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Trucks the Option for LNG Import Transportation in China

December 12, 2018

Amid high demand and limited pipelines, Chinese companies are using trucks to ship LNG imports from terminals to inland locations.

China has limited domestic supplies of natural gas, meaning much of its rapidly growing demand for the energy sources is being filled by imported Liquefied Natural Gas (LNG). However, LNG demand in China has increased so rapidly, pipeline line construction has been unable to keep up. As a result a unique mode of delivering LNG to market has developed in China: long lines of LNG tanker trucks. LNG tanker trucks are a critical and growing mode of delivering LNG from import terminals to power plants inland.

Truck deliveries of LNG in China are so prevalent, a story in the Midland Reporter-Telegram called “them pipelines on wheels.” Indeed, the Chinese energy company ENN Group is using truck transport it as the primary way to move LNG from its new import terminal.

Trucks carried approximately 19 million tons of LNG to customers, primarily power plants, in 2017, accounting for 12 percent of China’s total use, the highest percentage for trucked LNG in the world.

The Midland Reporter-Telegram notes ENN has bet trucking will continue to be a primary method of transporting LNG. Accordingly, its new LNG terminal in Zhoushan, a small island at the mouth of the Yangtze River, “is the first in the world built to load the majority of its imports onto trucks instead of reheating them to their gaseous state for pipelines or power plants…. The facility is designed to import about 3 million tons of LNG a year, with 2 million destined for trucks and the rest for pipelines,” reports the Midland Reporter-Tribune.

Markets, Pollution Crackdown, Increases Demand

China’s demand for natural gas is being driven by three factors: growing energy demand, the government’s crackdown on smog, leading to the closure of older coal power plants, and a partial deregulation of the natural gas market.

Concerning the latter point, to improve the efficiency of energy markets and increase supply rapidly to meet growing demand as older coal plants are shuttered, the Chinese government has moved to privatize or at least liberalize much of its natural gas industry. Under the control of the government for decades, China’s government has recently begun auctioning off gas and import terminal space on exchanges, and allowed third party, non-government participants access facilities and assets operated mainly by state-owned companies, while allowing prices to rise or fall based on market demand.

Even though trucking LNG to markets is more expensive than shipping it through pipelines, with pipeline space limited and demand high, trucking has become a profitable way to deliver gas to market.

“We haven’t seen this kind of volume in trucked LNG anywhere else in the world” Xizhou Zhou, head of China energy research for IHS Markit, told Midland Reporter-Telegram.  

H. Sterling Burnett, Ph.D. (hsburnett@heartland.org) is the managing editor of Environment & Climate News.

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H. Sterling Burnett, Ph.D. is a Heartland senior fellow on environmental policy and the managing editor of Environment & Climate News.
hsburnett@heartland.org