Storing Liquefied Natural Gas in Underground Salt Caverns Could Boost Global LNG Trade

Novel Process May be Half the Cost of Conventional Liquid Tank Terminals

Washington, DC - Conversion Gas Imports, LLC (CGI) of Houston, Texas, recently reported its findings on the "Bishop Process" to the Department of Energy -- a novel method of unloading and re-gasifying liquefied natural gas (LNG) directly from ocean tankers for storage in underground salt caverns. Initial indications are that a salt cavern-based LNG terminal can be built at about half the cost and twice the capacity of a conventional liquid tank terminal.

The action follows Secretary of Energy Spencer Abraham's meeting in June with the National Petroleum Council (NPC), during which he heard their recommendations on engaging consumers in smart energy use and on increasing natural gas supplies, which currently remain tight as prices continue to rise. Secretary Abraham had earlier called upon the NPC to host a meeting later this year to discuss natural gas supplies, but felt the situation needed more immediate attention. He also has also called for a Global Natural Gas Summit, to be held later this year.

"The Bishop Process, if proven successful, has the potential to significantly increase world LNG trade and provide a highly secure, economical and flexible way to expand LNG imports and augment the nation's energy supply," Secretary Spencer Abraham said. "CGI's report couldn't have come at a more advantageous time. My meeting last month with the National Petroleum Council raised concerns about natural gas supplies in the United States. Innovative ideas such as the Bishop Process could make all the difference."

Liquefied natural gas -- natural gas that has been transformed to a liquid by cooling it to minus 260 degrees Fahrenheit -- currently is unloaded from ocean-going tankers and stored in above-ground storage tanks that are specially designed to hold the LNG before it can be re-gasified.

The Bishop Process entails receiving LNG directly from an offshore tanker, pressurizing and warming it to 40o F, and then injecting the natural gas into underground salt caverns for storage, thereby effectively eliminating the need to build expensive above-ground cryogenic storage tanks, while simultaneously increasing the storage capacity potential of LNG imports.

The process is considered a success based on its use of a novel low cost seawater heat exchanger. Traditional heat exchangers, which use natural gas to heat the LNG, cannot keep up with tanker offloading rates at marine terminals. CGI's unique high volume, high-pressure heat exchanger enables shorter unloading times. In addition, ship unloading can be accomplished miles from the storage caverns, providing further security and siting flexibility.

The CGI feasibility study comes on the heels of Federal Reserve Chairman Alan Greenspan's recent testimony before the House Energy and Commerce Committee, calling for an expanded ability to import more LNG in an effort to stabilize the United States' market for natural gas.

Ultimately, the Bishop Process could enable the development of LNG receiving and storage facilities that are faster and less expensive to build, and have higher storage and "take away" capability than today's tank terminals.

Salt locations suitable for storage in proximity to significant natural gas distribution systems have been found both onshore and offshore in many LNG importing areas of the world. In the United States, there are over 1000 salt caverns being used for hydrocarbon storage and delivery, including the Strategic Petroleum Reserve's four sites.

Before industry moves forward in constructing a LNG receiving facility based on the Bishop Process, field tests are required to determine the critical elements needed to reach operational success. NETL, CGI and several industry partners are currently working to define the procedures and costs for these tests. Critical elements to be addressed include:

• Engineering and evaluating a method to moor and offload a LNG ship offshore;

• Designing, constructing, and testing a LNG pump capable of creating cavern injection pressures and flow capacities that provide for acceptable ship discharge times; and

• Designing, building, and testing a heat exchanger that will economically warm the LNG at high pressures and high volumes.

Total cost of the feasibility study was $168,450, of which DOE provided $134,750 and CGI contributed $33,700. The final report on this project can be accessed at: http://www.netl.doe.gov/scng/index.html.

- End of Techline -

For more information, contact:
News Media: Drew Malcomb, 202/586-5806

Technical Program Contacts:
Jim Ammer, DOE National Energy Technology Laboratory,
304/285-4383, jammer@netl.doe.gov
or
Brad Tomer, DOE National Energy Technology Laboratory,
304/285-4692, brad.tomer@netl.doe.gov