Fueling the future: cleaner-burning liquefied natural gas demand forecasted to triple by 2040

Delivering natural gas worldwide

Liquefied natural gas (LNG) is natural gas that has been liquefied for transport. LNG takes up significantly less space than its gaseous form, making it easier and more efficient to ship and allowing ExxonMobil to deliver cleaner-burning natural gas from remote production areas to distant markets where additional supplies are needed. This logistical flexibility helps improve the security of supplies worldwide, and is making LNG one of the fastest-growing energy markets, with demand expected to nearly triple to approximately 660 million tons annually (MTA) by 2040.

ExxonMobil and our affiliates around the world have operated successfully in the LNG marketplace for decades. Together with our valued partners, we have been a driving force in transforming the LNG market into a more efficient and truly global business. Our experience spans the entire value chain, including natural gas fields and liquefaction facilities, advanced-technology LNG ships, regasification terminals, and sales and marketing. Linking these individual elements of expertise into an integrated, value-added LNG development provides a strong, reliable offering to suppliers and buyers.

The LNG value chain is complex and capital intensive:

Natural gas production

• Natural gas is produced in subsurface or subsea gas reservoirs reached through drilling
• Natural gas is piped from the reservoirs to an onshore treatment plant where impurities and liquids are removed

LNG carriers

• New Q-Flex and Q-Max ships can carry about 45-80 percent respectively, more cargo than average carriers
• These double-hulled ships have larger cargo tank designs, optimized ship propulsion and enhanced processing technology that enable ships to deliver LNG more efficiently to destinations

LNG liquefaction train

• Gas is condensed into a liquid at atmospheric pressure by cooling it to -260°F (-162°C)
• Gas in liquefied form (LNG) takes up about 1/600th less space than in a gaseous form
• LNG is then stored at subzero temperatures in insulated tanks until it is loaded onto LNG carriers

Regasification terminal

• LNG is unloaded from carriers and stored at subzero temperatures in insulated tanks
• When needed, LNG is piped to regasification units where it is warmed to a point where it reverts back to its gaseous state for transport
• There are different structural types of LNG terminals, including onshore, offshore gravity-based and offshore floating

Customer utility company

• Gas is transferred via natural gas pipeline to serve a network of industrial, commercial and residential markets
• Gas utilities will play a growing role as gas is expected to surpass coal as the second-largest energy source by 2040

ExxonMobil: an LNG pioneer

ExxonMobil has significant experience in the LNG business with more than 40 years of LNG project development and market knowledge. ExxonMobil was involved in one of the world’s first LNG facilities. In partnership with Qatar Petroleum, we have developed and employed new technologies, resulting in the largest LNG production facilities and LNG vessels in the world, as well as large and technically advanced LNG regasification terminals in Italy, the UK and the U.S. Advanced technologies, project execution capabilities and economies of scale have reduced costs, thereby extending our ability to bring LNG to more people around the world.

In the early decades of the LNG industry, regional demand was satisfied with regional supplies. In the Pacific Basin for instance, ExxonMobil developed and operated Aceh’s onshore and offshore resources to supply gas to PT Arun LNG facilities in Indonesia, which operated from 1975 to 2014. During its lifetime, PT Arun supplied more than 4,100 LNG cargoes for customers in Japan and Korea.

We recognized that a dramatic step change in economies of scale would be essential for LNG to thrive in the global energy marketplace.

Today, ExxonMobil and our venture partner Qatar Petroleum are leading the drive for efficiency, which has helped LNG thrive in the global energy marketplace. It is a partnership focused on the long-term development of a resource and based on fair dealing, mutual trust and respect. Our collective efforts in innovation have made the vision of increased scale a reality.

These achievements are the result of our unprecedented focus on and commitment to:

• Strong partnerships
• Technology leadership
• Customer focus
• Marketing experience and global presence
• Ability to deliver on project execution
• Safe, reliable operations
• High environmental standards
• Financial strength
• Investment discipline

Our experience in marketing and commercial transactions associated with natural gas and LNG are a key strength. This expertise translates into the ability to negotiate with and secure customers for multi-billion dollar LNG projects years ahead of first cargo – a vital step for progressing projects. We can also offer the capability to market regasified LNG volumes across the globe, utilizing our extensive in-country gas marketing organizations. This can include the purchase and marketing of upstream partner equity volumes.

Our global presence provides early insight into emerging energy markets. Our regional offices throughout the world are staffed by experts knowledgeable in local cultures and markets to provide customer service for new and existing customers.

Developing new LNG technology with our partners and host nations

Host nations play a critically important role in facilitating successful development of their resources by providing a stable political, economic and regulatory environment. Such an environment will attract necessary international investment, technology and management skills to help meet a country’s strategic objectives and long-term vision for the nation’s overall economic development and energy security.

The partnership between ExxonMobil and Qatar Petroleum has leveraged the strengths of both partners to realize the shared vision for the development of Qatar’s North Field. The result has been an unprecedented, successful partnership that supplies cleaner-burning energy to all major gas markets around the globe.

In recent years, ExxonMobil increased its investment in research and development of energy related technologies to approximately US$1 billion annually – the largest of any international oil company.

For LNG in particular, economies of scale matter.

With Qatar Petroleum we produced a step change in size of liquefaction trains, making them nearly four times the size of previous trains of the mid-1990s. The newest trains of 7.8 MTA at QGII and RL3 are world-class facilities and the new benchmark for efficiency.

We also helped develop the newest classes of LNG carriers with the 210,000 cubic meter capacity Q-Flex ships in 2007 and the 265,000 cubic meter Q-Max vessels in 2008. The largest of these vessels is capable of carrying 80 percent more LNG cargo than a conventional LNG ship.

The large LNG ship technologies, developed in conjunction with Qatar Petroleum, include a number of industry breakthroughs and significant enhancements, including increased ship size, onboard reliquefaction units, slow-speed diesel engines, twin propellers and rudders, and the largest shipboard LNG tanks ever built.

The on-board reliquefaction facilities created an opportunity to shift from steam boilers and turbines used for propulsion by conventional LNG ships to highly efficient slow speed diesel engines. The Q-Max ships are equipped with two diesel engines driving twin propellers and rudders. This leads to more energy efficient, reliable and maneuverable ships and reduces fuel consumption by up to one-third.

The Q-Flex and Q-Max vessels were developed under the leadership of Qatar Petroleum and ExxonMobil coupled with significant engagement by shipyards, naval architects, and marine engineers and key technology providers. The end result is an innovative and proven LNG carrier design operating at a typical savings of 20 percent in transportation costs.

Innovation in the LNG value chain also extends to the design of new and larger receiving terminals.

ExxonMobil in partnership with Qatar Petroleum and Edison developed the Adriatic LNG terminal – the first offshore gravity based structure in the world for LNG. The terminal is located approximately 10 miles offshore of Porto Levante, Italy in the Adriatic Sea.

The structure is made of reinforced concrete weighing about 290,000 tons with a top deck area larger than two soccer fields. The terminal capacity is approximately equal to 10 percent of Italy’s annual gas consumption and to about 10 percent of installed LNG regasification capacity in Europe.

Qatar Petroleum and Total SA are joint venture partners with ExxonMobil on another terminal called South Hook, a large land-based LNG terminal located on the site of the former Esso oil refinery at Milford Haven in the UK. Milford Haven offers a safe, deep water anchorage readily accessible by large LNG tankers.

The global outlook for natural gas and LNG

The long-term outlook for global gas demand growth remains strong. LNG supplies are expected to play an increasingly important role in meeting global gas demand. LNG is the vital link between geographically separated gas suppliers and gas customers, and will increasingly fuel economic progress around the world.

As the global LNG market grows, LNG’s flexibility and market liquidity will enable LNG to flow to markets where natural gas is needed most, including those where gas demand is still emerging as local economies develop. In effect, global LNG supplies are expected to play an appreciable role in fueling economic growth for the foreseeable future.

ExxonMobil conducts an exhaustive study each year of the global supply and demand for all energy. We also focus on the specifics of natural gas and LNG.

In general, natural gas demand is forecasted to grow by about 40 percent from 2016 to 2040. LNG will be the fastest growing source of natural gas, nearly tripling over that same period.

We forecast that LNG supplies will continue to grow from traditional sources combined with new projects in Asia, the Middle East, Africa and South America.

ExxonMobil: partner of choice

There are three recurring strengths that make ExxonMobil the partner of choice at every link in the LNG value chain – proven project execution; attention to safety and the environment; and unparalleled financial strength.

Our experienced global workforce and structured project management systems focus on delivering projects of all sizes and complexity safely, on time, and on budget. Jointly with our partners, we allocate the resources necessary to achieve industry-leading results that we have come to expect and have delivered for decades.

Our performance demonstrates our steadfast commitment to the highest standards of safety, health and environmental care. We help to improve industrial safety performance wherever we operate by applying a disciplined focused approach to safety and by sharing best practices and procedures with our partners and contractors.

ExxonMobil’s legendary cost management and disciplined investment approach have helped position us as the industry leader in superior returns. This reputation and track record of successful project execution provides ExxonMobil and our partners with access to capital at superior rates.

Facilitating the development of a global market for cleaner-burning natural gas, ExxonMobil is an industry leader in all aspects of the LNG value chain from resource development, liquefaction, transportation, receiving terminals and gas marketing.

Sources

An ExxonMobil Publication, Gas & Power Marketing (2010). LNG — Fueling the future.