There’s a lot of nitrogen out there — it’s the seventh-most common element in the universe and the Earth’s atmosphere is 78% nitrogen (and only 21% oxygen). And there’s certainly nothing new about nitrogen in the production, processing and delivery of natural gas. That’s because all natural gas contains at least a little nitrogen. But lately, the nitrogen content in some U.S. natural gas has become a real headache, and it’s getting worse. There are two things going on. First, a few counties in the Permian’s Midland Basin produce gas with unusually high nitrogen content, and those same counties have been the Midland’s fastest-growing production area the past few years. Second, there’s the LNG angle. LNG is by far the fastest-growing demand sector for U.S. gas. LNG terminals here in the U.S. and buyers of U.S. LNG don’t like nitrogen one little bit. As an inert gas (meaning it does not burn), nitrogen lowers the heating value of the LNG and takes up room (lowers the effective capacity) in the terminal’s liquefaction train. Bottom line, nitrogen generally mucks up the process of liquefying, transporting and consuming LNG, which means that nitrogen is a considerably more problematic issue for LNG terminals than for most domestic gas consumers. So as the LNG sector increases as a fraction of total U.S. demand, the nitrogen issue really comes to the fore. In today’s RBN blog, we’ll explore why high nitrogen content in gas is happening now, why it matters and how bad it could get.
In observance of today’s holiday, we’ve given our analysts a break and are revisiting our recent blog on nitrogen and its impact on LNG feedgas. If you didn’t read it then, this is your opportunity to see what you missed. Happy Thanksgiving!
Let’s start with the basics. Figure 1 shows how nitrogen gets from the wellhead to the LNG terminal, with the numbers in the graphic matched to each bullet below. This is a generalized example, but is most reflective of Permian-Midland gas production, a significant portion of which makes it to the Texas Gulf Coast.
- Wellhead-level nitrogen content varies significantly across geography and geology. One well might have a nitrogen content of 1% while another down the road might have 5% or higher. The percentages shown are representative of wells in higher nitrogen areas of the northern Midland Basin.
- Wells with a wide variety of nitrogen content feed common gathering systems, which in effect become the first line of defense in the nitrogen-mitigation process. Higher-nitrogen gas is blended with lower-nitrogen gas to yield a gas mix that generally reflects the average nitrogen content in the area covered by the gathering system.
Figure 1. Nitrogen Flow from Wellhead to LNG Terminal. Source: RBN
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