LNG Transport



Q: Does the U.S. shipbuilding industry have capability to transport LNG?

A: Yes. Given the growth in the U.S. supply of natural gas, the industry is already investing in the LNG market and is looking to continue that investment in the future. Domestic shipyards have built, and are in the process of building, assets capable of moving LNG. Conrad Shipyard delivered the first LNG bunker barge built in North America at its Orange, Texas shipyard. VT Halter is currently building a LNG articulated tug and barge (ATB) designed to carry 4,000 cubic meters of LNG and has signed a letter of intent to build an 8,000 cubic meter version of the vessel. The LNG technology currently being used in U.S. shipyards is scalable to the demands of the customer.

Q: What are advantages of using a bunker barge versus a LNG tanker?

A: There are many advantages to using a bunker barge or an ATB. Many international LNG carriers are designed to not break-bulk, meaning they have to completely unload their entire cargo, whereas the LNG vessels designed in the U.S. are able to discharge and refuel LNG in separate allotments.

Tankers are larger ships, but there are tradeoffs to that scale. Tankers require a larger crew and, depending on the size and type of the vessel, may require different drafts, speeds, and berthing requirements. In areas like Puerto Rico, larger tankers may be unsuitable due to dredging requirements. Those considerations will impact the type of vessel that is best suited for the trade. The advantage of the Jones Act market is that the vessels can be purpose-built to serve the specific market.

Q: Does Puerto Rico need an LNG waiver?

A: The Puerto Rico government has described its desire to convert the island to an LNG-based economy, and that may happen someday. A single generating facility on the south side of the island currently receives a supply of LNG from international sources. In addition, PREPA has awarded a contract aimed at developing natural gas-powered generation at two of San Juan’s power stations on the north side of the island. Part of that contract is the conversion of the infrastructure on the north side of the island to accept LNG.  Currently, however, the facilities there are not available to accept the gas.  In other words, even if this waiver was granted, there would be no adequate facilities in Puerto Rico to accept the gas.

Q: Would a Jones Act waiver help New England customers?

A: No. Most states move natural gas through pipelines, the most cost-effective method of transporting natural gas. New England receives most of its natural gas through pipelines, but its pipeline system is constrained. Therefore, occasionally New England will import LNG cargoes.  A waiver to import LNG would not provide relief to consumers in pricing or reliability. Domestic natural gas is currently inexpensive, but natural gas is not the same thing as LNG. Currently, LNG generally travels under contracts established months in advance of when the gas is needed. Once converted to LNG its value is driven by the highest available global price net of transportation costs, meaning that the LNG will be sold at a world price. Moreover, both domestic and international LNG cargoes would need at least three weeks between decision to delivery.

Q: Is the U.S. relying on Russian LNG?

A: Of the LNG imported into the New England last winter, the U.S. Energy Information Administration (EIA) indicates that all but one cargo came from Trinidad.  The remaining cargo came from a terminal in France that does not produce LNG.  That French terminal receives LNG from a variety of sources, including US, Nigeria and Russia.  It is likely those sources were blended to produce the so-called Russian LNG delivered into New England.