Pipeline Safety and Natural Gas Liquids versus Liquified Natural Gas: What’s the Difference?

Written by Catherine Elder

I was starting to sketch out an idea for this month’s market blog, going in the direction of what impact lower interest rates might have on natural gas prices.  Then I noticed the Associated Press reported a pipeline explosion near Houston.  A 20-inch line, so pretty substantial.  The pipeline has been shut off but it will take hours for all of the material under pressure in that pipe to burn off.  More pipelines than most of us can count run through and around the Houston area, fueling the vast petro-chemical complex that runs along the Houston Ship Channel along with homes and commercial businesses and electric power plants that serve load in ERCOT.  In fact, the neighborhood where this incident occured is near Pasadena, Tx, where Calpine built the first of many so-called “merchant” power plants at the Phillips Petroleum plastics plant (with another over at Shell’s chemical plant in Deer Park).  I was the  independent fuel consultant to non-recourse project finance lenders on that plant and recall there being no less than six gas pipelines in the right-of-way along the La Porte Freeway in front of the plant. And some oil products pipelines and some liquids pipelines.

What the heck are natural gas liquids, or NGL’s?  Gas liquids are alternative forms of petroleum (which literally means oil rock) or hydrocarbons, make up by different combinations of carbon and hydrogen molecules than methane.  Natural gas liquids are naturally-occurring, and at typical ambient air temperatures they are liquids.  They can also be produced in a “reformer” that breaks down and recombines the number of carbon atoms and hydrogen atoms.  And their names all rhyme.

• Methane is CH4: one carbon atom and 4 of hydrogen.  This is the energy component of what we transport and consume as natural gas.  

• Ethane is C2H6.  It gets used to create plastics and anti-freeze

• Propane is C3H6 and you know it from barbeque grills.  Some homes in remote locations are heated with propane.  Folks in some countries buy small tanks of propane with their weekly groceries, to fuel their cook stoves.

• Butane is C4H10.  It fuels hand-held lighters like what I use to light candles (instead of matches).  It also is an input for synthetic rubber.  Its sister Isobutane fuels aerosol cans and can be a refrigerant.

• Pentane is kinda my favorite: C5H12.  It is otherwise known as “naturally-occurring gasoline.”  I call it my favorite because most folks don’t know that it is its connection to natural gas that gives it its name.

There are other combinations of C’s and H’s, including crude oil, and I think of what refineries do as “cooking” the oil to separate out the C’s and H’s and then recombining them into various petroleum products.  While we are here, recall that the term “natural gas” comes from it being found naturally-occurring, rather than being cooked or processed from coal or tar.

Back on track here: I was getting carried away reading that there are records of use of petroleum in China more than 2000 years ago, and there are handbooks in which 7th century Persians describe how they distilled crude oil, and that the streets of Baghdad were paved with tar.  In the U.S., one can find oil pits dug by the Seneca people in Pennsylvania in the 15th century.  So much for Colonel Drake’s claim to the first successful oil well… remember an oil company named Pennzoil?

Now what prompted the question today were that early reports on the pipeline explosion were that it had been an LNG pipeline that exploded (or, ruptured and then the contents ignited).  The industry is sensitive about this undoubtedly because fears of explosions were raised as concerns about LNG import terminals.  The industry is also anxious that LNG exports not be slowed because backing that gas up into the U.S. will cause lower domestic natural gas prices.

LNG -- liquified natural gas – is not a liquid at ambient temperatures. Rather, it is natural gas that is chilled to very very very low temperatures, like -270 degrees.  At such cold, natural gas converts to a liquid and the molecules packtightly together.  It is transported not in pipelines, but in what amount to very large thermos bottles.  The chilling is done at the export terminal.  The gas is warmed up to return to its gaseous form at an import terminal, where it is then injected, as a gas, into a pipeline to be transported to users.  LNG is transported in shipboard thermoses.

PHMSA (the federal government’s Pipeline and Hazardous Materials Safety Administration) will investigate the cause of this Houston rupture and then we’ll get confirmation on the cause.  PHMSA posts the number of reportable incidents.  Reportable incidents are those with fatalities or damage of more than about $125,000 or where a pipeline had to be shut down or more than 3 MMcf of gas (or 5 gallons of hazardous liquids) was leaked or that shuts down an LNG facility.  The data show a slight downward trend, but this does not account for new miles of pipeline – we should really look at incidents per mile of pipe – or the tightening of what must be reported, especially after the 2010 San Bruno, California high pressure transmission pipeline rupture and the2015 massive Aliso Canyon storage well leak.  

I can tell you now that the flames seem to have dissipated by half from when I started running the AP video feed on my background screen.  Word is two homes may have been ignited but mercifully there are no reports of injuries.  Centerpoint Energy had to de-energize some nearby electric transmission lines.  Will be interesting to see what is identified as the cause.