Natural gas travels a long way to reach our homes and businesses. But before it arrives, it undergoes a special transformation. This article explores the LNG value chain, onshore Liquefied Natural Gas (LNG) facilities, and its challenges of building one.  We'll find out how this process works and why it's important.

Before we delve into the world of LNG, below information will help us to understand the meaning of it.

LNG is natural gas in a liquid form that is clear, colorless, odorless, noncorrosive, and nontoxic. It is made from natural gas and has many applications, including use as a fuel for power generation, industrial and home heating, and as a chemical feedstock.

LNG Value Chain

Key stages of LNG can be divided into six activities, which are:

  1. Gas Production

The natural gas journey begins with finding and extracting it. This initial phase, called upstream, can happen on land (onshore) or at sea (offshore). Offshore exploration requires specific permits and finding a significant gas deposit.  Once a good location is identified, engineers design a well to reach the gas. This depends on the type of gas deposit. For regular natural gas, a simple vertical well can be done. If the gas is trapped in tight rock formations, a more advanced horizontal drilling technique or even hydraulic fracturing might be necessary.

  1. Pipeline Transportation

After extracting the natural gas, it usually will be travelled through pipelines (sometimes owned by others) to a special facility. There, it gets prepped for its trip by being transformed into a liquid state called LNG. To use these pipelines, agreements are made between the pipeline owner and the gas shipper (either the gas owner or the liquefaction facility, depending on who arranges the transport).

  1. Gas Processing and Liquefaction

After going through the pipeline to liquefaction plant, it goes through a cleaning process. First, they separate the water, which gets treated and reused. Then, the gas travels to a nearby station where it gets squeezed (compressed) to move it along. Finally, at a special LNG facility, the gas is cooled to -162°C, which reduces it to a liquid 600 times smaller than its original volume. This extreme cold also cleans it further and makes it easier and safer to store and transport on large ships. The gas is now referred to as LNG.

  1. LNG Shipping and Trading

Following production at export terminal, LNG will be stored before being loaded onto specially designed carriers. These LNG carriers are maritime vessels equipped with insulated cargo tanks specifically engineered to transport LNG and maintain its cryogenic temperatures throughout the journey.

  1. Regasification

Once the LNG carrier completes its journey from the LNG liquefaction terminal and arrives at the destination port, the LNG will typically be unloaded and regasified at the receiving terminal in order that the gas can be transported further downstream by pipeline.

  1. Distribution to End Users

After returning to a gaseous state (regasification), LNG is typically delivered to its final destination via pipelines, signifying the completion of the value chain. This downstream stage, following the regasification terminal, might involve various contractual agreements. Alternatively, the gas might be delivered directly from the terminal to a single consumer.


Onshore LNG (OLNG)

After understanding the LNG value chain, we can conclude that OLNG refers to facilities that handle LNG on land. The facilities include:

  1. Liquefaction plant

In this facility, natural gas will be cooled down to a staggering -162°C (-260°F). In the stage of transforming natural gas into LNG, there are several main components in the liquefaction plant that are used, such as a gas processing unit, refrigeration unit and condensation unit. Not only that, in liquefaction units generally there are also storage units, utilities facilities, and control and instrumentation systems.

  1. Regasification

As previously explained, regasification is the process of returning LNG to its initial form, namely gas, before being distributed to end users. In this stage, the facilities used include LNG storage tanks, vaporizers, pressure regulation equipment, pipelines, and other additional facilities such as metering stations and control systems.


OLNG Challenges

Onshore LNG facilities, while crucial for the global gas trade, face several challenges such as:

  1. High Capital Costs

Building and maintaining these massive industrial complexes require significant upfront investment.  The cost can be influenced by factors like plant size and capacity, location and land acquisition, and the complexity of the chosen liquefaction technology.

  1. Environmental Impact

The liquefaction process is energy-intensive, requiring significant power to achieve and maintain the extremely low temperatures needed. Optimizing energy efficiency is crucial to minimize the environmental footprint. Furthermore, the energy used for liquefaction can generate greenhouse gas emissions, contributing to climate change. Facilities are looking for ways to reduce these emissions, such as using cleaner energy sources or capturing emitted carbon.

  1. Siting Considerations

There can be public opposition to onshore LNG facilities due to concerns about safety, environmental impact, and potential property value decline. Engaging with local communities for transparent communication and addressing concerns is crucial.

Based on the article above, it can be concluded that the LNG value chain consists of gas production, pipeline transportation, gas processing and liquefaction, LNG shipping and trading, regasification, and distribution to end users. Two of these value chains, namely liquefaction and regasification, can be included as onshore LNG facilities, where both facilities are generally located on land. In the development and implementation process, onshore LNG has several challenges such as high capital costs, environmental impacts, and sitting considerations.



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Bahadori, A. (2014). Liquefied Natural Gas (LNG). Natural Gas Processing, 591–632. Elsevier.

Industrial & Engineering Chemistry Research (2018) Key Issues and Challenges on the Liquefied Natural Gas Value Chain: A Review from the Process Systems Engineering Point of View.

Shell Australia. (2023, November 14). About onshore natural gas. Shell Australia. https://www.shell.com.au/about-us/projects-and-locations/qgc/about-onshore-natural-gas.html

Norton Rose Fulbright. (2023, March 22). Exploring new shores: An overview of the legal landscape. Norton Rose Fulbright. https://www.nortonrosefulbright.com/en-id/knowledge/publications/2235f3d1/exploring-new-shores-an-overview-of-the-legal-landscape


This Article is Written By :
Rania Annur
Sales & Marketing Staff

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