SAVANNAH ― Mariners along the Savannah River often navigate via familiar landmarks, such as the iconic Talmadge Bridge, the brick citadels of Fort Pulaski and Old Fort Jackson, the erector-set-like cranes at the Georgia Ports Authority terminals and, of course, the Tybee Island lighthouse.
Then there’s the cluster of mammoth, blue holding tanks that loom above the surrounding marshlands downstream from Savannah’s historic downtown.
Nearly three weeks into the Iran war, those tanks are attracting new attention. They are part of the Elba Island liquefied natural gas (LNG) export terminal, one of only nine in the United States and an increasingly vital supplier of energy as Iran squeezes exports from the Middle East.
Most shipping traffic has been halted in the Strait of Hormuz, a 21-mile-wide chokepoint that connects several of the world’s most prolific oil and natural gas fields to the Indian Ocean. And on Wednesday, Iran missile strikes decimated a $20 billion LNG facility in neighboring Qatar, which exports nearly a fifth of the global supply, and repairs could take years.
Credit: Miguel Martinez/AJC
Credit: Miguel Martinez/AJC
“It is a worrying situation bordering on catastrophic,” said Alex Munton, an expert on natural gas markets at consulting firm Rapidan Energy. “We now have destruction of critical energy infrastructure on a massive scale and it almost doesn’t matter if and when the Strait of Hormuz is open. The areas that were hardest hit will take years for them to recover.”
Countries in Asia and Europe depend on Qatar as a source of natural gas, analysts say, and prices in those nations are climbing as facilities in the U.S. and Australia ― the globe’s two largest natural gas producers ― were already operating near capacity before the war.
Elba Island, operated by Kinder Morgan subsidiary Southern LNG, liquefies, stores and exports 2.5 million tons of gas annually. That’s a small share of the 125 million tons produced domestically every year, but Elba is renowned for its reliability — it runs at 97% capacity, according to market analysis firm Natural Gas Intelligence.
“Every little bit helps right now,” Munton said. “The most important thing is for Elba and facilities in Texas and Louisiana to perform reliably. That in itself will help the world out.”
An expansion project meant to boost Elba’s capacity to 2.9 million tons started last year and is being completed during scheduled maintenance outages “over the next few years,” according to a spokesperson, meaning it won’t help address shortfalls in the near term.
Credit: Miguel Martinez/AJC
Credit: Miguel Martinez/AJC
Dutch energy giant Shell purchases all of Elba’s LNG, with about 50 tankers sailing from Savannah each year.
A Shell official declined a request for an interview and said the company does not disclose LNG export movements.
Here’s what else to know about Georgia’s role in the LNG industry.
Savannah terminal is half-a-century old
Elba has handled natural gas since 1972 and the 140-acre facility once marked the easternmost edge of Savannah’s industrial waterfront. It’s located at a major marine crossroads, where the Intracoastal Waterway cuts across the Savannah River.
Originally built as an import facility, Elba received LNG from Algeria, converted it to a gaseous state and piped it to U.S. suppliers. Operations ceased in 1980 as the supply of gas from North America, specifically Canada, increased and made importing LNG financially infeasible. The terminal was dormant for two decades.
From imports to exports
The market shifted again in 2001 and Elba reopened for imports, but a more significant quake laid ahead for the Savannah terminal.
The U.S. became the world’s No. 1 natural gas producer in 2009 amid the fracking boom. Fracking involves drilling into shale rock and then fracturing the rock to release natural gas. Large fields were discovered in the Midwest as well as Texas and Louisiana.
The American supply was so robust that Elba was converted from imports to exports starting in 2016. At the time, only one export facility operated in the U.S. Elba’s retooled terminal came online in 2019 and now has 10 liquefaction units on-site.
Credit: Miguel Martinez/AJC
Credit: Miguel Martinez/AJC
Natural gas is sent to Elba through a series of pipelines, the last crossing along the bottom of the Savannah River just west of the facility.
Liquefying natural gas requires cooling methane from its gaseous state to minus 260 degrees. The process also compresses the gas ― by up to 600 times ― and is easily reversed at import facilities.
Kinder Morgan currently employs about 185 workers at the Elba facility.
Elba is strategically located
The Savannah facility is one of only two export facilities on the East Coast, nine in the U.S. and 11 in North America. More than a dozen other terminals, most of them along the Gulf Coast, are under construction or in development planning.
However, a large-scale LNG facility takes a minimum of three years to build, Munton said. Major new projects launched in 2023 and 2025 and expansions at existing terminals, such as the one at Elba Island, will double U.S. LNG export capacity, although that additional gas won’t become fully available until 2029, according to the U.S. Energy Information Administration, a government agency.
Elba’s ongoing expansion involves construction of a new condensate plant as well as modifications to each of the site’s liquefaction units.
The fallout from Iran war’s LNG interruptions
Middle East LNG exports go largely to countries along the Indian Ocean and the Pacific Rim. India is rationing natural gas because of the supply interruption, and Taiwan is seeking additional sources of LNG, which provides about 40% of the island nation’s power.
European nations are less reliant on Qatari LNG but have been grappling with sourcing and high prices since Russia’s 2022 invasion of Ukraine. Germany and other nations allied with Ukraine launched a boycott of Russian natural gas in response.
Credit: Miguel Martinez/AJC
Credit: Miguel Martinez/AJC
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