Sabine Pass LNG tanks leaked, says regulator

U.S. regulators of natural gas infrastructure have issued an order requiring the owner of a liquefied natural gas terminal in Louisiana to remove part of that facility from service, following the discovery of unintended releases of LNG from the facility.

At issue is Sabine Pass Liquefaction, LLC's Sabine Pass Liquefaction Facility. The company is a subsidiary of Cheniere Energy, Inc. The Sabine Pass LNG terminal includes five LNG storage tanks with capacity of approximately 16.9 billion cubic feet equivalent (Bcfe), two marine berths that can accommodate vessels with nominal capacity of up to 266,000 cubic meters and vaporizers with regasification capacity of approximately 4.0 Bcf/d, adjacent to a series of liquefaction trains. The facility has received U.S. Department of Energy authorization for export of LNG by vessel.

According to a Corrective Action Order issued by the Pipeline and Hazardous Materials Safety Administration on February 8, 2018, on January 22, 2018, workers at the Sabine Pass plant discovered a release of LNG from a storage tank at the facility. The order states that LNG escaped from the tank into the annulus -- the space between the tank's inner and outer walls -- which eventually caused cracks in the outer tank wall and the pooling of LNG in a secondary containment area. It also says that the federal investigation into this incident discovered additional LNG releases from multiple cracks in another tank at the site, with evidence of "brittle failures" in the carbon steel outer tank wall.

The order says Sabine took steps upon discovery of the incident including commencing de-inventorying LNG from the tank, reducing system pressures, and deploying an emergency management team. Sabine reported no injuries or fatalities as a result of the incident, and there were no reported fires or explosions. The cause of the incident has not yet been determined.

The PHMSA order requiring corrective action includes a finding "that the continued operation of the Affected Tanks without corrective measures is or would be hazardous to life, property and the environment." It describes unintended releases of LNG as "rare ... low -frequency, high-consequence" events which "can result in a serious hazard to people and property." It notes, "To date, Sabine has been unable to correct the long-standing safety concerns described above involving the Affected Tanks, cannot validate the exact source or amount of the LNG that may have leaked into the annulus of the Affected Tanks, and cannot identify the circumstances that allowed the LNG to escape containment in the first place."

The order requires Sabine to develop a timeline and plan for removing the two "Affected Tanks" and their associated systems from service. A third tank is described in a footnote to the order as having experienced releases of LNG from the inner tank into the annular space, but is not included as one of the "Affected Tanks" covered by the order requiring corrective action. It requires Sabine to develop a work-plan including tank-specific purging plans, a root-cause analysis plan, a detailed repair and modification plan, a continuing operation plan for facilities that remain in service, and a plan to return the affected tanks to service, and prohibits Sabine from returning the affected tanks to service until authorized to do so by the Director of PHMSA.

Shell announces LNG plants for transportation sector

Energy company Royal Dutch Shell PLC has announced plans to build two liquified natural gas (LNG) plants in North America to produce fuel for marine and heavy-duty on-road transportation.

Shell, a global group of energy and petrochemicals companies, may be most famous for its roadside gas stations, but also operates businesses in crude oil and natural gas production, refining, marketing, and research and development. According to a press release issued yesterday, Shell and its affiliates now plan to develop two liquefaction units to turn natural gas into LNG.

By cooling natural gas to around -260°F, it can be liquefied.  The resulting LNG takes up significantly less volume than the gas did, making it easier to ship and store.  Unlike gas taken directly off a pipeline, LNG can also be used as a mobile fuel source for transportation.  Compared to oil-based fuels such as diesel and gasoline, LNG can be less expensive and may create fewer emissions of carbon dioxide and pollutants.

Shell's newly announced plants will be built in Geismar, Louisiana and Sarnia, Ontario, Canada.  The Geismar plant will supply LNG along the Mississippi River, the Intra-Coastal Waterway and to the offshore Gulf of Mexico and the onshore oil and gas exploration areas of Texas and Louisiana.  Shell is partnering with companies including subsidiaries of Martin Resource Management Corporation and Edison Chouest Offshore to supply LNG fuel to marine vessels that operate in the Gulf of Mexico.  Under Shell's vision, LNG produced at Geismar will be barged to Port Fourchon, Louisiana, where it will be bunkered into customer vessels.  Shell also announced plans for a similar liquefaction unit at its Shell Sarnia Manufacturing Centre in Sarnia, Ontario, Canada.  The Sarnia project is designed to supply LNG fuel to all five Great Lakes, their bordering U.S. states and Canadian provinces and the St. Lawrence Seaway.

Each facility will be relatively small-scale, capable of producing 250,000 tons of gas per year. According to Shell, pending final regulatory permitting, the liquefaction units may begin operations and production in about three years.  Shell is currently developing a similar gas processing facility in Alberta, Canada, and plans to sell LNG at truck stops in that province.

Several years ago, energy companies rushed to develop LNG import terminals in the U.S. to increase supplies of natural gas in the interstate pipeline system.  Hydraulic fracturing and the resulting development of feasible production of domestic natural gas from shale resources turned LNG imports' economics on their heads.  Now that natural gas in most of the U.S. is significantly cheaper than imported LNG, companies like Cheniere Energy Inc. are now seeking to export LNG to other countries.  Domestic use of LNG in the transportation sector represents an alternative way for energy companies to profit from the shale gas boom.