Post on 22-Dec-2015
© 2005 by Institute for Energy, Law & Enterprise, University of Houston Law Center. All rights reserved. 1
PMRE/BUET & UH IELE WORKSHOP
The Role of LNG, GTL, CNG
Dhaka, Bangladesh. January 9-12, 2005
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How Much Natural Gas Is Out There? Proved natural gas reserves at end 2003, ~6000 tcf.
BP Statistical Review of World Energy 2004
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Monetizing Global Natural Gas Resources
Global Gas Production,108 tcf 2000
Marketed
Production
86%
Reinjected
11%
Vented,
Flared
3%
Other
14%
14% ~ 15 tcf, does not get to market
WORLD PROVEDRESERVES 2002:
6,000 TCF
NORTH AMERICARESERVES4%
Much of this natural gas is stranded, with no or little domestic demand
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Monetizing Global Natural Gas Resources Key Drivers
• Abundance of proved Natural Gas• Huge stranded reserves exist –
countries and companies want to monetize these reserves
• North America and Europe – flat or declining production
• LNG is becoming a cost effective solution
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Monetizing Global Natural Gas Resources
What is CNG, LNG, NGLs, LPG, and GTL?LNG Composition
Others5%
Methane 95%
NGL Composition
Ethane, propane, butane95%
Others5%
LPG Composition
Propane and Butane
95%
Others5%
Typical Natural Gas Composition
Methane82%
Other19%
Ethane
Nitrogen
Pentane
Butane
Propane
Carbon Dioxide
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Monetizing Global Natural Gas Resources
Gas-to-Liquids (GTL)
Source: Deshpande, A & Economides, M.J. – University of Houston
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Compressed Natural Gas (CNG)
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Natural Gas Composition
Component
Typical (Mole
Percent)
Range (Mole
Percent)
Hydrocarbons
Methane (C1) 92.77 83.74 – 98.22
Ethane (C2) 3.36 0.52 – 7.64
Propane (C3) 1.51 0.18 – 4.74
Iso-Butane (i-C4) 0.41 0.05 – 1.10
Normal Butane (n-C4) 0.47 0.06 – 1.63
Iso-Pentane (i-C5) 0.19 0.03 – 0.50
Normal Pentane (n-C5) 0.13 0.00 – 0.42
Hexane (C6) 0.27 0.09 – 0.78
Inerts Nitrogen (N2) 0.30 0.12 – 0.91
Helium (He) Trace 0.00 - 0.02
Impurities Carbon Dioxide (CO2) 0.59 0.13 - 1.86
Hydrogen Sulfide (H2S) Trace 0.00 - 0.10
Oxygen (O2) Trace 0.00– 3.00
Water (H2O) Trace 0.00 - 0.01
Source: Cheniere
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Advantages
• Simplicity• Inexpensive onshore facilities• Can start with very modest transporting
needs• Energy efficient• Can exploit isolated supply sources • Suitable for small demand markets
Compressed Natural Gas (CNG)
Source: Deshpande, A & Economides, M.J. – University of Houston
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Scope of the CNG Technology
• Projects using the CNG technology can be successful technically and commercially
• CNG is capable of meeting small market demands and monetizing small supply areas
• Majority of the investment involved with shipping needs, thus, making the assets movable and used in other areas of interests
• CNG can supply gas for distances of 2500 miles cheaper than LNG
Source: Deshpande, A & Economides, M.J. – University of Houston
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Opportunities for CNG Marine TransportVOTRANS™Shifts CNG Paradigm
RA
TE,
mm
scfd
1,000
500
1,500RA
TE,
mm
scfd
1,000
500
1,500
Pipelines LNG
Hydrates
3,0002,0001,0000
Transport Distance, nm3,0002,0001,0000
Transport Distance, nm
CNG
3,0002,0001,0000
Transport Distance, nm4,0003,0002,0001,0000
Transport Distance, nm4,0003,0002,0001,0000
Transport Distance, nm4,000
VOTRANSTM
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Transport Costs
•Supply Matched with Demand Centers
•Smaller Demand Centers can be converted to gas
Transport costs range from $1.25-1.75/MMBTU (100-300 MMSCF)
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Compressed Natural Gas (CNG)
Two technologies for CNG transport a. The Cran & Stennings approach b. The Enersea approach
Example: Consider the transportation of 300 MMscf of gas as CNG– Using the Cran & Stennings approach
• Actual volume of CNG: 1.76x106 ft3
– Using the Enersea approach• Actual Volume of CNG: 1.2x106 ft3
Source: Deshpande, A & Economides, M.J. – University of Houston
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Transportation of the gas
90% of the investment involved is in shipping of the gas.
Loading and unloading is possible and easy with small facilities.
Source: Deshpande, A & Economides, M.J. – University of Houston
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CNG Cargo Containment System
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CNG Application
• For distances up to 2500 miles, CNG appears more attractive than LNG
• Major advantage in terms of market entry
• Much less capital deployed in country
• Up to 2 Bcf on a ship• Ideal for limited supply, limited
consuming markets
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What Is LNG?
LNG is natural gas that has been cooled that it condenses to a liquid
• Temperature -256oF (-161oC) • Atmospheric pressure.• Volume is reduced 600 times• Thus economical to transport
locally and between continents in specially designed ocean vessels
• Liquefaction technology makes natural gas available throughout the world
Natural Gas
LNG
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What Is LNG?
• LNG is liquid form of the natural gas used for cooking, heating and power generation.
• The liquefaction process removes almost all “contaminants”
• LNG must meet higher and lower limits on energy content
• LNG composition has traditionally been set by markets in Japan, South Korea, and Taiwan
• LNG also is used in the U.S. as an alternative fuel for public transportation systems.
Typical LNG Composition
Others5%
Methane 95%
Source Methane Ethane Propane Butane Nitrogen
Alaska 99.72 0.06 0.0005 0.0005 0.20
Algeria 86.98 9.35 2.33 0.63 0.71
Baltimore Gas & Electric 93.32 4.65 0.84 0.18 1.01
New York City 98.00 1.40 0.40 0.10 0.10
San Diego Gas & Electric 92.00 6.00 1.00 - 1.00
Source: Liquid Methane Fuel Characterization and Safety Assessment Report . Cryogenic Fuels. Inc. Report No. CFI-1600, Dec. 1991
LNG COMPOSITION (Mole Percent)
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5%
15%
100%
Over-RichWill not burn
Flammable
Too Lean - Will not burnLower Flammability Limit (LFL)
Upper Flammability Limit (UFL)
5%
15%
100%
Over-RichWill not burn
Flammable
Too Lean - Will not burnLower Flammability Limit (LFL)
Upper Flammability Limit (UFL)
Flammable Range for LNG (Methane)
LNG Properties
Density
3.9ppg (Water 8.3ppg) LNG floats on water.
Flammability range
5 – 15%.
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Comparison of Properties of Liquid Fuels
LNG Liquefied Petroleum Gas (LPG)
Gasoline Fuel Oil
Toxic No No Yes Yes
Carcinogenic No No Yes Yes
Flammable Vapor Yes Yes Yes Yes
Form Vapor Clouds Yes Yes Yes No
Asphyxiant Yes, but in a vapor cloud Yes, same As LNG No No
Extreme Cold Temperature Yes Yes, if refrigerated No No
Other health hazards None None Eye irritant, narcosis, nausea, others.
Same as gasoline
Flash point oF -306 -156 -50 140
Boiling point oF -256 -44 90 400
Flammability Range in air %
5-15 2.1-9.5 1.3-6 N/A
Stored Pressure Atmospheric Pressurized (atmospheric if refrigerated)
Atmospheric Atmospheric
Behavior if spilled Evaporates, forming visible “clouds”. Portions of cloud could be flammable or explosive under certain conditions.
Evaporates, forming vapor clouds which could be flammable or explosive under certain conditions.
Evaporates, forms flammable pool; environmental clean up required.
Same as gasoline
Source: Lewis, William W., Lewis, James P, Outtrim, Patricia A., PTL: LNG Facilities - The Real Risk, AiChE Meeting, New Orleans, April 2003 as modified by industry sources.
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Fuel Autoignition Temperature, oF
LNG (primarily methane) 1004
LPG 850-950
Ethanol 793
Methanol 867
Gasoline 495
Diesel Fuel Approx. 600
Source: New York Energy Planning Board, Report on issues regarding the existing New York Liquefied Natural Gas Moratorium, November 1998
Auto Ignition Temperature of Liquid Fuels
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General LNG Production Process
HeatExchangers
GasTreatmentRefrigerant
Compression
LNGShips
PipelineFeed Gas
-259 F
LNG Storage
• Pentanes and heavier• Condensates• Impurities
-Carbon Dioxide-Mercury-Hydrogen Sulfide-Water-Nitrogen
Heat expelled to water or air
Source: Cheniere
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5 64321
Dock-1
Dock-2Dock-3
HGFE
A
D
BC
LPG Tanks
LNG Plant SiteBontang Indonesia
With 8 trains running, the
capacity of the plant has
reached 22.25 MMT/year
LNG, 1 MMT/year LPG and
10 MMbbl/year
condensates.
STORAGE : LNG : 4 x 95,000 m3 + 2 x 125,000 m3
LPG : 5 X 40,000 m3
Cond. : 10,000 m3 + 12,000 m3
LNG
BADAK
Sources: Ministry of Energy and Mineral Resources of the Republic of Indonesia
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Brief History of LNGEMERGENCE• 1941 – First commercial LNG production• 1964 – Algeria first commercial LNG export
facility • Spawned all US receiving terminals and
several European counterparts• 1969 – Kenai USA starts supply to Japan• 1970 – Libya starts supply to Italy
DEVELOPMENT• 1972-1990 – Development of Far Eastern
LNG trade• Brunei, Indonesia, Abu Dhabi, Malaysia,
Australia start production• Korea, Taiwan, USA join Japan as
importers
GROWTH• 1996 – Qatar starts production• 1999 - Trinidad starts production• 2000 – Nigeria starts production
British Gas Canvey Island LNG TerminalA World First Import Terminal
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LNG VS PIPELINE
• The distance over which natural gas must be transported increases, usage of LNG has economic advantages over usage of pipelines.
• Liquefying natural gas and shipping it becomes cheaper than transporting natural gas in offshore pipelines for distances of more than 700 miles or in onshore pipelines for distances greater than 2,200 miles.
© 2005 by Institute for Energy, Law & Enterprise, University of Houston Law Center. All rights reserved. 26
Why LNG Now?Growing Global LNG Demand
Pipeline
74%
LNG
26%
Source: BP Statistical Review of World Energy June 2003
Natural Gas Trade Movement2002
7% per year growth (1992-2002)
Growth in LNG Demand
-
1,000
2,000
3,000
4,000
5,000
6,000
1970 1980 1990 1992 1994 1996 1998 2000 2002
bc
f
Japan South Korea Taiwan France Spain USAItaly Belgium Turkey Greece Portugal UK
Source: Cedigaz, BP Statistical Review of World Energy June 2003
LNG is about 6% of worldwide natural gas consumption and about 94% of natural gas consumption in Japan.
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Global LNG Imports by Basin• In 2002 there are 43 terminals
with a capacity of over 280 million tonnes, 24 of the terminals are in Japan.
• Inter-regional LNG trade is expected to increase six fold over the next 30 years.
• Most of the increase in LNG trade would be in the Atlantic basin, which will overtake the pacific basin in volume.
• Importing countries will need to add almost 660 million tonnes of new regasification capacity.
Global LNG IMPORTERSYear 2002
Japan48%
South Korea 16%
Taiwan5%
France8%
Spain8%Other
31%USA5%Italy
4%
Turkey4%
Belgium2%
Greece0%
Portugal0%
Pacific Basin Atlantic Basin
Source: World Energy Investment Outlook, IEA, Nov. 2003.
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Global LNG Imports
Japan 23
Importing CountryExistingPlanned
Japan 23Japan 24
Importing CountryExistingPlanned
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Global LNG Exports
Source: BP Statistics, ,World Energy Investment Outlook, IEA, Nov. 2003.
There are currently 16 liquefaction plants with 70 trains in operation worldwide
0
20
40
60
80
100
120
140
160
1970 1975 1980 1985 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Bil
lio
n c
u.
m
Indonesia Algeria Malaysia Qatar
Australia Brunei Oman Nigeria
UAE Trinidad & Tobago USA Libya
Global LNG Exporters2002
Indonesia23%
Malaysia14%
Qatar12%
Australia7%
Brunei6%
UAE5%
Other27%
Algeria18%
Oman5%USA
1%
Nigeria5%
Trinidad & Tobago
4%Libya0%
Pacific Basin Atlantic Basin
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LNG Liquefaction FacilitiesThe LNG industry could be poised for dramatic growth
30
• LNG supply growing• Multiple LNG supply
proposals announced• Long term LNG supply
outlook robust
Global LNG Supply
Source: Cedigaz, NPC
ExistingUnder ConstructionProposed
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LNG Liquefaction Facilities
More than 60% of the equity is owned by state companies; in some cases in joint ventures with major oil and gas producers
1.4
2.0
2.0
2.2
2.6
3.0
3.0
3.4
3.4
3.8
4.4
4.6
4.7
4.7
8.9
9.1
10.0
17.0
23.3
0 5 10 15 20 25
BHP
Unocal
Mitsui
Vico
Nippon Oil Corporation (NOC)
BP
Nigeria National Petroleum Company
Omani State
Brunei Government
Abu Dhabi National Oil Company (ADNOC)
Total
Japan Indonesia LNG Company (JILCO)
Exxonmobil
Mitsibushi
Qatar Petroleum
Shell
Petronas
Pertamina
Sonatract
mpta
State Owned
61%
Oil Companies
23%
Others16%
Liquefaction Capacity
Source EIA
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• Almost all existing liquefaction projects have announced expansions: Trinidad, Nigeria, Qatar, Oman, Malaysia, Brunei, Indonesia, Australia. Expect most of these to be built. Would raise worldwide total capacity by over 40% to approximately 184 million tons per annum.
• Additional countries have announced planned and prospective greenfield liquefaction plants (as of April 2001): Angola, Australia, Egypt, Indonesia, Iran, Nigeria, Norway, Papua New Guinea, Russia, U.S. (North Slope), Venezuela, Yemen.
LNG Supply: Summary
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World LNG Imports and Export
2003 (Billion Cubic Feet)
Source: BP Statistical Review World Energy 2004
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Atlantic Basin LNG Supply and Demand
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Supply (2001) Demand (2001) Supply (2010) Demand (2010)
Bcf
/yr
Middle East
Venezuela
Angola
Egypt
Trinidad
Nigeria
Algeria
New Markets
Europe
United States
Source: Pace Global Energy Services
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LNG costs are declining.Natural gas can be economically produced and delivered to the U.S. as LNG in a price range of about $2.50 - $3.50/MMBtu depending largely on shipping cost.
LNG COSTS ARE DECLINING
Does not include feedstock prices
2.5
1.8
0.5 0.1
0.1
0
0.5
1
1.5
2
2.5
1980's Liquefaction Shipping Regasification and Storage
2000's
$/MMBTU
Sources: El Paso
How Much Does LNG Cost?
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LNG Project Costs Will Continue Dropping
0
100
200
300
400
500
600
700
800
mid 1990 2002 2010 2030
$/to
nn
e o
f ca
pac
ity
Liquefaction Shipping Shipping Regasification and StorageSource : IEA
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Typical LNG Value Chain
EXPLORATION &
PRODUCTION
LIQUEFACTION
SHIPPINGREGASIFICATIO
N& STORAGE
$1.0 - $2.5 billion
$1.5 – 2.0 billion
$0.8 - $2.3 billion
$0.5 - $1.0 billion
$0.5-$1.0/MMBtu$0.8-$1.20/
MMBtu$0.4-$1.0/
MMBtu$0.3-$0.5/MMBtu
TOTAL = $3.7 - $7.8 billion or $2.00 - $3.70/MMBTU
Sources: Industry
Greatest variability is in upstream feedstock for liquefaction and shipping distance.
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Current LNG Cost Competitiveness
Source: Marcy Darsey et al, Liquefied Natural Gas, Exploring Energy, Inc.’s Future with a Developing Field, UH Law Center, 2004
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Liquefaction Costs Transformed
0
100
200
300
400
500
600
700
1990 1995 1999 Trinidad 00 Future LNG
$ per tonne of capacity
Source: BP
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LNG Greenfield Liquefaction Costs
0
100
200
300
400
500
Qatargas Nigeria LNG Atlantic LNG Rasgas,Qatar
Oman LNG
$/t
py
1 11 1 2
Source: OGJ
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World LNG Outlook Liquefaction Facilities
0
50
100
150
200
250
300
350
400
mid1990
2002 2010 2030$/tonne
Liquefaction
Source: IEA
Liquefaction Cost is Dropping
Technology improvement, higher capacity plants,
improved economies of scale
Source: ALNGSource: ALNG
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LNG Shipping
166 existing LNG ships, as of Nov 2004 with 105 on order. The fleet size needs to increase by 3-4 times to meet the projected growth in trade by 2030. LNG ships built 1965 - Oct 2004
02468
10121416
1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004
Ship
s b
uilt
each
Source: EL PASO &
LNG OneWorld, /www.lngoneworld.com/
Source: NLNG
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Major Natural Gas Trade Movements
BP Statistical Review of World Energy 2004
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New Trade Routes Are Emerging
Existing Trade Prospective Trade
Existing Trade Prospective Trade
Source: Iwata, Makoto, Mitsui O.S.K. Lines, Ltd., LNG Transportation, LNG Ministerial Summit, Washington D.C., 2003
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LNG Shipping Costs
LNG carrier (125-138,000 cu.m) newbuilding prices
0
100
200
300
199019911992 1993199419951996 199719981999 2001200220032004
$M
Source: LNGOneWorld 2001©
Source: LNG OneWorld, /www.lngoneworld.com/
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World LNG OutlookShipping
0
50
100
150
200
250
mid1990
2002 2010 2030
$/tonne
Shipping
Source: IEA
Shipping Cost is Dropping
Competition between shipyards, technology
improvement, higher capacity ships, improved economies of
scale
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Cost of Transport to the Eastern U.S.**Based on Cove Point, MD LNG Import Terminal.
$-
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
Saudi
Arabia
Qatar
Iran
Oman
Yemen
Angola
Equat
orial
Guin
ea
Egypt
Nigeria
Russia
- Bar
ents
Norway
(Sno
hvit)
Algeria
Venez
uela
Trinid
ad
$/M
MB
tu
Mid East W. & N. Africa
Source: Pace Global Energy Services
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Likely market arbitrage players
Broadly equidistant from US and European markets
Much closer to US markets
Likely cargo / trade swap players
Much closer to European markets
Shipping opportunities
Arbitrage and swap opportunities
0
2,000
4,000
6,000
8,000
10,000
AtlanticLNG
Venezuela EgyptianLNG
Algeria NigeriaLNG
AngolaLNG
SnohvitLNG
Nau
tica
l m
iles
Barcelona
LakeCharles
Source : BG
LNG Value Chain
Source: BG
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0
1
2
3
4
5
6
7
8
'95 '96 '97 '98 '99 '00 '01 '02 '03
LNG Spot Cargo - Volume
5 fold increase from 1998
Sources : Clarkson Research Studies, LNG Trade & Transport, 2003, BP
Volume of LNG Spot Cargo
MTPA
Spot Trading isincreasing rapidly
Source: Iwata, Makoto, Mitsui O.S.K. Lines, Ltd., LNG Transportation, LNG Ministerial Summit, Washington D.C., 2003
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World LNG Outlook Storage and Regasification Facilities
0
20
40
60
80
100
120
140
mid1990
2002 2010 2030$/tonne
Regasification and Storage
Source: IEA
Storage and Regasification Cost is Dropping
Larger capacity plants, improved economies of
scale
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Offshore Storage & Regasification Terminals
Proposed Cabrillo Port FSRU (Floating Storage and Re-gasification Unit), Oxnard, CA.
Source: BHP Proposed ChevronTexaco Port Pelican Project, offshore Louisiana - Gravity-based structure
Source - ChevronTexaco
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Energy Bridge (Shuttle and LNG Regasification System), Excelerate, Offshore LA.
The Energy Bridge is a regasification vessel and a buoy system that delivers natural gas into offshore pipelines.
35+Meters
35+35+MetersMeters
SubseaSubseaManifoldManifold
Docking BuoyDocking Buoyand Riserand Riser
Subsea Subsea PipelinePipeline
10 to 12 Miles (Dependent on Water Depth)10 to 12 Miles (Dependent on Water Depth)10 to 12 Miles (Dependent on Water Depth)
LNG Regas.LNG Regas.VesselVessel
Source: El Paso
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Main Pass Energy HubCavern-based LNG Receiving Facility
McMoran, LA.
The Bishop Process • receive LNG directly from an offshore tanker,• pressurize and warm it to 40oF, • Inject the resulting natural gas into underground salt caverns for storage.• effectively eliminate the need to build expensive above-ground cryogenic
storage tanks
Source: Conversion Gas Import http://www.conversiongas.com/html/bishop_processtm.html
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LNG Supply IssuesLNG Interchangeability
LNG HHV Relative to Typical Pipeline Tariff Range
1065 1098 1132 1142 1143 1168
0
200
400
600
800
1000
1200
1400
Trinidad Algeria Qatar Abu Dhabi Nigeria Oman
Source: WGL
HH
V, B
tu/scf HHV min - 970
HHV max - 1150
Scheduling coordination, blending, and inert gas injection could result in consistency of gas product and easily overcome interchangeability concerns.
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Gas-to-Liquids (GTL)
• What are they?• GTL technology converts natural gas into
hydrocarbon liquids and promises to complement LNG in transporting remote natural gas to distant markets in the absence of existing pipelines.
• Impetus for the GTL technology: Clean fuel obtained as product and easy transportation
Source: Deshpande, A & Economides, M.J. – University of Houston
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• GTL processes convert the gas into hydrocarbon liquids.
• The main products are Middle distillates like gasoline, kerosene, jet fuel, naphtha and diesel
Source: Economides, M.J. – University of Houston
Gas-to-Liquids (GTL)
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Reasons for GTL attraction
• Monetizing stranded natural gas• Salvaging associated gas • Meeting environmental specifications • Maintaining pipeline productivity (e.g.,
Alaska pipeline)
Source: Economides, M.J. – University of Houston
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• The Fischer-Tropsch synthesis (F-T synthesis) is one the important technologies in GTL.
• The main advantage of the F-T products is the absence of sulphur, nitrogen and complex cyclic hydrocarbons resulting in almost no emissions of sulfur dioxide, nitrous oxides and unburned hydrocarbons.
• For 100 barrels of liquids there is a need for 1 MMscf of gas
Gas to Liquids
Source: Deshpande, A & Economides, M.J. – University of Houston
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Overview of a typical process
Fischer-Tropsch Method
Source: Economides, M.J. – University of Houston
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Processes for converting methane
© 2005 by Institute for Energy, Law & Enterprise, University of Houston Law Center. All rights reserved. 61
Existing and Emerging Technologies
Company Syngas Fischer-Tropsch Catalyst Plant Size, bpd
Sasol (SPD) ATR(O2) Slurry phase Fe, Co 50,000
180-250 oC, 10-45 atm
Shell (SMDS) POX(O2) Fixed bed Co 50,000
(Non-catalytic) 180-250 oC, 10-45 atm
ExxonMobil ATR(O2) Slurry phase Co >50,000
AGC-21 (Fluidized bed) 180-250 oC,10- 45 atm (“RIM”)
BP SMR Fixed bed Co
Syntroleum ATR(air) Fixed bed Co <10,000 180-250 oC, 10-45 atm
Rentech SR Fixed bed, slurry Fe <5,000
© 2005 by Institute for Energy, Law & Enterprise, University of Houston Law Center. All rights reserved. 62
GTL Technology Assessment
Source: GTL Study
© 2005 by Institute for Energy, Law & Enterprise, University of Houston Law Center. All rights reserved. 63
GTL Technology Assessment
• All propose mild hydro-isomerization/hydrocracking for product upgrading
• Exxon and Sasol are considering separate upgrading for light fraction (naphtha) and heavy fraction (distillate)
• Shell proposes single stage hydrocracking/isomerization
• Exxon’s patented oxygenate preservation (for enhanced lubricity) and fuel formulation technology could well prove valuable in non-blending fuel markets– Oxygenates improve lubricity of GTL diesel– Benefits in blending markets are doubtful
• Upgrading technology is likely to be modified on a site-by-site basis to extract premium products (waxes, a-olefins, alcohols, lube feedstock)
Source: GTL Study
© 2005 by Institute for Energy, Law & Enterprise, University of Houston Law Center. All rights reserved. 64
• Cost of GTL products: $20+ per bbl of oil required for economic returns on GTL project.
• GTL can satisfy different market needs.
GTL Cost
Source: Deshpande, A & Economides, M.J. – University of Houston
© 2005 by Institute for Energy, Law & Enterprise, University of Houston Law Center. All rights reserved. 65
GTL production costs: $20,000-35000/barrel of liquid produced
For 500MMscf/d plant $1.5 billion
CNG: $30-40 million for 500MMscf/d unit.
Ships used for transporting petroleum products can be leased fortransporting the GTL products.
Shipping is a major part of a CNG project
Comparison of CNG and GTL
Source: Deshpande, A & Economides, M.J. – University of Houston
© 2005 by Institute for Energy, Law & Enterprise, University of Houston Law Center. All rights reserved. 66
Comparison of CNG and LNG
Size of investment for a 500MMscf/d plant CNG LNGReserves: Modest LargeProduction cost: MM$30-40 MM$750-2000*Transportation costs: MM$230/ship MM$160/shipUnloading costs: MM$16-20 MM$500-
550Total investment: $1-2 billion** $2-3 billion**
* Depending upon the location of the production site** Depending upon the number of ships used for the transport of the gas.
Source: Deshpande, A & Economides, M.J. – University of Houston
© 2005 by Institute for Energy, Law & Enterprise, University of Houston Law Center. All rights reserved. 67
Price of the gas deliveredLNG value chain per MMBTUExploration and Production: $0.5-1.0/MMBTULiquefaction: $0.8-1.2/ MMBTU.Shipping: $0.4-1.5/ MMBTU*.Regasification and Storage: $0.3-0.5/ MMBTU.$1.00 as netback for the investors
Final price of LNG: $3.00-5.20/MMBTU.
* For transport distances from 1000 miles to 5000 miles
Comparison of CNG and LNG
Source: Deshpande, A & Economides, M.J. – University of Houston
© 2005 by Institute for Energy, Law & Enterprise, University of Houston Law Center. All rights reserved. 68
CNG value chain per MMBTUExploration and Production: $0.5-1.0/MMBTUProcessing and transportation: $1.08-3.82/MMBTU*$1.00 as netback to the investor
Final unit price of CNG: $2.58-5.82/MMBTU
* For transport distances from 1000 miles to 5000 miles
Comparison of CNG and LNG
Source: Deshpande, A & Economides, M.J. – University of Houston
© 2005 by Institute for Energy, Law & Enterprise, University of Houston Law Center. All rights reserved. 69
Advantages of CNG over LNG• Requirement of lower throughput of gas for a
project• Involvement of lower capital• Ease of deployment … faster implementation of a
project• Ability to access stranded reserves and monetize
them• Majority of the investment is in the shipping,
making the assets movable and reducing the risk involved
DisadvantagesInability to transport large volumes of gas such LNGDisparity in the volume transport hinders commercial
possibility of CNG
Comparison of CNG and LNG
Source: Deshpande, A & Economides, M.J. – University of Houston
© 2005 by Institute for Energy, Law & Enterprise, University of Houston Law Center. All rights reserved. 70
Trinidad to GOM
Australia to Baja
Venezuela to GOM
Feedstock gas 0.75 0.75 0.75Liquefication 0.95 0.70
1.65Transportation 0.50 1.20Regasification 0.45 0.45
TOTAL w/ Margin 3.05 3.45 2.40
LNG vs. CNGCNG
Source: Deshpande, A & Economides, M.J. – University of Houston
© 2005 by Institute for Energy, Law & Enterprise, University of Houston Law Center. All rights reserved. 71
Dialogue CNG experience in India
• CNG supply for fleet vehicles established in India