal drilling and hydrau- lic fracturing, have fueled the shale gas boom. As such, the U.S. Energy Information Administration reported that gas extraction increased 17 percent between January 2009 and January 2014, and, according to the Center for American Progress, U.S. import of natural gas decreased 23 percent in 2012. However, the current natural gas infrastructure in the U.S. is geared overwhelmingly toward natural gas import. There are 12 LNG import terminals in operation in the U.S. — nine along the East and Gulf Coasts, two located offshore in the northeast, and one in the Gulf of Mexico. This boost in production coupled with the lack of export facilities in the U.S. has resulted in a surplus of natural gas and its byproducts, also known as natural gas liquids (NGLs). While the U.S. is largely meeting its own consump- tion needs, there are few options to fully utilize the surplus. The U.S. has only one existing export terminal, located in Alaska, and gas companies have been scrambling to develop gas export capabilities, extensively investing in gas liquefac- tion plants and marine terminals. For example, the Federal Energy Regulatory Commission has approved fve new export terminals, four of which are currently under construction, and there are 14 proposed export terminals and two import terminals under review. LNG Demand International demand for natural gas continues to grow, particularly in Asia, Southeast Asia, and Latin America. The largest consumer of LNG is Japan, followed by China and South Korea. Recently, there has been relatively no new sup- ply to meet the growing demand, which has pushed prices up, particularly in Asia. Ernst & Young estimates that global liquefed natural gas capacity will grow by one-third by 2018 and double by 2025 as global projects come online. For example, Australia has seven liquefed natural gas export projects under develop- ment, Exxon Mobil recently began operating a new LNG export facility in Papua, New Guinea, and Nigeria is work- ing to expand LNG export capabilities. As new liquefied natural gas export facilities are being developed worldwide, so are LNG carriers. According to Lloyd's Register, in December 2013 there were 387 LNG ships in service and 114 ships on order, including 16 Arctic- capable LNG carriers. The majority of the vessels are being constructed in South Korea and China. Market Efects Meanwhile, the U.S. is estimated to begin to supply global demand for LNG, and U.S. liquefed natural gas export will impact domestic and global prices, global demand, and LNG production. Many academic, government, and market ana- lysts agree that liquefed natural gas export from the U.S. will cause domestic natural gas prices to rise, which will cause a subsequent increase in global LNG prices. New demand will be stimulated as natural gas becomes more accessible and new LNG sources become available. Demand is already growing for LNG as a fuel for electrical generation worldwide, and new uses are being developed, The Global Gas Revolution America's Energy Renaissance is a game-changer. by LCDR Anthony hillEnbrAnd National Technical Advisor U.S. Coast Guard Liquefed Gas Carrier National Center of Expertise New Energy and Its Maritime Impacts continued on page 13

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