AACQ– see Actual
Annual Contract Quantity
ACQ– see Annual
Contract Quantity
Actual Annual Contract Quantity–
The amount of LNG a buyer physically takes delivery of during a Contract
Year under a long-term supply contract. May be measured in same units
as ACQ, or expressed as a percentage of ACQ.
Annual Contract Quantity– The
amount of LNG a buyer agrees to purchase from seller over the length of
a Contract Year, most accurately expressed in MMBtu, and measured in Gross
Heating Value
Boil off– LNG that evaporates
during storage and transport. Typically, any rise rise in temperature
of LNG during storage and transport will be countered by allowing evaporated
LNG to vent from storage tank. Boil off gas is sometimes used to supplement
fuel for tankers, or as a fuel at storage facilities
Btu– see British
Thermal Unit
British Thermal Unit– Traditionally
defined as the amount of heat required to raise the temperature of 1 pound
(lb) of water by 1 degree Fahrenheit. One Btu is more precisely defined
as the amount of heat equivalent to 1,055.06 Joule.
Carry-forward LNG– A clause in
some long-term contracts that allow a buyer that takes more than Take
or Pay amount in a single Contract Year to get a credit to set against
future Take or Pay contract year obligations. Quantities are frequently
restricted. (see also make-up LNG, make-good LNG)
Contract Year– Traditionally,
and typically, a period of twelve consecutive months beginning on the
first day of October and ending on the thirty-first day of September.
The October-September year allows buyers to avoid the risk of supply disruption
that would be follow from a supply contract expiring in the middle of
winter in the northern hemisphere. Nevertheless, "contract year"
in some new LNG contracts has also been specified as running from the
first day of January until the thirty first day of December.
Contract Period– The total length
of a term supply contract between buyer and seller.
Delivery point– Typically defined
as the flange connecting the loading line of an LNG tanker with the LNG
metering equipment at the seller's facility (in an FOB contract), or at
the buyer's facility (in a delivered, or ex-ship, contract)
Ex-ship– The delivery basis
for most traditional long-term LNG contracts. Agreed price includes cost
of freight and insurance for transporting the LNG by tanker to buyers'
facilities. Usually contrasted with Free On Board (FOB)
FOB– see Free
On Board
Force Majeure– A contract clause
that allows buyer or seller to default on delivery because of forces or
events deemed to be beyond the control of either party. Force majeure
is usually defined on a contract-by-contract basis, either by specifying
what may constitute force majeure, or by excluding what may not. Historically,
force majeure has rarely been invoked in LNG contracts.
Free On Board– Delivery, inspection
and loading costs involved in putting LNG on a tanker at sellers' facilities
are included in agreed price. Buyer pays all additional costs to transport
and unload the cargo
Gross Heating Value– The quantity
of heat in Btu produced by the complete combustion in dry air of one standard
cubic foot of dry ideal gas and the condensation of all the water formed,
with the initial and final temperature and pressure being 60 degrees Farenheit
and 14.696 psia respectively. Usually contrasted with Net Heating Value.
Joule– The energy expended in
one second by an electric current of one ampere in a
resistance of one ohm.
Liquefaction– The process by
which natural gas is converted into liquid natural gas
Liquefied Natural Gas– Natural
gas that has been cooled to a cryogenic -259 degrees Fahrenheit (-161
degrees Celsius) and condensed into a liquid which is colorless, odorless,
non-corrosive and non-toxic. LNG weighs less than half the weight of water.
LNG– see Liquefied
Natural Gas
Make-up LNG– When a payment
for LNG is made under Take or Pay clause, the buyer is often contractually
permitted to take delivery of the same amount of (normally free) LNG at
a later date. Quantity of make-up LNG allowed to be taken is frequently
restricted. (see also carry-forward LNG)
Make-good LNG– A clause in some
long-term contracts allowing buyer to reduce one Contract Year ACQ, which
is made up in full by increasing the ACQ in the following year or years
(see also carry-forward LNG)
MMBtu– One million British Thermal
Units.
Natural Gas Liquids– A general
term for all liquid products separated from natural gas in a gas processing
plant. NGLs include ethane, propane, butane, and natural gasoline.
NGLs– see Natural
Gas Liquids
Nomination– The process by which
buyer informs the seller of how much LNG it intends to take in a coming
Contract Year under a long-term supply contract. Typically, in LNG, nomination
schedules work as follows: At least 90 days before a new Contract Year,
both parties will seek to agree a program containing (a) buyer's binding
nominations for cargoes for each calendar month in the coming Contract
Year (b) indicative nominations from buyer for cargoes likely to be required
in each calendar month of the following two years, (c) shutdowns and maintenance
planned for buyer's LNG facilities in the coming Contract Year (d) shutdowns
and maintenance planned for seller's LNG facilities in the coming Contract
Year. LNG delivery schedules may typically only be changed by mutual consent
after being agreed. If a delivery schedule can not be agreed within the
timeframe laid out in the nomination section of a long-term contract,
a final delivery program is often set by the buyer, after taking account
of seller's available cargoes.
Peak shaving facility– Natural
gas from storage to supplement deliveries during times of peak periods.
LNG peak shaving facilities have a regasification unit attached, but may
or may not have a liquefaction unit. Facilities without a liquefaction
unit depend upon tank trucks to bring LNG from nearby sources. Of approximately
113 active LNG facilities in the US, 57 are peak-shaving facilities. Other
LNG facilities include marine terminals and storage facilities.
Pounds per square inch– A pressure
gauge reading in which the gauge is
adjusted to read zero at the surrounding atmospheric pressure
Pounds per square inch absolute–
Gauge pressure plus barometric or
atmospheric pressure. PSIA (also known as absolute pressure) can be zero
only in a perfect vacuum.
PSI– see Pounds
per square inch
PSIA– Pounds per square inch
absolute
Regasification terminal– Facility
for receiving, unloading, storing and re-gasifying LNG, usually including
breakwaters, tanker berthing and other marine facilities.
Take or Pay– The minimum payment
level guaranteed by a buyer of LNG, regardless of actual receipt of LNG.
Buyer pays seller for the value of gas which it is unable to receive below
the Take or Pay minimum quantity. Take or Pay minimum quantity normally
defined as a percentage of ACQ.
Tanker– Double-hulled ships
specifically designed to handle the low temperature of LNG, insulated
to limit the amount of LNG that boils off. LNG carriers are up to 1000
feet long, and require a minimum water depth of 40 feet when fully loaded.
Therm– 100,000 British thermal
units. A common measure of gas sold to residential customers.
Train– An LNG plant comprises
one or more LNG trains, each of which is an independent unit for gas liquefaction.
Wobbe Index– An index that defines
the heating value of a quantity of gas that will flow though a hole of
a given size in a given amount of time. The higher the index, the higher
the heating value. Typically, Wobbe is given without units. All gas mixtures
that have the same Wobbe number will deliver the same amount of heat.
Pure methane has a Wobbe number of 1363; natural gas as piped to homes
in the US typically has a Wobbe number between 1310 and 1390. The Wobbe
Index is found by dividing the high heating value of the gas in Btu per
standard cubic foot by the square root of its specific gravity with respect
to air.
Window Period– In LNG supply
contracts, the specific time-frame in which the seller commits to make
available the first supplies of LNG under the terms of a long-term agreement.
The length of the window period is steadily reduced as the start-up of
supplies nears, resulting in as many as four or five separate (and progressively
shorter) window periods being notified by seller to buyer in the run-up
to a new supply program.
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