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January 2019

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18-ACC-0145_ad_IGU Annual Magazine - Full Page Ad Update_Palladian_210x297.indd 1 1/8/19 9:34 AM

ISSN 1747-1826

CONTENTS

Copyright © Palladian Publications Ltd 2019. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the copyright owner. All views expressed in this journal are those of the respective contributors and are not necessarily the opinions of the publisher, neither do the publishers endorse any of the claims made in the articles or the advertisements. Printed in the UK.

ON THIS MONTH’S COVER

10

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JANUARY 2019

03 Comment

04 LNG news

29 Permanent magnet technology – reliable and eco-friendlyJussi Puranen and Ville Parpala, Yaskawa Environmental Energy / The Switch, Finland, outline the benefits of diesel-electric propulsion over diesel-mechanical propulsion for LNG vessels.

33 Unleashing the full potential of LNGDavid Mikal Knutsen, Connect LNG, Norway, presents a new floating LNG transfer system.

38 Quenching the thirst for optimisationVinai Misra, Woodward, USA, explains how to improve quench control for refrigeration compressors.

45 A small step forward for LNGBjörn Munko, TGE Marine, Germany, presents a small scale FSRU solution to supply LNG to remote locations.

49 Combining rupture discs and safety valvesOrhan Karagöz, REMBE, Germany, takes a detailed look at the isolation and protection of safety valves using rupture discs on upstream and downstream connections.

53 The digital twin as a digital transformation enablerHans Kouwer and Erika Gracés, Hexagon PPM, the Netherlands, discuss how digitalisation and the digital twin concept can help LNG facility owners embark on a digital transformation journey and create intelligence from their data.

56 15 facts on... The Mediterranean

14 A shallow water mooring solutionDavid Waronoff and Arun Duggal, SOFEC, USA, consider the Tower Yoke Mooring system as a solution which can bring LNG storage and regasification technology closer to areas of LNG demand.

19 Shaping up nicelyDaejun Chang, LATTICE Technology, South Korea, presents a pressure vessel solution for LNG storage and LNG cargoes.

23 Steady the shipLorenz Claes, GTT, France, and Mei Rongbing, DSIC, China, discuss the benefits of a ballast-free LNG carrier design.

26 Forming a figurehead for changeFrank Harteveld, Wärtsila Gas Solutions, Julien Bec, GTT, and Rolf Stiefel, WinGD, describe how three industry leaders have joined forces to promote LNG as a marine fuel.

10 Diversifying Europe’s gas supplyAndreas Silcher and Chrysa Kitsou, Haynes and Boone CDG, LLP, UK, take a detailed look at the European LNG market.

When it comes to fuel LNG storage, every LNG-fuelled ship is faced with multiple challenges of safety, installation space, OPEX, and CAPEX. For example, cylindrical pressure vessels waste valuable ship space while non-pressure tanks accompany safety risk and costly OPEX due to normal and bunkering BOG handling. As a Type-C free-shape pressure vessel, the LPV (lattice pressure vessel) helps these green ships with meeting these challenges all together. The LPV on the cover is the fuel LNG tank for the Korean government’s first LNG-fuelled ship, increasing the storage volume by 50% from what a cylinder can provide in the same space.

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Anz HE Gas Industry 2019-01.indd 1 11.01.19 14:24

COMMENTDAVID ROWLANDS

DEPUTY EDITOR

Editorial/Advertisement Offices, Palladian Publications Ltd 15 South Street, Farnham, Surrey, GU9 7QU, ENGLAND, Tel: +44 (0) 1252 718 999 Fax: +44 (0) 1252 718 992 Website: www.lngindustry.com

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Much of the last quarter of 2018 was spent looking forward to 2019, and the vast riches it promises to bring. A number of final investment decisions (FIDs) are expected to

be taken over the course of the year and several tonnes of capacity to be added.

Indeed, in its latest quarterly report, Wood Mackenzie noted that a number of projects are expected to take FID this year, including Golden Pass, Calcasieu Pass and Sabine Pass Train 6.1 Wood Mackenzie also reports that Canada’s Woodfibre LNG project could also reach FID.

But now January has arrived, and the reality of the task sets in. Indeed, there are still a number of challenges to overcome before the LNG industry can take another significant step towards growth.

Whilst everyone has their own personal New Years Resolutions, the resolutions of European powers are more a continuation of years of work, rather than any snap decisions. Europe, perhaps unsurprisingly, is still looking to decrease its dependency on Russian gas, and LNG could of course hold the key to doing so.

Indeed, in 2018, Egypt officially imported its last LNG cargo. With the discovery of the Zohr field in the Mediterranean, which has an estimated 30 trillion ft3 of original gas, Egypt is sure to offer European nations an alternative to Russian gas.

In addition to this, in July last year, US President Donald Trump and the President of the European Commission, Jean-Claude Junker, agreed to lift regulatory barriers and invest in infrastructure in order to increase LNG trade from the US to Europe.

Clearly then, more LNG is set to become available to

European markets over the coming years, especially as more receiving facilities are developed.

However, as Andreas Silcher and Chrysa Kitsou of Haynes and Boone CDG, LLP, discuss in their article on page 10, dependency on Russian gas is appearing to grow. Whilst US supplies and Mediterranean resources are becoming increasingly available, there are still a number of political, financial and infrastructure-related hurdles to overcome before diversification and security of supply can be realised in Europe.

For instance, the current emphasis is still on investing in transnational pipelines. Indeed, this year, Nord Stream 2 will be completed, connecting Russia and Germany with a nameplate capacity of 55 billion m3/yr of gas.

Silcher and Kitsou claim that, in the long-term, such pipelines will make gas more marketable, as well as immediately available and less expensive.

It is clear, therefore, that although more capacity is due to come online this year across the globe, the industry still has a number of challenges to overcome before it can think of dominating the European market.

For now though, we at LNG Industry hope to see you at all of the year’s biggest events. This particular issue will be distributed at the European Gas Conference in Vienna, Austria, as well as at the 2nd Small-Scale LNG Summit in Milan, Italy.

We hope you enjoy our first issue of the year.

1. Wood Mackenzie, ‘North America to Lead Next Wave of Global LNG Projects’, https://www.woodmac.com/press-releases/north-america-to-lead-next-wave-of-global-lng-projects/ (18 December 2018)

4 January 2019

LNGNEWSSingaporeKeppel secures ice-class LNG bunker vessel contract

Keppel Offshore & Marine Ltd (Keppel O&M) has, through its wholly-owned subsidiaries, Keppel Singmarine Pte Ltd.

(Keppel Singmarine) and Keppel Shipyard Ltd. (Keppel Shipyard), clinched contracts worth a combined value of approximately S$300 million.

These contracts include the design and construction of an ice-class LNG bunker vessel and are not expected to have a material impact on the net tangible assets or earnings per share of Keppel Corp. Ltd for the current financial year.

Chris Ong, CEO, Keppel O&M, said: “Keppel O&M also stands ready with a suite of advanced and cost-effective solutions such as scrubber retrofits and LNG-fuelled vessels, as the International Maritime Organization implements the 0.5% global sulfur cap on marine fuel from January 2020.”

The LNG bunker vessel contract was signed by Keppel Singmarine with Shturman Koshelev LLC for the design and construction of an ice-class LNG bunker vessel. When completed in 4Q20, the vessel will be chartered to Gazpromneft Marine Bunker Ltd. (Gazpromneft) for operations in the Baltic Sea. The contract complies with applicable sanctions.

The vessel will be built to the MTD 5800V LNG design, a proprietary design of Keppel O&M’s ship design and development arm, Marine Technology Development (MTD), and will have an Ice Class Arc 4 notation and a cargo capacity of 5800 m3.

This project leverages Keppel O&M’s strong track record in ice-class vessels, experience in cryogenics, and comprehensive suite of solutions along the gas value chain. Keppel O&M has delivered 11 ice-class vessels to-date and is currently building LNG-fuelled vessels including South East Asia’s first LNG bunkering vessel.

AustraliaBechtel awarded FEED contract for Pluto Train 2 project

Woodside has announced that it has awarded a contract to Bechtel (Western Australia) Pty Ltd to carry out the

front-end engineering design (FEED) work for the Pluto Train 2 project.

According to the statement, the FEED work includes activities required to finalise the costs and technical definition for the proposed second LNG train at the facility.

Furthermore, the contract also includes an option for Woodside to progress to a lump sum engineering, procurement, and construction contract for the execution of phase activities. Woodside claims that this option is subject to, inter alia, a positive final investment decision (FID) being taken on the project.

The CEO of Woodside, Peter Coleman, said: “Our Burrup Hub vision is taking shape as we work with Bechtel to progress the Pluto Train 2 Project, which will create a pathway for the globally cost-competitive development of Western Australian gas resources.”

According to the statement, the Pluto Train 2 project will underpin the company’s preferred concept for the development of the 7.3 trillion ft3 Scarborough gas resource. In addition to this, the project will also include a second LNG train at the Pluto facility, with a planned capacity of 5 million tpy, as well as the installation of domestic gas infrastructure.

Woodside claims that it is planning to take FID on the Pluto Train 2 project next year, with startup scheduled for 2024. Reaching these milestones is subject to all of the necessary joint venture approvals and regulatory approvals, as well as the appropriate commercial arrangements being finalised.

ArgentinaTango FLNG en route to Argentina

EXMAR has announced that its floating LNG (FLNG) unit, which will be renamed Tango FLNG, has

successfully left China to Bahia Blanca, Argentina, where its liquefaction operations will begin.

EXMAR released the statement on 27 December, and the vessel is now underway its 45-day (approximately) journey.

Once Tango FLNG arrives, EXMAR claims that it will be put in operation for the company’s customer, YPF S.A., with LNG production expected to start up in 2Q19. The FLNG unit is designed for a liquefaction capacity of approximately 0.5 million tpy of LNG, and will play a significant role in YPF’s efforts to export the Vaca Muerta gas reserves to international markets.

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6 January 2019

News Highlights

Visit our website for more news: www.lngindustry.com

X Egypt reaching new LNG export highs

X Kairos commences reload operations at Klaipeda terminal

X Shell acquires 100% equity in Hazira LNG

LNGNEWSRussiaSCF Group orders three LNG-fuelled tankers

Sovcomflot (SCF Group) has announced that it has placed an order at Zvezda shipbuilding complex

for the construction of three LNG-fuelled next generation product carriers.

The three MR-class vessels will operate primarily on LNG, and will have a deadweight of 51 000 t each. They will be used to transport petroleum products and gas condensate, and will be chartered to Novatek under long-term time charter agreements. In addition to this, each vessel will have an ice class of 1B, allowing for safe operations in areas that have difficult ice conditions, such as the Baltic.

According to the statement, the specifications of the vessels reflect the international regulatory limits on sulfur, nitrogen and greenhouse gas (GHG) emissions that are scheduled to come into effect next year.

These latest orders follow previous orders for two 114 000 DWT LNG-fuelled Aframax crude oil tankers from Zvezda in September last year.

The PhilippinesDOE Philippines grants permit for construction, ownership and operation of LNG hub

Energy World Corp. Ltd (EWC) has announced that the Secretary of Energy, Alfonso G. Cusi, on behalf of the

Department of Energy (DOE) Philippines, has issued a permit for Energy World Gas Operations Philippines Inc. to construct, own and operate an LNG hub.

The LNG import terminal and regasification facility will be located at Pagbilao Grande Island, Quezon Province, the Philippines.

According to the statement, the permit was issued on 21 December last year, and is an update to the original permit documentation. It provides for a further construction period of 24 months from the permit issue date. EWC claims that this will allow the LNG hub’s first tank to be aligned with the commercial operation date of the associated 650 MW power plant and the NGCP switchyard expansion under construction and for the construction of the second tank.

Stewart Elliott said: “This permit demonstrates the continued strong support from the DOE for our LNG hub terminal at Pagbilao and will further enhance our program to bring affordable LNG to the Philippines for power generation, town gas and transportation.”

180319_LNG_MayJun_MSC_ta.indd 1 3/21/2018 9:15:04 AM

8 January 2019

LNGNEWS

12 February 20192nd Small-Scale LNG SummitMilan, Italyhttps://www.sslngevent.com/

26 - 27 February 20193rd Annual LNG USA SummitHouston, USAhttps://www.lng-usa.com/

01 - 05 April 2019LNG2019Shanghai, Chinahttps://www.lng2019.com/

29 - 30 April 20195th International LNG CongressSt. Julian’s, Maltahttps://lngcongress.com/

Mauritania/SenegalBlack & Veatch receives limited notice to proceed on FLNG conversion

Black & Veatch has announced that it has received a limited notice to proceed on work to jointly outfit

a Golar LNG owned LNG carrier, Gimi, with its patented PRICO® liquefaction technology.

According to the statement, Black & Veatch will work with Keppel Shipyard Ltd to convert the carrier into a floating LNG (FLNG) vessel. This will support the development of Phase 1 of the Greater Tortue/Ahmeyim field, which is located offshore Mauritania and Senegal. BP reportedly holds a majority interest and operatorship in the Greater Tortue/Ahmeyim project.

Black & Veatch claims that the Gimi project will follow up on the success of the Golar FLNG Hilli Episeyo, which was completed last year, and has been operating commercially offshore Cameroon ever since.

Bob Germinder, Black & Veatch Senior Vice President and Managing Director of Floating Oil & Gas Solutions, said: “Preparing the Gimi for production will mark another major proof point that FLNG can meet the world’s rising demand for energy.

“It also represents fresh confirmation that Black & Veatch’s PRICO technology plays a leading role in moving the market forward by providing a nimble, efficient, and cost-effective solution.”

USAWilliams’ Gulf Connector project put into service

Williams has announced that its Gulf Connector project has been put into full service, further

connecting its Transco pipeline with global LNG markets.The Transco pipeline is the largest-volume interstate

natural gas pipeline in the US. The Gulf Connector project expands the delivery capacity of the pipeline by 475 million ft3/d, providing service to Cheniere Energy’s Corpus Christi liquefaction terminal and Freeport LNG Development L.P.’s liquefaction project.

The President and CEO of Williams, Alan Armstrong, said: “Since 2017, Williams has now added more than 2 billion ft3/d of capacity to directly serve global LNG export facilities.

“Projects like Gulf Connector, which leverage existing gas pipeline infrastructure, make it possible to connect abundant domestic supply with emerging international markets, giving a boost to the US economy while helping meet the world’s increasing demand for clean energy.”

In the statement, Williams claims that it is well placed to take advantage of the expected growth in the LNG market. This is because the Transco pipeline runs through every state in the US that has an LNG facility currently under construction. The company adds that natural gas demand to serve LNG export facilities along the pipeline corridor is expected to grow by approximately 11 billion ft3/d by 2025.

13 - 15 March 2019Australasian Oil & Gas Exhibition & ConferencePerth, Australiahttps://aogexpo.com.au/

26 - 28 March 2019StocExpo EuropeRotterdam, the Netherlandshttps://www.easyfairs.com/stocexpo-europe-2019/stocexpo-europe-2019/

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Powering the Energy Future through LNG

Europe is a net gas importer, importing approximately 70% of its natural gas via a network of pipelines, or as LNG, which is then subsequently placed into the gas

supply network to be distributed nationally and beyond. EU policymakers’ commitment to cutting the EU’s carbon

footprint and investing in renewable energy incentivises the use of gas. To ensure gas growth, policymakers are focusing on diversification, competitiveness, flexibility, sustainability and security of supply. As the production in the North Sea is in decline due to fields being depleted, access to more suppliers is needed to, inter alia, decrease dependency on Russia, which is currently the dominant importer due to its competitive prices, immediate supply, affluent reserves, and comprehensive network of pipelines. In particular, the Baltic countries and the southeastern part of Europe remain dependent on Russia, leaving those countries susceptible to market disruptions.

In an effort to change the equation, the focus from the North has begun to shift to the South and the Mediterranean.

EU productionGas production within the EU has now dropped to 28 billion m3 (representing a 12% year-on-year decrease). The EU’s two top producers, the Netherlands and the UK, had to decrease production due to reserves’ depletion. In Denmark, gas output decreased predominantly as a result of the parliament bill to reduce and ultimately put the Groningen field – Europe’s largest field – on halt on a ‘as quickly as possible’ basis by 2030 due to seismic activity. In addition, gas production declined in Germany, Ireland and Romania, whilst it remained unchanged in Poland. Italy was the only Central European country where gas production increased.

There are plans for new fields, such as the Culzean gas field in the UK North Sea, which will start delivering gas in

2019 and, according to predictions, will produce 60 000 – 90 000 boe/d in 2020. However, this is not sufficient to satisfy the increasing demand.

EU importsNet imports have increased by 3% compared to the year before based on Eurostat data. This was attributed to the decline in the domestic conventional production and necessary storage injections.

Russia is the leading supplier in the EU, and it does so through three main routes: Ukraine, including the Brotherhood pipeline and Balkan route; Belarus (the Yamal pipeline); and Nord Stream.

Looking at LNG Imports, Qatar (43%) was the main LNG supplier of the EU in 2Q18, followed by Nigeria (17%), Algeria (16%), Trinidad & Tobago (9%), Norway (9%) and the US (1.3%). Looking at the latter, only four cargoes arrived in the EU from the US in 2018 to date as compared to 20 LNG cargoes unloaded in 2017. On 25 July 2018, the President of the European Commission, Jean-Claude Junker, and US President Donald Trump agreed to facilitate and strengthen energy relations by increasing the LNG trade from US to Europe by lifting regulatory barriers and investing in building up infrastructure. However, there are more challenges in US LNG to be overcome, such as: dynamics in other markets, such as Asia, where LNG can potentially be sold at a more profitable rate leading to shipments to such areas being prioritised; and Russia’s ability to respond to European demand faster via the network of pipelines at more competitive prices.

TerminalsExcept in Russia and Norway, the remaining European gas terminals have import rather than export facilities providing

Diversifying Europe’s

gas supply

Diversifying Europe’s

gas supplyAndreas Silcher and Chrysa Kitsou, Haynes and Boone CDG, LLP,

UK, take a detailed look at the European LNG market.

10

11

12 January 2019

an array of services, such as reloading, trans-shipment, cooling down and gassing up, loading of bunkering ships, and truck loading services.

In Europe, there are 28 large scale LNG facilities (23 land-based, four FSRUs and one FSU. 24 in EU countries and four in Turkey) and eight small scale LNG facilities with regasification capacity of 227 billion m3 in 2017.

The EU is evidently making progress in decreasing its gas reliance on Russia, by investing in LNG infrastructure in recent years, such as in Malta, Poland and Lithuania, widening in this respect the suppliers’ spectrum. In the foreseeable future though, reliance is not expected to be eliminated, but merely decreased, and it is unlikely that Russia will drop its lion’s share in the European market easily by letting other suppliers bypass it.

New projects in the pipeline Until today, the gas industry’s focus was predominantly on the northern half of Europe, with the most recent example being the Nord Stream 2 project, which divided opinions. Nord Stream 2 will connect Russia and Germany this year by a 1200 km pipeline running through the Baltic Sea passing though the waters of three other nations (Finland, Sweden and Denmark) with a nameplate capacity of 55 billion m3/yr of gas, thus strengthening Russian gas presence in Europe. However, there is a lot of activity in the southeast Mediterranean region, including, in particular, the Zohr discovery in Egypt, the Leviathan discovery in Israel, and the Aphrodite discovery in Cyprus, raising expectations that the eastern Mediterranean countries may play a pivotal role in shifting the industry balances and focus.

The Zohr field discovery of offshore gas in Egypt with an estimated 30 trillion ft³ of original gas, the largest ever gas discovery made in the Mediterranean Sea, is well placed to reach plateau production of 2.5 billion ft3/d. The Zohr field, together with other discoveries in Egypt, is projected to lead to natural gas self-sufficiency levels in 2019, marking Egypt as an important export region and rebuilding its economy following the 2011 revolution. Also, a memorandum of understanding (MoU) was signed on 23 April 2018 between the EU and Egypt. The MOU aimed to consolidate Egypt’s presence in the gas market, therefore assisting the EU in its goal to secure gas supply from a diversified supplier base.

The Leviathan offshore deepwater gas field, one of the world’s largest offshore gas fields found in the past decade with an estimated 22 trillion ft3 of gross recoverable resources, is on track to be completed and is expected to begin delivering gas by the end of 2019. This gas will be sourced to Israel through a pipeline aiming to satisfy its domestic growing gas demands, but also to be exported. As announced recently, there are already multiple agreements in place between Israel and Egypt whereby gas from the Leviathan and Tamar fields will be exported to Egypt using the existing pipeline networks. Expanding pipeline infrastructure to Jordan, for Leviathan gas to be sold as of 2020, is another project currently underway envisaging US$10 billion worth of natural gas to be sold over 15 years in the Jordanian market. Israel is en route to solidifying its economic ties with its neighbours and its presence in the gas market.

The Aphrodite field, with an estimated 5 – 8 trillion ft3 of resources, located off the southern coast of Cyprus, has

caused a lot of controversy over ownership and territorial rights to its gas reserves among Cyprus, Turkey and Israel. Further to the 2017 bilateral preliminary agreement, Cyprus and Egypt agreed to transport gas from the field to the Egyptian liquefaction plants in Idku and Damietta in order to be re-exported to Europe and elsewhere. By virtue of a pipeline inter-governmental agreement signed on 19 September, the construction of a subsea pipeline connecting the Aphrodite gas field to Egypt will allow gas to commence flowing to Egypt in 2022. These two Egyptian liquefaction plants have been idle, but, given the new gas landscape in the region, they are practicable and cost-efficient solutions both for Israel and Cyprus, which do not possess their own facilities, to process and distribute their gas reserves not only to the European market, but also to Asia through the Suez Canal.

In February 2018, the discovery of the Calypso field off the coast of Cyprus was announced. The Calypso field was characterised as geologically comparable to the giant Zohr field, marking the second substantive discovery in the Cypriot exclusive economic zone and increasing the country’s momentum.

The Trans Adriatic Pipeline (TAP) is the final leg of the Southern Gas Corridor (SGC) project that will be ultimately connecting Italy to Azerbaijan through Turkey (Trans-Anatolian Pipeline). Once completed, it will source approximately 10 billion m3 of natural gas in the European markets by 2020, which has the potential to transform Italy into a gas hub due to its diverse source of suppliers as it is also connected to pipelines from Algeria, Libya and Russia, has regasification facilities, and is close to new discoveries in Egypt and Israel.

The Eastern Mediterranean pipeline is another project under development, providing for construction of a 2000 km offshore gas pipeline with a capacity of 20 billion m3/yr, linking both Israeli and Cypriot reserves to Greece and through the Poseidon and Gas Interconnector Greece-Bulgaria (IGB) pipelines to Italy and other southeastern European countries by 2025. This project, once completed, is likely to help cement Italy’s position as an energy hub.

ConclusionWhilst dependency on Russian gas appears to grow, on the geographical antipode, the East Mediterranean region has proven to hold vast gas wealth and increased exploration efforts are underway setting milestones in the gas industry. The established synergies in the Mediterranean region positively contribute to the European objectives of diversification and security of supply. It is, however, undeniable that the exploitation and monetisation of the resources come with considerable challenges relating to the region’s complex political landscape and lack of technical infrastructure.

Though there are plans to invest in regasification infrastructure in many European regions, including in the Mediterranean, the emphasis is still on investing in transnational pipelines, which, in the long-run, will make the commodity more marketable, immediately available and less expensive. Regardless, LNG is still key in diversifying the sources and enabling other nations such as the US, Nigeria and Trinidad & Tobago, not adjacent to Europe or the Mediterranean, to distribute their gas into the market and increase competition.

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