We recently talked about the history of the liquefied natural gas (LNG) industry – but what about its future? As of 2022, the industry is seeing rapid growth, and it’s set to continue moving forward. Before you can see how these changes may affect your organization, it’s important to review the supply chain. Your first question should be, “Can the supply chain keep up?” To help you answer that question, we’ll also talk about what steps you can take to keep in step with the ongoing and upcoming growth of the LNG industry.
The Supply Chain and LNG
Liquefied natural gas is an excellent way to transport gas across areas where pipeline access is limited, such as oceans. However, natural gas must first undergo a process so it can be shipped safely and efficiently.
Before we dive into the growth of the industry, here’s a quick look at that process – how LNG is stored, how it’s transported, and what happens at the destination:
This is when the natural gas undergoes condensate removal, dehydration, CO₂ removal, and Mercury and H₂S removal.
The natural gas is cooled to -260 degrees F.
The natural gas is liquefied, becoming LNG. It is now 600 times smaller and much easier to transport.
The LNG can be stored in double-walled insulated tanks that are kept at atmospheric pressure.
Over land, LNG can be transported on a truck or trailer that can handle cryogenic temperatures.
On a site, vacuum insulated, or flat bottom storage tanks are used.
Once the LNG is at its destination and no longer has to be stored, it enters an LNG import facility and is heated until it becomes
a gas again.
The natural gas is delivered through pipelines to customers.
The Rapid Growth of the LNG Industry
In 2021, the LNG market was valued at 109.48 billion. Between 2022 and 2030, it was stated by a research company, that the industry may grow at “a compound annual growth rate (CAGR) of 8.1%.” It’s quite possible that we will see an increase in global output by 2030 that will double the amount seen in 2012. Natural gas used for electricity generation surpassed coal use in 2016.
This expected growth is due to a number of reasons, including:
- Increased demand for clean energy
- More focus on distributed power and utility
- Growth in power generation businesses
- Increased LNG construction
- Natural gas increasing in use for electricity
Can The Supply Chain Keep Up with LNG Growth?
Growth is great for an industry, but if the supply chain is unable to keep up with demand, it can lead to further problems. Across the globe, people in the LNG industry are running into challenges that can set the industry back. It’s largely due to the complex nature of the business – there is plenty that can go wrong, early on. These are just a couple of the hurdles companies in LNG have seen in recent years:
- Higher Than Expected Construction Costs
- Due to a number of factors, including increased labor costs, environmental approvals, and infrastructure challenges, construction costs are rising for LNG facilities. Construction usually accounts for about 30% of the entire project cost. However, in Australia, companies are seeing construction rise to 50-60% of the total cost. In the United States between 2000 and 2013, development of liquefaction plants went from $300 per ton per year to $1,200.
- Issues During Start-Up
- Problems during start-up can also set LNG organizations back several years, especially if the locale is in a non-traditional area. Lengthy maintenance and reworks may be required to get the ball rolling, which increases costs and slows down growth. The selection of certain locations can also be met with environmental, social, or political push back.
Can Your Facility Keep Up? What Steps Can You Take?
As the LNG industry takes off, so should your business and facilities. But when growth comes knocking, will you be able to keep up? Many organizations struggle to scale properly and keep up with demand. Some of these struggles may include:
- Failing to meet customer expectations
- Having trouble hiring enough qualified workers
- Struggling to meet compliance requirements
- Facing a changing company culture
- Having issues with inventory
- Being faced with cash flow problems
However, there are steps you can take to avoid these many issues. One we recommend? Keeping up with your content development. Documentation can help ensure your entire team knows what steps to take to complete their jobs safely and efficiently, but also gives you direction during periods of heavy growth. Documented processes and plans can be the difference-maker for your entire organization.
Curious about how documentation can be a game changer for your LNG facility during periods of rapid growth? Schedule a call with us to go over areas where you can improve your content development strategy.