LNG & Energy Needs

What is LNG and why do we need it?

Liquefied Natural Gas (LNG) is, as its name suggests, natural gas in liquid form. LNG is formed by chilling gas to -161oC so that it occupies 600 times less space than in its gaseous form. This makes it an ideal way of storing and transporting large volumes of gas from countries such as Algeria, Trinidad and the Middle East.

LNG is essentially the gas used to heat our homes and businesses, cook our food and provide us with a warm shower. Gas demand is expected to increase by at least 15% over the next 10 years and dependence on imports is expected to approach 50% by 2010.

Over time, as UK demand grows and indigenous supplies fro the UK Continental Shelf diminish, LNG could make up a significant percentage of the UK's gas supply requirement. However, it will be fore the market to decide how much. Grain LNG is ideally placed with existing assets and capability to expand considerably to help address this deficit.

The Grain LNG terminal has several functions:

To receive LNG ships and unload them
To store LNG in cryogenic tanks
To manage LNG stock
To regassify LNG to meet the needs and demands of customers
To send gas into the National Transmission and Local Distribution Systems.

The strategic need for LNG

The UK's demand for natural gas is increasing and is expected to rise by at least 15% over the next ten years. Traditionally the UK has met demand from its gas sources in the North Sea, but these supplies are in decline. In order to meet this supply shortfall, it is estimated that by 2010 around 50% of the UK's gas will have to be imported. Importing natural gas in the form of LNG from around the world makes economic sense when transporting over long distances. LNG importation is also playing an important role in increasing the security and diversity of energy supplies to the UK. In 1997 the gas industry, along with the regulator OFGEM, opened up the UK gas market to competition. It is this which enables a variety of shippers, as Grain customers, to bring LNG from around the world into the UK market via National Grid's Grain LNG terminal.