LNG Industry December 2009

LNG 16 - The International
Conference & Exhibition

on Liquefied Natural Gas
18-21 April 2010
Oran Convention Centre
ORAN - ALGERIA
A supplement to Hydrocarbon Engineering
Winter 2009
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03 Comment
05 LNG news
10 LNG in Europe
Andy Flower, Waterborne Energy, UK, explores industry developments in Europe
16 Australias energy future
Ng Weng Hoong, LNG Industry Correspondent, discusses the potential of the
new Australian gas fields
21 Embracing e-trading
Roger Aitken, on behalf of Trayport Ltd, UK, and Dan Smith, Trayport, UK,
examine whether a more efficient and transparent method for price negotiation
of LNG could successfully evolve
28 Oil and gas development in Algeria
LNG16 Executive Committee, Algeria, discusses the oil and gas potential of Africa, and
the upcoming LNG16 conference
31 LNG - the marine fuel of the future
Hkan Werner and Kjetil Sjlie Strand, I.M. Skaugen, Norway, explore small scale
LNG supply chains and bunkering infrastructure
36 Delivering a new FSRU
Blake Blackwell, Golar LNG Energy, UK, presents an insight into delivering the
worlds first FSRUs based on the conversion of an existing LNG carrier
44 LNG tandem offloading
Leen Poldevaart, Jean-Pierre Queau and Perry Adams, SBM Offshore, Monaco,
discuss the logistics of offshore LNG offloading
49 Standardising offshore transfer
Leiv Kallestad, TORP Technology AS, Norway, discusses a standardised approach
to offshore LNG transfer
53 Efficient operation at peak times
Eric Frey, Brian Eisentrout and Jan Snyder, CB&I, USA, explain how solutions for
peak shaving facilities are required as gas composition continues to change
57 Going green
Kamal Shah and Judy Wong, Aker Solutions US Inc., USA, and Bill Minton,
Advantage Fuels, USA, consider ambient air based technologies when building
LNG regasification terminals
65 A logistical challenge
Emmanuelle Rauline, Franois Fvrier and Nicolas Bilbault,
GEA Batignolles Technologies Thermique, France, discuss logistical solutions for
remote LNG facilities
69 Its all in the design
Michael Cords, Ebara International Corp., USA, explores how NPSHR performance
can be affected by different inducer designs
The LNG Exhibition and Conference takes place every
three years with producer and consumer countries
taking turns to organise the event. In 2010, LNG16
will be conducted in Oran, Algerias second largest
city. Oran has all the assets to host a world event
of this magnitude: strategic geographical location,
modern services network, experience in organising
large events and its special hospitable character.
For Reader Enquiries visit:
www.lngindustry.com
ON THIS MONTHS COVER
LNG 16 - The International
Conference & Exhibition
on Liquefied Natural Gas
18-21 April 2010
Oran Convention Centre
ORAN - ALGERIA
A supplement to Hydrocarbon Engineering
Winter 2009
Winter 09 | LNGINDUSTRY.COM 1
Contents
|WINTER 2009|
ISSN 1468-9340
Copyright
Palladian Publications Ltd 2009. 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 does the Publisher
endorse any of the claims made in the articles or the
advertisements. Printed in the UK.
LNG Industry is audited by the
Audit Bureau of Circulations (ABC).
An audit certicate is available on
request from our sales department.
Comment
T
he world is now cautiously eyeing the
Arctic, anxiously noting incremental
degrees of thaws and freezes, and
deducing what this might mean for
future energy production in both
positive and negative terms. The shocking claim
that the Arctic sea will be completely ice-free
during the summer within 20 years illustrates
just how indeterminate the environment that
we live in continues to be. On one hand, an
ice-free summer would spell easier oil and gas
exploration in the region. The Northwest Passage
could become a watery bridge for commercial
enterprises, potentially allowing us to tap into
vast swathes of previously inaccessible resources,
and turning back the clock on our inexorable
global fossil fuel decline. The downside to the loss
of the worlds most fragile region is a medley of
catastrophic predictions that no one really wants to accept as possible.
And its not just the natural environment that holds uncertainty for us in the
near future. The global political climate can be just as ambiguous. With Asian LNG
traditionally linked to oil prices, and US LNG prices determined by the gas market,
global LNG pricing has been predicted to come closer in the future. The gap in
pricing will be bridged by countries like Qatar, which continues to be pivotal in
driving LNG exports around the world. Opportunities will continue to expand for
LNG strong in its advantage of being shippable to anywhere in the world, and a
comparatively carbon-friendly energy source.
Natural gas has been tipped as the bridge fuel to a more environmentally
stable future. In his speech at the World Gas Conference in Buenos Aires in
October, BPs Tony Hayward said, I dont think we can afford to wait. We need to
take carbon out of the energy mix today. [] I can see only one way of doing it
by increasing the use of natural gas. But as the Arctic polar bears finally steady
themselves on the thick ice in their ever-limited cold December days, the most
imminent bridge for us to cross this month towards a more stable future will be the
United Nations Climate Change Conference in Copenhagen.
Editorial/Advertisement Ofces, 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
LNG Industry is a supplement to Hydrocarbon Engineering
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Subscriptions Laura Cowell
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CONTACT I NFORMATI ON
Anna Scordos
Editor
Changing the world of LNG through innovation
www.golarlng.com
Liquefaction
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ExxonMobil has reached a preliminary deal to sell 2 million tpy
of LNG from its Papua New Guinea operation to Sinopec. This
is likely a precursor to a long term contract between the two
companies to supply Chinas long term energy needs, which are
set to triple in the next 10 years, potentially reaching
18 million ft
3
/d in 2020.
The imported LNG will feed the Quingdao terminal being
built in Shangdong province, which is scheduled to come online
in 2014. Sinopec is also planning a string of other terminals
along Chinas coastline, including one in the planning stages at
Huangmao island in Zhuhai, which will supply the neighbouring
market of Macao.
The deal represents an attempt by Sinopec to expand its
share of the domestic market, currently dominated by Petrochina
and China National Offshore Oil Corp., which previously had
been thwarted by a lack of LNG supplies. Although it still has
a way to go to catch its rivals, who already have two and three
LNG terminals respectively, in various stages of development.
As a result of slumping gas prices in the USA brought on
by the economic recession, Qatar is to start diverting LNG
supplies from the USA to China. In total it will amount to
10% of LNG shipments; approximately 5 million tpy. Qatar
plans to produce 77 million tpy of LNG by September 2010,
and is now looking to negotiate more long term supply
contracts with China.
Domestic gas prices in the USA are being pressured by
increased domestic supply, low demand and record high
inventories, which has deterred producers from shipping LNG to
America; gas prices there have dropped by more than 60%.
China on the other hand, is a very attractive market at the
moment, with economic growth this year of 8%, compared
with a US economy still struggling out of recession.
Indeed, China is likely to become one of the worlds largest
consumers of LNG in the future. This is likely to continue with
China National Offshore Oil Corp. negotiating a 25 year supply
deal with Qatargas.
Yemeni President Ali Abdullah Saleh and Yves Louis Darricarrere,
the Head of Exploration and Production at French oil company
Total SA, inaugurated the first shipment of LNG from Yemens
new US$ 4.5 billion LNG facility at the port of Balhaf, on
the Arabian sea. The project is part of plans by the Yemeni
government to expand oil and gas revenues in the impoverished
state.
The first processing train came online on 15 October and
a second train will come online once construction is finished.
When fully operational, the plant is expected to produce
approximately 6.7 million tpy of LNG, and will help Total
close the gap with larger European based LNG suppliers
Royal Dutch Shell plc, BP plc, and BG Group plc.
The Yemen LNG joint venture is owned by a group of
shareholders, with Total taking 40%. Other shareholders include
Korea Gas Corp., Dallas based Hunt Oil Co., Yemen Gas Co.,
South Koreas SK Corp., Hyundai Corp. and Yemens General
Authority for Social Security and Pensions.
PAPUA NEW GUINEA \\ Sinopec to buy LNG from ExxonMobil
CHINA \\ Qatar to divert LNG to China
YEMEN \\ First LNG exports leave country
LNG News
// DIARY DATES
BP Trinidad and Tobago (BPTT) has
announced the start of natural gas
production from the Savonette field,
offshore Trinidad. Savonette is located
in 290 ft (88 m) of water approximately
50 miles off Trinidads southeast coast.
BPTT holds a 100% interest in the field.
Production from the platform is
tied into BPTTs Mahogany B platform,
via a 26 in. diameter 5.3 mile subsea
pipeline, where the gas is processed
and then exported into BPTTs existing
infrastructure.
Gas from Savonette will supply
Atlantic LNGs liquefaction plant for
export as LNG to international markets,
as well as the domestic market. With
Savonette, BPTT now has production
from 12 offshore platforms.
Production from Savonette is
expected to average 600 million ft
3
/d of
gas, plus associated condensate, from
four wells. Savonette production will
contribute to maintaining BPTTs
total production level at more than
450 000 bpd of oil.
The Savonette platform, installed in
February 2009, is the fourth in a series
of normally unmanned installations,
designed and constructed locally in
Trinidad using a standardised clone
concept. The 1898 t jacket and the
871 t topsides were built at the
Trinidad Offshore Fabricators (TOFCO)
yard in La Brea, south Trinidad.
The Savonette platform has
high Trinidadian local content with
some 30% of its total engineering,
procurement and construction value
being spent in the country and with
T&T nationals being responsible for 55%
of the project management hours, and
98% of total fabrication hours.
TRINIDAD & TOBAGO \\
Gas production starts at
Savonette
GE Oil & Gas has been awarded a
competitive bid, worth over
US$ 400 million, to deploy advanced
LNG technology for the development
of Gorgon, one of the worlds largest
untapped natural gas fields, which
also features the worlds largest
ever CO
2
sequestration technology
project.
GE will supply Chevron with
equipment to fulfil Gorgons LNG
production and CO
2
sequestration.
This includes three main refrigerant
compression trains required for
Gorgons production of 15 million tpy
of LNG, and six compression trains
required to drive Gorgons pioneering
CO
2
sequestration project.
The demand for natural gas,
which plays a vital role in balancing
economic growth and environmental
responsibilities, is expected to grow
by more than 67% by 2030.
The Gorgon projects estimated
economic life is at least 40 years. In
addition to natural gas supply for
domestic Australian use, Gorgon is
critical to meeting Asias growing
need for cleaner energy.
Globally, the net impact of
using Gorgon LNG will result
in approximately 45 million t
less greenhouse gas emissions,
when compared with coal. This is
equivalent to taking around
two-thirds of all Australian
vehicles off the road.
GEs main refrigerant
compression trains and compression
trains for CO
2
sequestration will be
manufactured and tested in Florence
and Massa, Italy, then shipped in
2011 and 2012.
ITALY \\ GE awarded
Gorgon contract
1 - 4 December 2009
10
th
Annual World LNG Summit
Barcelona, Spain
www.cwclng.com/worldlng2009
t: +44 20 7978 0000
e: bookings@thecwcgroup.com
20 - 21 January 2010
Global Floating LNG Summit
London, UK
t: +44 20 7368 9300
e: enquire@iqpc.co.uk
26 - 27 January 2010
European Gas Conference
Vienna Marriott Hotel,
Vienna, Austria
t: +44 207 067 1800
e: c.brown@theenergyexchange.co.uk
28 - 29 January 2010
Gas Transport and Storage Summit
Radisson BLU Scandinavia Hotel,
Dusseldorf, Germany
t: +44 20 7202 7511
e: richard.jones@wtgevents.com
17 - 19 February 2010
Meet The Buyer Oil and Gas
Marriott Courtyard,
Dubai, UAE
t: +44 1276 682898
e: info@coplandevents.com
18 - 21 April 2010
16
th
International Conference & Exhibition
on LNG (LNG16)
Oran, Algeria
www.lng16.org
t: +44 20 7596 5000
f: +44 20 7596 5111
e: LNG16conference@ite-exhibitions.com
6 LNGINDUSTRY.COM | Winter 09
LNG News
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A joint venture between Linde North America and
Houston based Waste Management, is now producing clean
renewable vehicle fuel from its plant at the Altamont landfill
near Livermore in California.
The US$ 15.5 million plant purifies and liquefies gas that
Waste Management collects from decomposing organic
waste at the site, and is expected to be able to produce
13 000 gal./d of LNG when the plant reaches full capacity in two to
three months. This should enable the plant to provide fuel for 300
of the 485 waste hauling vehicles in 20 Californian communities.
The plant required a unique four step liquefaction process to
clean up the impurities in the liquefied gas, and remove all the
carbon, nitrogen, sulfur and alcohols. The environmental gains
are substantial though, and the project is expected to reduce CO
2

emissions by 30 000 tpy. The plant is also powered by electricity
generated by landfill gas, so the process is entirely renewable.
Better management of capacity could lead to a stabilisation
of the LPG shipping sector in 2010, however, dry bulk and
container shipping are still going to come under pressure
resulting from limited demand and oversupply.
This stabilisation in the LPG and LNG sector is expected
because fleet growth is decreasing in the sector for 2010 and
2011, and this decrease should help alleviate the oversupply
problem. The same cant be said for other shipping sectors, with
more ships being delivered and even more on the order books
at shipyards. This will not help an industry where approximately
10% of the global container fleet is idle and spot rates across
most shipping sectors are at a five year low.
The financial repercussions will be more long term; the
overhang of shipping assets requiring funding is valued at
approximately US$ 350 billion. A lot of the new vessels that
have been ordered and are being built have not been financed,
and the banking sector will have some difficulty financing all the
vessels coming onstream.
Chevron Corp. announced that it signed an agreement with
Apache Julimar Pty Ltd, a subsidiary of the Apache Corp.,
and KUFPEC Australia (Julimar) Pty Ltd, a subsidiary of the
Kuwait Foreign Petroleum Exploration Company k.s.c., to bring
them into Chevrons Wheatstone LNG project as natural gas
suppliers and 25% equity partners in the project facilities.
Under the agreement, Apache and KUFPEC will provide
natural gas from their Julimar and Brunello fields, located
in northwestern Australia, to supply 25% of the inlet gas
to Trains 1 and 2 of the Wheatstone project. Apache will
assume a 16.25% equity interest and KUFPEC an 8.75%
equity interest in the project. Chevron will remain the project
operator.
John Gass, President, Chevron Global Gas, added, Creating
the Wheatstone project as an LNG hub will continue to help
unlock natural gas resources in the Carnarvon Basin and
establish a new source of LNG from Australia for customers in
the Asia-Pacific market.
USA \\ Landfill waste LNG to power Waste Management haulage fleet
SINGAPORE \\ LPG shipping sector likely to stabilise in 2010
AUSTRALIA \\ Wheatstone project takes on two new partners
LNG News
J
anuary 2009 marked the 50
th
anniversary of the first
LNG cargo transported by ship. The Methane Pioneer, a
bulk carrier built during the Second World War, which
had been converted to carry LNG by installing specially
designed tanks, transported approximately 5000 m
3
of LNG from
a small liquefaction plant at Lake Charles in Louisiana, USA, to
Canvey Island in the UK. Five years later, in October 1964, the
first regular commercial shipment of LNG commenced, with the
arrival of the purpose built Methane Princess at the Canvey Island
terminal, with a cargo from Arzew in Algeria.
Europe can therefore be said to be the birthplace of LNG
imports, but Asia became the focus for growth, following the
start of LNG imports from Kenai, Alaska, into Japan in 1969. As a
country with very limited natural gas reserves, and where pipeline
imports have not been technically or economically feasible, Japan
needed LNG imports to diversify from its dependence on oil, and
to provide a cleaner burning fuel. Downstream gas demand grew
rapidly and by the early 1980s Japan was importing over 75%
of global LNG production. The growth in Asian LNG imports was
boosted by the start of imports into Korea in 1986, and Taiwan in
1990, and more recently by the opening of receiving terminals in
India and China. Asia accounted for 68% of global LNG imports
in 2008.
Growth of LNG imports
In contrast, the growth of LNG imports into Europe has been
more gradual because LNG has had to compete with pipeline gas
in most countries. The discovery of natural gas in large quantities
in the UK and Norwegian sectors of the North Sea from the
mid-1960s, together with the build-up of pipeline imports from
Russia, has meant that LNG has had to play a supplemental
role to pipeline gas in the eight countries that currently import
LNG (the UK, France, Spain, Italy, Belgium, Turkey, Greece and
Portugal). Only in Spain and Portugal does LNG account for more
than 50% of the total gas supply.
As Figure 1 shows, LNG accounted for 10.4% of Europes
1

natural gas supply in 2008. Domestic production, mainly in
Norway, the UK and The Netherlands, but including more limited
contributions from other countries such as Germany and Italy,
provided just over half of Europes supply. Imports by pipeline
from North Africa, Algeria and Libya into Spain and Italy met
8.5% of Europes gas supply, but the main source of imports was
the former Soviet Union with a total share of 30.1%. Most of this
gas comes from Russia, but Turkmenistan, Azerbaijan and other
central Asian Republics are also sources of supply.
The role of LNG in Europes natural gas supply looks set
to increase in the future. Governments and buyers are
increasingly concerned about security of supply, as domestic
production declines and the dependence on imports
increases. In January 2009, the supply of gas from Russia was
interrupted by the dispute between Russia and the Ukraine
over the prices the latter pays for its natural gas
imports. Approximately
80% of the gas that flows from
Russia to Europe passes through
the Ukraine, and while the dispute
did not involve Russias customers
in the rest of Europe, they saw
their supplies reduced in the
middle of one of the coldest
winters for many years. It is
the third time since 2005
that relations between Russia
and the Ukraine have led to
interruptions to supply, although
in the past the disruption has
been for a much shorter
time and has had a lesser
impact.
A renewed interest in LNG
imports
Gas buyers and governments see LNG as providing access
to international sources of gas supply, potentially reducing
the dependence on Russian gas and thereby increasing the
security of supply. In some of the countries that now import
LNG, receiving terminal capacity is being increased, while several
countries are planning to become importers.
A second factor behind the renewed interest in LNG
imports has been the growth in the spot and short term
trading of LNG over the last decade. Companies involved in
this activity want access to the flexible gas markets in northwest
Europe, especially the UK, but also northern France, Belgium and
The Netherlands, since it positions them to take advantage of
price differences with the USA and other global markets, and add
value to their LNG portfolios.
LNG in
ANDY FLOWER, WATERBORNE ENERGY, UK,
EXPLORES INDUSTRY DEVELOPMENTS IN EUROPE.
Luroe
Spain
Figure 2 shows the build-up of LNG imports into Europe over
the 44 years between the arrival of the first cargo into the UK
in 1964 and in 2008 when imports reached 43.3 million t,
equivalent to 58.5 billion m
3
of natural gas. Spain is Europes
largest and the worlds third largest importer of LNG, after Japan
and Korea. In 2008, its imports of 22.1 million t (29.8 billion m
3
)
represented just over 50% of the European total. LNG met
73% of Spanish natural gas demand, making it the European
country most dependent on LNG. The reason for Spains
dependence on LNG lies in the geography of the country, with
the Pyrenees Mountains having been a barrier to the construction
of pipeline connections with the French and the wider European
gas grid. There are only two small pipelines at the western end
of the Pyrenees linking France and Spain, one of which is used to
carry gas contracted by the Spanish gas company, Gas Natural,
from Norway.
The lack of pipeline connections to the north means that
Spain has only two options to access natural gas imports, which
it needs, given its limited domestic reserves and production. It can
import gas from Algeria through the Pedro Duran Farrell
pipeline, which passes through Morocco and across the
Straits of Gibraltar, or it can import LNG. This pipeline was
commissioned in 1996, with an initial capacity of 8.5 billion m
3
/y
(equivalent to 6.3 million tpy of LNG), and was expanded to
11.5 billion m
3
/y (8.5 million tpy of LNG) in 2004. Approximately
2 billion m
3
/y of the pipelines capacity is used to supply gas to
Portugal. Spain was forced to turn to LNG to meet the rapid
growth of gas demand between 2000 and 2008, largely as a
result of its use for power generation, which increased at an
average rate of 44% per annum.
As the largest importer of LNG it is not surprising that Spain
has more LNG terminals than any other country in Europe.
Six facilities are currently in operation and a seventh, the
El Musel terminal near Gijon in the north of the country, is under
construction.
France
France is Europes second largest market for LNG, with imports
of 9.5 million t (12.8 billion m
3
) in 2008. It is well connected to
the European gas grid, and has the option of increasing pipeline
imports into the north of the country and diverting LNG to
alternative, higher priced markets. This has resulted in the level of
LNG imports fluctuating over the last few years. France now has
two terminals in operation, Montoir at the mouth of the
River Loire on the Atlantic coast and Fos Tonkin near Marseille in
the Mediterranean. The latter facility can only receive ships of up
to 75 000 m
3
capacity, and is used mainly for the import of LNG
from Algeria. A second facility, Fos Cavaou, has been built close
by and will have the capacity to unload larger ships. It was due
to receive its first cargo in July but the local authority removed
its operating permit at the last minute after a court upheld an
appeal by a pressure group. Startup is now expected around the
end of 2009 or early 2010.
UK and Italy
The UK and Italy were both early LNG importers and in both
countries LNG imports were interrupted for extended periods of
time. In the UK, the discovery of natural gas in the North Sea
less than a year after LNG imports commenced, resulted in the
country becoming self-sufficient in natural gas. LNG imports
stopped when the original contract with Algeria expired in the
early 1980s, and the terminal at Canvey Island was converted
to an LPG facility. However, the rapid decline in North Sea gas
production has resulted in the country turning once again to LNG
imports. It now has four LNG receiving terminals in operation,
two of which were commissioned at Milford Haven in
southwest Wales in 2009.
In Italy, the arrival of pipeline gas from Algeria through the
Enrico Mattei pipeline, which transits Tunisia and Sicily, meant that
LNG was no longer required and the single terminal at Panagalia
in the northwest of the country was largely unused from
1981 - 1996. Public opposition to LNG receiving terminals has
resulted in Panagalia remaining the countrys only import facility,
until August 2009, when the Adriatic LNG facility, a gravity based
structure, located approximately 15 km (10 miles) off the Veneto
coastline in northeast Italy, received its first cargo from Qatar. Figure 3. Sources of European LNG imports 1980 - 2008.
Figure 2. European LNG imports 1964 - 2008.
Figure 1. European natural gas supply in 2008.
Specialist services
for the
LNG industry
PNS (UK) Ltd
Unit A2 Foxbridge Way
Normanton, Wakefield
United Kingdon
WF6 1TN
Tel: +44 (0)845 604 0281
Email: info@pnsuk.com
PNS BV
Phileas Foggstraat 65
Emmen, Drenthe
The Netherlands
7825 AL
Tel: +31 591 668155
www.pns-services.com
Nitrogen Services
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Critical Joint Management
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Helium Leak Testing
Process System Drying
Nitrogen Purging
Nitrogen Pre-Cooldown
Camera Inspection
Subsidiary offices in: Germany, France, Italy, Spain, Libya, Croatia, Middle East and China
A second offshore terminal, this time using a ship as a floating
storage and regas unit (FSRU), is being developed off Livorno in
the northeast of the country. Construction of an onshore terminal
at Porto Empledocle in Sicily is scheduled to start in 2010. Overall,
Italy appears to be set for a significant increase in LNG imports,
some 40 years after its first cargo arrived.
Belgium
The Zeebrugge terminal in Belgium was built to receive LNG
under the long term contract that the countrys main gas
company, Distrigas, had with Algeria. The contract was not
renewed when it expired in 2006 and the terminal has been used
since 2007 mainly to import LNG from Qatar under a long term
contract between Distrigas and RasGas, and a more flexible and
shorter term contract that RasGas has with French company
EdF Trading. The terminal has also received spot cargos from
Egypt, Nigeria, Norway, Trinidad and Tobago, and Malaysia in the
last three years. It now acts as a re-export facility with LNG being
reloaded onto ships. Cargos were delivered to Korea, India and
Spain in 2008.
Turkey
Turkey turned to LNG imports in 1994 to reduce its
dependence on pipeline imports, which come from Russia,
Iran and Azerbaijan. It has two terminals in operation, the
Marmara Eregelisi terminal, 95 km south of the capital Istanbul,
which is owned and operated by the countrys main gas company
Botas, and the Aliaga terminal near Izmir, which was built by
an entrepreneur and was idle for several years after completion,
before a growing need for imports led to its activation in
December 2006. Initially it was used to import cargos for Botas,
but in 2009 the terminals owner and operator, Egegaz, imported
two cargos directly from Qatar.
Portugal and Greece
Portugal and Greece each have one LNG terminal, which was
built to diversify natural gas supply from dependence on pipeline
gas from Algeria and Russia respectively. Portugals main source of
LNG supply is Nigeria, while Greece receives most of its LNG from
Algeria.
Sources of supply
The increase in Europes LNG imports in the last decade has
brought with it a diversification of the sources of supply as is
shown in Figure 3. From 1964 - 1998, Algeria supplied
over 90% of Europes LNG imports. Libyas Marsa-el-Brega
liquefaction plant, which has been operating at well below its
design capacity, was the only other significant source of supply.
A few cargos were imported on a spot basis from the Middle East
and Australia in the mid-1990s, when Algerias LNG output was
reduced as it revamped its liquefaction facilities.
As can be seen in Figure 4, Algerias share of Europes LNG
supply fell to just over a third in 2008. Nigeria is the second
largest supplier with a 28% share, while Qatar, which accounted
for 13.7% of the supply, is now the third largest followed by
Egypt and Trinidad. Oman, Libya and Norway were the other
suppliers in 2008.
European LNG terminals
Europe now has a well developed infrastructure of LNG import
facilities. In September 2009, 19 terminals were in operation
(see Table 1), including three that have started up in 2009:
South Hook and Dragon LNG in the UK, and Adriatic LNG in Italy.
The total capacity of the facilities now in operation is estimated
at 107 million tpy (144 billion m
3
/y), close to two and a half times
the actual level of imports in 2008.
2
Terminals were, on average,
operating at a load factor of just over 50%.
Terminals in the UK, Spain, Portugal and Greece are being
expanded, while four new terminals are under construction in
Spain (El Musel), France (Fos Cavaou), Italy (offshore Livorno) and
The Netherlands (the Gate terminal in Rotterdam). They will add
an estimated 48.4 million tpy (75.3 billion m
3
/y) to Europes LNG
import capacity taking the total to approximately 155 million tpy
Figure 4. Europes LNG imports by source in 2008.
Table 1. LNG imports and terminal capacity in Europe
Country LNG
imports in
2008 in
million t
Number of
terminals
in
operation
LNG
import in
operation
Capacity
in million
tpy under
construction
Spain 22.1 6* 41.8 12.4
France 9.5 2 10.7 16.8
Portugal 2.0 1* 3.3 1.9
Turkey 4.1 2 8.3 -
Greece 0.7 1* 3.3 -
Italy 2.1 2 8.6 3.4
Belgium 2.1 1 6.7 -
UK 0.8 4* 35.0 5.0
The
Netherlands
- - - 8.9
Total 43.3 19 107.0 48.4
Note: *Capacity at operating terminals is being expanded.
Table 2. Estimated LNG imports into Europe from January to
September 2008 and 2009
Country Jan - Sept
2008 in
million tpy
Jan - Sept
2009 in
million tpy
Increase in
million tpy
% change
Spain 16.4 15.0 -1.4 -8.6%
France 6.9 7.1 0.2 3.1%
Portugal 1.5 1.7 0.2 13.8%
Turkey 3.2 3.0 -0.1 -4.4%
Greece 0.5 0.5 0.0 6.8%
Italy 1.6 1.4 -0.2 -10.4%
Belgium 1.4 3.9 2.5 175.8%
UK 0.3 4.4 4.1 1595.0%
Total 31.7 37.1 5.3 16.8%
(209 billion m
3
/y) by 2012, when the construction work is
scheduled to be completed. The opening of the Gate terminal in
The Netherlands will bring the number of European LNG
importing countries to nine.
The expansion of Europes LNG receiving terminal
infrastructure is unlikely to stop there. A large number of new
facilities are at various stages of the planning process. There
are plans for Italy, France and the UK to add new terminals,
while countries seeking to start importing LNG include Poland,
Croatia, Albania, Cyprus, Germany, Bulgaria, Romania, Lithuania,
Estonia, Sweden and Eire. In the unlikely event that all the
planned terminals are developed, they would add at least another
100 million tpy (135 billion m
3
/y) to capacity.
Trading patterns
The spare LNG import capacity in Europe, especially in the flexible
LNG markets of the UK and Belgium, proved to be an important
factor in balancing global LNG supply and demand in 2009, when
the economic crisis resulted in a large reduction in demand
in major markets, including Japan, Korea, Taiwan and Spain.
Waterborne Energys European LNG edition, which is published
every two weeks, tracks the movement of cargos into Europe.
Together with its sister publications covering Asia and the USA
and the Americas, Waterborne LNG Europe has shown how
trading patterns have changed in the first nine months of 2009;
with Europe and the Americas increasing their imports while Asian
demand is falling.
In the first nine months of 2009, European LNG imports are
estimated by Waterborne to have increased by 5.3 million t, at a
time when Asian imports have fallen by over 7 million. As Table 2
shows, the main increases in imports have been in the UK, where
they have grown by 4.1 million t to over 15 times their level in
the same period of 2008, and in Belgium, where the increase
is 2.5 million t, or nearly three times the level in 2008. In both
Belgium and the UK, the main source of the additional imports
was Qatar but cargos were also received from other sources as
producers sought outlets for LNG cargos no longer required by
Asian buyers.
Elsewhere in Europe, the changes in the level of imports have
been much less dramatic. Spain reduced its imports by 1.4 million t
(8.6%), as its economy entered recession. Imports were also down
marginally in Turkey and Italy. France increased its imports by
0.2 million t (3.1%) and Portugal by 0.2 million t (13.8%).
The future
The trends that are being witnessed in Europe in 2009 look set
to continue over the medium term, as some 95 million tpy
(128 billion m
3
) of new liquefaction capacity comes onstream
between the beginning of 2009 - 2013. Beyond 2013, the
outlook is much less certain, with the progress of liquefaction
projects at the planning stage in the Atlantic Basin stalled by a
combination of low prices, high costs and some governments
prioritising domestic gas consumption over LNG exports.
Notes
For the purposes of this article Europe is defined as the 27 member
countries of the European Union plus Norway, Switzerland and Turkey.
Figures for the capacity of an LNG receiving terminal can vary
depending on whether they are based on baseload or peak capacity
and the source of the estimate. The data in Table 1 is the authors
estimates using information from a number of sources.
1.
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energy future
A
ustralia could well become the worlds next
energy superpower, with the recent spate
of announcements and deals involving the
development of LNG projects, and high value
export deals. Investors are at various stages
of developing 10 LNG projects in Australia
and Papua New Guinea worth more than AU$ 200 billion, backed
by freshly signed contracts to export record volumes of LNG to
Asian countries
1
.
Amid the worldwide economic gloom, Australia stands out as
the only advanced economy not to have gone into recession. Thanks
largely to buoyant exports to China and India, Australia has so far
avoided a technical recession, as defined by two successive quarters
of negative growth. To the envy of others, its economy grew
0.6% in Q2, the strongest showing by any advanced economy
during the downturn.
The governments forecast in May for the economy to contract
by 0.5% this year, now looks overly bearish. By 2010, the Australian
economy could be expanding by as much as 3.5%, probably the
fastest in the industrialised world.
While LNG markets are expected to be oversupplied in the short
term, Australias projects are based on long term projections of strong
Asian demand for cleaner burning fuels. The projects include four
proposals to convert coal seam gas, or coal bed methane into LNG.
As immediate proof, China and India signed separate blockbuster
deals with the developers of the giant Gorgon field off the state of
Western Australia, to import a total of AU$ 60 billion worth of LNG.
Gorgon leads the way
Australian Prime Minister Kevin Rudd has delivered on his promise,
by granting early production licences and retention leases for a
proposed AU$ 50 billion joint venture LNG development of the
Gorgon project. Jointly developed by Chevron (50% shareholder
and operator), ExxonMobil (25%) and Shell (25%), Gorgon
represents the start of a series of Australian LNG projects, according
to government and private economists. In September, the three
majors announced their long awaited joint decision to proceed with
Gorgons first phase. Chevron said Gorgon, its single largest project,
will account for 8% of global LNG capacity when operational.
Making the claim for Australias energy superpower status,
Federal Resources and Energy Minister, Martin Ferguson, flagged off
the Gorgon project with a ceremony in Perth last month, predicting
it will generate AU$ 300 billion in export earnings, and boost the
nations GDP by AU$ 65 billion over the 30 years of its lifespan. The
government expects to earn revenue of AU$ 40 billion, and predicts
it will lead to the domestic purchase of AU$ 33 billion worth
of goods and services. In addition, it is expected to support
10 000 direct and indirect jobs during the peak construction phase,
and 3500 direct and indirect jobs throughout the life of Australias
largest ever resources development, off its northwest coast.
The Greater Gorgon area has approximately 40 trillion ft
3
of
gas, sufficient to underpin the project for more than 30 years, said
Mr Ferguson. The consortium has announced plans to develop
three 5 million t LNG trains, one of the worlds largest CO
2
injection
projects, and a domestic gas plant. Speaking at the start of the
projects AU$ 50 billion first phase, he promised that Gorgon
will provide energy security for many decades, and stimulate
Australias economic growth. He added that Gorgon will also be
the worlds biggest CO
2
geological storage project. The Federal
government last month announced its decision to jointly accept
long term liability arising from the storage with the Western
Australian state government, clearing the way for the projects final
approval.
Mr Ferguson also pointed out that, the environmental benefits
of the Gorgon project will, however, be more far reaching. Every
tonne of CO
2
generated producing LNG in Australia, reduces 4 t of
CO
2
in Japan, and 9 t of CO
2
in China when used in place of coal for
electricity generation. Gorgons progress will encourage work on at
least another 10 projects, worth a total of AU$ 200 billion, in various
stages of planning in Western Australia, the Northern Territory,
NG WENG HOONG, LNG INDUSTRY CORRESPONDENT, DISCUSSES THE
POTENTIAL OF THE NEW AUSTRALIAN GAS FIELDS.
and Queensland. Some of these could start drawing in investment
funding worth tens of billions of dollars, over the next 18 months.
The Australian Petroleum Production and Exploration Association
has released its own forecast, for AU$ 220 billion worth of
new investments, that will create 50 000 jobs, and deliver
AU$ 10 billion/y in tax and government revenue. Merrill Lynch
agrees, putting the tab at more than AU$ 200 billion over the next
decade. In response to demand from Asia, Australia is in a strong
position to raise LNG production capacity from 20 - 50 million tpy by
2015, and possibly to 140 million t a decade from now.
Australia could capture 55% of the regions LNG demand of
164 million t by 2015, up from 13% last year, said Tony Regan, a
consultant at Singapore based Tri-Zen International. ConocoPhillips
Australia President, Joseph Marushack, said Australia could rise from
its current sixth position to displace Qatar as the worlds leading LNG
exporter by 2020.
PetroChina and Indias Petronet sign 20 year
supply deals
In August, the local affiliate of ExxonMobil secured two record
breaking 20 year deals to supply LNG to PetroChina and Indias
Petronet. The LNG supplies, worth a total of AU$ 60 billion, will be
sourced from ExxonMobils share of the Gorgon project. PetroChina
will import 2.25 million tpy of LNG, valued at approximately
AU$ 50 billion, making it the single largest trade agreement
between Australia and China.
ExxonMobils AU$ 10 billion agreement to supply Petronet,
represents Australias first LNG contract with India. The US major will
supply 1.5 million tpy of LNG to a new terminal under construction
at Kochi in southern India.
Describing it as an historic agreement, Luke Musgrave,
ExxonMobils Vice President for Australia LNG, said his company
regards Petronet LNG as a foundation customer for the Gorgon LNG
project. Petronet LNG Managing Director, Prosad Dasgupta, said the
deal will be supported by more than US$ 2 billion of related energy
infrastructure investment, in India. Energy consumers in Kerala state
will now have access to a clean burning base load fuel, which will
enhance the economic development of the region, and maintain the
pristine ecology of Kerala, he said.
ExxonMobils affiliate holds a 25% stake in the Gorgon
project, which include three 5 million tpy LNG processing trains.
Last November, Shell announced it had signed a 20 year agreement
to supply up to 2 million t of LNG to PetroChina, from its 25% share
of Gorgon.
Chevron to supply Japanese and Korean
companies
Not to be outdone, Chevron Corp. says its Australian subsidiaries
have secured long term supply agreements with Japanese
and Korean customers, for its 50% share of LNG from the
Gorgon project. The agreements are for a total supply of nearly
4.5 million tpy of LNG to Japans Osaka Gas and Tokyo Gas, and
South Koreas GS Caltex and Korea Gas. Chevron said it will be
supplying Osaka Gas with 1.375 million tpy of LNG for 25 years, and
1.1 million tpy to Tokyo Gas for the same period, both starting in late
2014. As part of the deal, Osaka Gas will acquire a 1.25% equity
stake in the project, while Tokyo Gas will purchase a 1% stake.
Separately, Chevron Australia Pty Ltd and Chevron International
Gas Inc., have signed agreements to supply 500 000 tpy to
GS Caltex Corp. for up to 20 years. The LNG will be supplied from
Gorgon and other fields within Chevrons global portfolio. Chevron
said the agreements with GS Caltex, a 50% owned subsidiary, have
paved the way for its entry into the South Korean LNG market. It will
also facilitate GS Caltexs expansion from refining, petrochemicals
and power, into the LNG business.
The Chevron subsidiaries later landed another agreement, to
deliver 1.5 million tpy to Korea Gas Corp. (Kogas) for 15 years
from the Gorgon project, with an option to extend the deal for
another five years. The parties are also discussing LNG sales, and
an equity purchase from Chevrons Wheatstone project, to be
located in the western Pilbara region, approximately 200 km south
of the Wheatstone natural gas field. Chevron Australia Managing
Director, Roy Krzywosinski said, This agreement represents the
largest, long term LNG sale between Australia and Korea, and the
first long term sale between Kogas and an Australian supplier.
Korea is the worlds second largest importer of LNG, and is a
desirable market for LNG.
The sale of Gorgon LNG to Korea reflects Australias growing
reputation as an LNG supplier. We expect to build on this
relationship with Kogas, as we move forward with our Australian
LNG projects. Describing the Japanese and Korean companies as
Gorgons foundation partners, Chevron Global Gas President, John
Gass, said, securing sales agreements with major customers in
Japan and Korea is a significant milestone in Chevrons efforts to
commercialise our equity natural gas, and grow our LNG business.
Jim Blackwell, President of Chevron Asia Pacific Exploration
and Production Co., added that the participation of Osaka Gas
and Tokyo Gas as equity participants in Gorgon, will help ensure
the projects long term success.
Chevrons Wheatstone natural gas project
edges closer to commercialisation
Apart from Gorgon, Chevron Corp. is also developing its fully
owned Wheatstone natural gas project in northwest Australia. In
July, Chevron awarded a major front end engineering and design
(FEED) contract to Bechtel Oil, Gas & Chemicals Inc., to develop
the projects first phase, comprising two LNG trains each with
a capacity of approximately 4.3 million tpy, and a domestic gas
plant. The facility will be supplied initially from Wheatstone, and
the companys operated Iago field.
Chevron expects to make a final investment decision on the
Wheatstone project in 2011. Discovered in 2004, Wheatstone
is located in the WA-253-P and WA-17-R permit areas in water
depths of approximately 200 m, while the adjacent Iago field was
discovered in 2000 and spans two retention permits, WA-17-R
and WA-16-R. Together, these fields hold enough natural gas to
supply a two train LNG development, said Chevron.
Origin Energy and ConocoPhillips
announce Australia Pacific LNG site
Australia Pacific LNG said it has secured the Laird Point site on
Curtis Island, in the Port of Gladstone, from the Queensland state
government, as the site for its proposed LNG plant. The company,
an equal joint venture between Australias Origin Energy and
US ConocoPhillips, to convert coal seam gas (CSG) to LNG, also
released results from a study by KPMG Econtech, which highlights
the economic benefits and jobs the project would create.
Origin Managing Director Grant King said, Australia Pacific
LNG reported a 52% increase in reserves at a proved and
probable (2P) level, from 4.6 trillion ft
3
in 2008 to 6.9 trillion ft
3
in
2009. This reserves increase demonstrates the size and quality of
the CSG resource available to Australia Pacific LNG.
With the largest CSG reserves in the country, the
announcement of the site for the Australia Pacific LNG plant at
Laird Point is another significant milestone in the development
of the project, as we move towards the final investment decision
proposed for the end of 2010, and the first production train,
which is planned to be completed by the end of 2014.
Malaysia to import 2 million tpy of LNG
from Australia
In June, Malaysian state energy company Petronas signed
a contract with the Australian consortium GLNG, to import
2 million t of LNG for 20 years, starting in 2014. Petronas, which
owns a 40% stake In the GLNG consortium, has the option to
purchase an additional 1 million tpy, on the condition that a final
investment decision on the proposed GLNG project is reached,
sometime in the first half of next year.
The LNG will be consumed in gas rich Malaysia, reflecting
the countrys growing energy demand, and a likely shortfall in
its future energy balance. Led by the 60% owner, Santos of
Australia, the multibillion dollar GLNG project is expected to
become the worlds project to develop LNG from coal seam gas
(CSG) or coalbed methane (CBM).
The consortium will extract gas from the Surat and
Bowen Basins, in the southwestern part of Queensland state, pipe
it 435 km to Gladstone where it will be chilled to -161
C, and
liquefied for transport by ship to overseas markets. In 2008,
Malaysia earned RM 40.7 billion from its record LNG export of
22.87 million t, according to Bank Negara Malaysia. Domestic gas
discoveries off Peninsular Malaysia, which supply more than 75%
of the countrys gas market, are dwindling.
David Knox, CEO of Santos, said the marketing agreement
confirms Petronas, a net gas exporter, as a foundation customer
of GLNG. He said, The development of the GLNG project will
bring long term benefits to the communities (in Queensland) in
which we are working, from our coal seam gas fields around
Roma, to the site of the LNG plant in Gladstone. Up to 6000 jobs
would be created in the development of the three train LNG plant
outlined in the environmental impact statement recently
submitted to the Queensland state government.
Concern over rising costs and poor
economics
The implementation of these mega projects has not all been
smooth sailing though. The partners in the Browse LNG project
are squabbling over the initial, estimated AU$ 50 billion cost,
that would make it just as costly as the much larger Gorgon LNG
project. Gorgon, the countrys largest gas project, has almost
three times the amount of gas reserves as Browse, which includes
the Torosa, Brecknock and Calliance fields, with total reserves of
approximately 14 trillion ft
3
of gas.
However, Woodside Petroleum, the operator and 50%
owner of Browse, has disputed this estimate, leaked to the local
media, possibly by one or more of its partners, which include
Chevron, Shell, BHP Billiton and BP. The partners are also said to
be in disagreement with Woodside over the projects execution.
Woodside wanted to build a costly plant for Browse gas in
Kimberly, while its partners are seeking a lower cost option, which
would involve processing Browse gas at an existing Woodside
operated plant at Karratha. That facility currently processes gas
from Australias Northwest shelf.
Poor economics may force developers to merge other coal
seam based LNG projects, amid weak energy prices and rising
costs. The alternative would be for some of the projects to be
cancelled. There are four major and three smaller LNG projects
in the northeastern state of Queensland. In the states Gladstone
region alone, there are four projects.
Analysts believe the developers will realise it is not viable for
them to undertake their projects separately, as they face high
construction costs and uncertain market conditions. One possible
option could be to merge the projects of Santos-Petronas with
either ConocoPhillips or Origin.
References
US$ 1 = AU$ 1.13. 1.
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W
ith the
spotlight
of the
LNG
markets attention
turning to the Australian
federal governments
decision to grant
environmental approval
for the AU$ 50 billion
(approximately
US$ 42 billion) Gorgon
project, one of the worlds
biggest LNG developments,
some experts are now
asking whether greater
pricing transparency can
come to a commodity that
has traded on a bilateral
basis and largely in secret.
The Gorgon
development, which should
have global significance
given that it is estimated to
have a resource base of over
40 000 billion ft
3
of gas and
an estimated economic life
of at least 40 years from the
time of startup, would be
a shot in the arm for LNG
supplies, particularly when
supplies had until recently
been limited.
When completed,
the project would be
an additional source of
LNG supply, especially
to Asia-Pacific buyers,
says Obindah Wagbara,
an expert in petroleum
economics at the University
of Dundees Centre for
Energy, Petroleum and
Mineral Law & Policy.
However, he adds that its
impact on transparent LNG
pricing would depend on
the pricing regime used in
the export contracts.
Global LNG
supply
The significance of the
Australian move should
also be in the context of
global LNG supply, which
according to estimates for
2008 (see Table 1) showed
that exports from the top
15 LNG exporting countries
EMBRACING E-TRADING
ROGER AITKEN, ON BEHALF OF TRAYPORT LTD, UK, AND DAN SMITH,
TRAYPORT, UK, EXAMINE WHETHER A MORE EFFICIENT AND TRANSPARENT
METHOD FOR PRICE NEGOTIATION OF LNG COULD SUCCESSFULLY EVOLVE.
stood at 226.51 billion m
3
. It should also help Australia in terms
of its contribution to global LNG exports (top five in 2008).
Today, Japan and South Korea are the two leading importers
of LNG, and in 2008, they collectively sucked in approximately
40% of supply. Topping the export table was Qatar, by some
10 billion m
3
(approximately 17% of global supply) from
the next largest producers; Malaysia at 29.40 billion m
3
, and
Indonesia with 26.85 billion m
3
.
Some of the geographic hotspots today in terms of where
LNG is traded can be found in the Pacific Basin, Atlantic Basin
markets (US East Coast, Spain and the UK), as well as China
and India. Headed by China, Asian countries have positioned
themselves to be major customers of Gorgon LNG. For example,
PetroChina, Chinas largest energy company, has reached a
deal to purchase US$ 41 billion worth of Gorgon LNG over
a 20 year period from ExxonMobil, which along with
Royal Dutch Shell, controls the rest of Gorgon.
A more efficient solution required
Wagbara, who has written a number of papers on the
structure of the LNG market and in particular what determines
investments in LNG liquefaction infrastructure
1
, noted at the
13
th
Annual Middle East Gas Summit (Megas) in 2008, that
an effective and robust mechanism for determining prices was
necessary to attract players and achieve liquidity.
In short, LNG pricing was faulty. And, certainly it might
not be regarded as efficient in terms of how it is traded by
counterparties, as compared with other energy products where
electronic trading - either voice or hybrid (electronic/voice) - has
taken hold.
Today, electronic trading of LNG has failed to materialise,
despite some recent exchange initiatives in the Middle East.
However, competitive exchange based LNG trade could
generate efficient prices. Wagbara noted in one of his LNG
papers that although competitive exchange based LNG trade
could generate efficient prices, it is not sufficient to attract
investments in liquefaction infrastructure.
However, enhanced investment in LNG infrastructures and
capacity could result if the spot e-trade generated price of LNG
via an electronic platform was considered reliable enough to be
the basis for contract price indexation (long term).
Typically, when energy markets have gone fully electronic
on exchanges, huge volume increases have tended to follow.
For example, take trading on the New York Mercantile
Exchange (Nymex), where since the advent of electronic
trading in 2006, between 75 - 80% of Nymex trades
(including crude oil products) were handled electronically just
two years later.
Elsewhere, after Atlanta based InterContinental Exchange
(ICE) Futures went fully electronic, its benchmark
IPE Brent Crude futures and IPE Gas Oil futures contracts, saw
explosive growth. Each of the top five months in exchange wide
volumes in ICE Futures history happened since the transition
to fully electronic trading. Traders, who arbitraged electronic
Brent on ICE Futures and the Nymex light, sweet crude contract
(WTI), got used to faster execution speeds and remarked on the
inefficiencies of the open outcry system.
The current state of play
So, what is the state of current play in the LNG trading market?
With the global economic recession, demand for LNG (energy)
has declined and there is an interim supply glut. A few experts
foresee the re-emergence of a buyers market, but Wagbara
cautions, saying he expects a tight LNG supply situation in
2010. And, that situation could remain so in the foreseeable
future.
Many energy economists agree that the evolution of LNG
trade has created the need for more transparent pricing. But
while some have argued that the secretive nature of LNG
trade is hampering liquidity, there is yet a generally accepted
replacement for existing price regimes. Spot trading of LNG, on
an electronic platform, could also help enhance investments in
liquefication infrastructure, since capacity is the weakest link in
the LNG supply chain.
In terms of the nature of LNG contracts and how it trades
today, it is either traded through long term contracts
(five to 15 years) or spot contracts (once or over a year).
Long term contracts are negotiated and reviewed periodically,
depending on the price and volume terms, and a few master
spot contracts are used.
Clive Furness, founder of Contango Markets, who is
recognised as one of Europes leading commodity specialists,
says, As a market it [LNG] has got enough global reach, and
as a tradable market I think its perfect to go electronic, since
you are talking about something that is a known quantity. Its a
certain number of cubic metres of LNG.
He adds, The value of it is known at the end point. So,
therefore one could either price it from the shipment point, or
the delivery point. As such it has got all the opportunities of
trading it electronically.
Figure 1. Expected LNG export capacity by region.
Table 1. Trade movement - LNG (exporting countries, 2008)
Country Billion m
3
Qatar 39.68
Malaysia 29.40
Indonesia 26.85
Algeria 21.87
Nigeria 20.54
Australia 20.24
Trinidad & Tobago 17.36
Egypt 14.06
Oman 10.90
Brunei 9.20
Source: BP/Cedigaz (provisional).
Note: total global exports from 15 LNG exporting countries
equated to 226.51 billion m
3
. Asia-Pacific accounted for
approximately 154 billion m
3
of total imports, with Japans
imports representing 92.13 billion m
3
and South Korea
36.55 billion m
3
.
1.
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A slow start
Recent efforts to establish electronic trading platforms for
the commodity, e.g. listing LNG spot and futures contracts
on exchanges, have fallen short of expectations due to
insufficient transaction volumes and liquidity. But several
initiatives have been tried.
Back in March 2007, the International Mercantile Exchange
(IMEX), a new exchange in Qatar, designed a platform for
regular LNG cargo auctions to go live before the end of that
year. Specifically, it was designed for the contracts to be traded
in a similar manner to those of Brent crude oil contracts.
The planned flagship contract for IMEX was to be an
innovative LNG contract, touted as the first of its kind in the
energy exchange world. Jon ONeill, Vice President of
Hess Energy Trading UK (HETCO), an energy trading
company, used by IMEX as its main consultant on the project,
said at the time that, The nascent spot LNG arbitrage market
is anticipated to grow quickly in the coming years.
However, a defined LNG pipeline gas price relationship
that links Atlantic hubs and Asia-Pacific markets with a
potential Middle East hub, was viewed as essential. Indeed,
with the State of Qatar being the leading LNG producer
globally, it should be well positioned. Furthermore, Qatar
was recently estimated to have 15.2 billion bbls in petroleum
reserves and the worlds third largest reserves of natural gas
at approximately 14.9%. Collectively, the Middle East boasts
of some 40% of the worlds natural gas reserves.
The fact that to date LNG trading via electronic channels
has met with next to no takeup, can be attributed to the
historical evolution of the market, with secretive bilateral
agreements. Furthermore, the market has been changing
over time from a buyers market to a sellers market and back
again. At each point of the transition, either the sellers or the
buyers would have a negotiating leverage in respect of the
pricing mechanism.
Wagbara says, Besides this, with the emergence and
peculiarities of competitive gas markets in the Atlantic Basin
(Henry Hub, NBP and Zeebrugge), it has made the emergence
of a global LNG price marker difficult.
Challenges to overcome
A number of impediments remain to be overcome in respect
of e-trading takeup in the commodity and deployment of
screens in the space. According to Wagbara these include:
Few spot transactions (relative to long term transactions).
The varied basis of indexation used in spot transactions.
Exporters discomfort about price volatility in the
importing markets.
He also points out, There is no direct relationship
between long term and spot LNG contract prices. So, even if
e-trading starts, it may not be sustainable.
In addition, there are issues with other inherent
commercial interests relating to price mechanism and internal
dynamics in the importing markets, and fears that shale gas
production could constrain LNG demand in the USA.
That said, the Dundee based academic believes there
could be staged solutions in bringing more electronic/screen
based trading for the LNG market, but exporters would
have to be committed. Perhaps integrating/formulating
a relationship between crude oil price and e-trading LNG
price could help to stimulate exporters interest, Wagbara
contends.
l
l
l
He also thinks it could be a good idea to create a
scheme which in real time captures cross product spreads,
especially LNG price against benchmark crude and LNG
against gas. On that, he believes the key issue would be
how the changing dynamics in various LNG importing
markets are captured. Perhaps an easy solution would be to
start with a few markets, suggests Wagbara.
Contangos Furness thinks that trading of LNG
electronically would probably lend itself to being more an
arbitrage product than anything else. It might have one
value going east and another value going west, he says. If
you have spot, you can then take advantage of the [price]
spikes, particularly in the North Atlantic winter. Youve got
opportunities for price spikes in some of the North Atlantic
gas markets.
Wagbara says, To some extent it could help with
arbitrage opportunities, if the process is perceived as
transparent and not susceptible to manipulation. Perhaps
one could try to determine the likely long term effects on
exporters (relative to the current situation).
Hybrid broking
Trayport, which is a supplier of trading systems to over the
counter (OTC) brokers and trading companies, and exchanges
trading energy commodities, has been closely following
developments in the LNG market with a view to potentially
rolling out its services.
Dan Smith, Head of Broker Services, Trayport, says, We
believe the adoption of Trayport hybrid broking technology
for OTC LNG trading will allow for greater transparency and
encourage more liquid markets.
Hybrid broking, a blend of voice and electronic trading,
is ideally suited to brokered OTC markets. And, with over
130 large energy companies and banks involved in LNG
trading already using the companys Trading Gateway product
for trading power, gas, emissions, coal and freight, adding
LNG products could well prove to be a natural extension
according to Smith.
He adds, Traders using the product will be able to trade
other related commodities such as gas and oil, and allow
them to calculate key cross product spreads, such as LNG
against benchmark crude and LNG against gas, in real time,
to uncover hidden trading opportunities.
Hybrid broking should also help to improve on the
current voice traded markets by allowing brokers to market
prices to a larger number of traders, allowing them to focus
on providing colour and perspective on the market, and voice
broking more complex products while more commoditised
products trade on screen.
If the primary LNG traders are comfortable trading in
voice and having those relationships, then using hybrid
technology will be the way the market will go, says Furness.
But it could just as easily go full electronic with a properly
constituted market, provided traders are equally comfortable
with that option.
References
What are the Potential Implications of Exchange-based LNG
Auctions for Investment in Liquefication Capacity, O. Wagbara
(University of Dundee).
Note
Roger Aitken is a specialist writer on electronic trading platforms and
algorithmic trading across asset classes.
1.
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Oil
.nd
develomen
in Al,eri.
LNG16 Executive
Committee, Algeria,
discusses the oil and gas
potential of Africa, and
the upcoming LNG16
conference.
C
O
V
E
R

S
T
O
R
Y
A
region rich in natural resources, the LNG
production capacity of the North African
countries Algeria, Egypt and Libya, will
reach 60 billion m
3
in 2014, compared to
42 million m
3
in 2008.
North Africas existing liquefaction
capacity is centred around Arzew (Algeria), Marsa El Brega
(Libya), and the Egyptian plants of Damiette and Idku. African gas
production is concentrated in the north, with exports from leading
producer Algeria accounting for approximately half of overall
production. Nigeria has large gas reserves and exports most of
what it produces, whilst Angola, which until now reinjected gas
into its oilfields, and Equatorial Guinea, another producer of crude
oil, have established LNG projects. Gas discoveries have been made
in Mozambique and Tanzania, neither of which are oil producing
countries.
Market development
The Algerian company Sonatrach, the second largest gas supplier to
Europe after Russia and the largest gas producer on the continent, is
keen to consolidate its position and move forward in expanding and
developing its role within the LNG market by broadening its reach
overseas. The group currently conducts business in the countries
of Mauritania, Niger, Mali, Libya, Tunisia and Egypt with additional
operations in Peru. Notwithstanding, Algeria wishes to raise its gas
exports to 85 billion m
3
in 2014 compared to its current 62 billion.
Europes natural gas market development goes through the
expansion of the pipeline network. Its assets have an undeniable
weight on the geostrategic chessboard of the international oil
market. For all these considerations, many structural projects have
been initiated to supply oil directly to Europe, a market traditionally
granted to Algeria, and even beyond.
Included in this are the Transsaharien Gas Pipeline (TSGP), a
US$ 10 billion project; the Algeria-Sardinia (Galsi) and the Medgaz.
The TSGP is intended to transport natural gas from fields operating in
Nigeria to Europe, through Niger and Algeria. It is an intercontinental
project potentially spanning 4128 km or 2310 km across Algeria
to the Mediterranean coast at either Beni Saf or El Kala, through a
pipeline that will carry between 20 - 30 billion m
3
/y of gas to cover the
needs of the European market.
The Galsi, for its part, will open up a new gas outlet to Europe.
All these projects are part of the new dynamic of global demand for
gas; especially that of Europe, including 25 countries that consume
471 million m
3
/y, representing 17% of the global market. Europe
imports more than half of its consumed gas, which is increasing by
3% per year; its traditional suppliers are Norway, Russia and Algeria.
Currently, over 95% of Algerian gas exports are destined for
Europe and more particularly, to Italy, taking 40% of exports. A
quarter of Europes gas consumption comes from Russia. However,
since the crisis between Russia and the Ukraine, the EU seems
obsessed with its energy security and has made the diversity of
its sources of supply a priority, and a question of survival. It has
particularly expressed, on many occasions, its interest in establishing
a stronger energy partnership with Algeria. Thus, Algeria will
eventually become the second largest supplier of gas to the EU
after Russia.
Libya, the third largest oil producer in Africa (after Nigeria and
Angola), currently produces 3.5 billion m
3
/d of natural gas and plans
to double its gas production by 2012 or 2013.
Fresh discoveries
In Angola, the authorities expect strong growth of the gas field
with the implementation of Angolan LNG projects, and with the
construction of new refineries that will foster the creation of a
petrochemical industry. In Mozambique, the gas is exported by the
South African company SASOL, mainly for petrochemicals.
For its part, the Tanzanian government has announced several
discoveries of gas fields in the country without disclosing their reserve
potential. All these fields have been discovered along the coast of the
Indian Ocean, between Dar-Es-Salaam and Mtwara. Algeria and Libya
are major European suppliers, unlike Egypt, which consumes the bulk
of its production. Over two thirds of oil exports from northern Africa
are destined for Europe.
Algeria as host of LNG16
It is clear why Algeria is holding the 16
th
Edition of the International
Conference and Exhibition of LNG. Indeed, Algeria is the first LNG
producer to reach 1 billion m
3
of cumulative LNG production in
mid-September 2008, since the entry into production of its first LNG
plant, GL4/Z (ex Camel) at Arzew, in 1964. In fact this was the first
LNG production plant in the world.
To export its LNG to Europe and to the USA, Algeria significantly
developed this industry in the 1980s. The plant currently has
four LNG liquefaction complexes of a combined capacity of
44 million m
3
/y, and three plants located in the industrial centre of
Arzew on the western side of the country. These are GL1Z, with
a production capacity of 17.563 million m
3
/y of LNG, GL2Z with
a production capacity of 17.820 million m
3
/y, and GL4Z with a
production capacity of 2 million m
3
/y. Finally, there is another plant
in the industrial centre of Skikda on the eastern side of the country;
GL1K has an LNG production capacity of 6.942 million m
3
/y.
This production capacity will increase significantly with the start
of production of a fifth plant, GL3/Z, currently under construction at
the industrial centre of Arzew. As a guide, the combined domestic
production of all LNG plants has risen from 194.309 million m
3
in
1964 to approximately 1 billion m
3
in 2008. But this production,
exceptional as it may be, remains within the capabilities of national
reserves and leaves underground natural gas still untapped.
The 16
th
international conference on LNG, held in Algeria, will
provide an opportunity for visitors not only to discover a pioneer
in the gas industry and LNG, but also to discover an attractive and
welcoming country with a diverse history.
The Oran Convention Center (CCO) has been designed especially
to host the event. The venue will consist of the congress building,
which includes an auditorium with a capacity of 3000 seats, two
meeting rooms with 500 seats each, 20 meeting rooms with
50 - 100 eats each, a VIP space (a circular meeting room with
a capacity of 50 seats), and a banquet hall with a capacity of
2000 places.
Figure 3. Cathedral in Oran, Algeria.
Figue 1. LNG train.
Figure 2. Part of LNG train.
Figure 4. Map of Algeria.
LNG
- THE MARINE FUEL OF THE FUTURE
T
he global focus on climate change and
emissions is increasing, and the maritime
industrys contribution to the problem claims
attention. Shipping is very efficient in terms of
fuel consumption per tonne x mile, compared
to other transport alternatives. Still, the shipping industry uses
approximately 330 million tpy of fuel, or approximately 3.3% of
the worlds fossil fuel oil consumption.
Shipping was not addressed at the Kyoto Climate
Conference. This, however, only bought the industry some
time, which is now running out. The IMO has already dictated
significant emissions reductions, and the upcoming
Climate Conference in Copenhagen is likely to point towards
shipping as a sector where dramatic improvements are needed.
HKAN WERNER AND
KJETIL SJLIE STRAND,
I.M. SKAUGEN, NORWAY,
EXPLORE SMALL SCALE
LNG SUPPLY CHAINS AND
BUNKERING INFRASTRUCTURE.
IMO has established so called SECA zones (Sulfur Emission
Control Areas) in the Baltic Sea and the North Sea. More areas,
including US coastal waters, the Mediterranean and Japans
coastal areas are also expected to be established as such zones in
the near future. The Tier II limits for NO
x
emissions as per MARPOL
Annex VI, are valid for all new ships after 2011, and IMO Tier III
will come into force from the beginning of 2016 in designated
ECA zones. This means that SECAs will become ECAs (Emission
Control Areas) from 2016, with 0.1% sulfur limits and IMO Tier III
limits for NO
x
, which will imply approximately an 80% reduction
from todays allowable NO
x
emissions.
In addition, Norway and Sweden have both already
implemented costly NO
x
and SO
x
taxes and fairway dues in their
domestic waters, and more countries are expected to follow.
Furthermore, it is expected that the EU will implement a 0.1%
sulfur limit in all EU ports as soon as 2010.
The long term future of heavy fuel oil as bunkers is therefore
questioned, both in terms of dependency on oil, and not least
with regards to emissions. Natural gas in contrast gives a far more
environmentally friendly combustion, and in addition there appear
to be greater reserves available than for oil. Thus, LNG as marine
bunkers has the potential to be the solution for the shipping
industry to cope with its emission challenges in the years to come.
Propulsion plants and onboard fuel systems for LNG are
already available in the market, and development and expansions
of the product portfolios are ongoing. However, availability of
LNG as fuel in ports is currently not developed. Except for some
pioneering small LNG terminals and projects along the Norwegian
coast, marine LNG fuelling stations do not exist. Many large LNG
import terminals exist in Europe and elsewhere, but these will not
be suited for bunkering of LNG. They are in the wrong places and
not at all built for transferring smaller quantities of LNG. Thus,
the LNG has to be transported in smaller parcels to strategically
located hubs, close to where LNG fuelled vessels need to bunker.
To do this, new small scale LNG supply chains, making use of
smaller LNG carriers and storage facilities, need to be established.
Small scale LNG
The small scale LNG concept is an effective solution for making
natural gas available to energy users, currently not connected to
pipeline networks. The concept increases the market for natural
gas, by distributing LNG from either an LNG plant, LNG import
terminal, or directly from an LNG carrier using a combination
of both sea and land based transport, directly to the end user.
The concept is based on I.M. Skaugens Multigas LNG carriers of
10 000 m
3
or 12 000 m
3
, where the first vessel in a series of
six will be delivered in late 2009.
The small scale LNG concept shares much of the technology
with traditional large scale LNG, but that is where the similarities
end. Large scale is about intercontinental transport of millions
of tonnes of LNG, from a LNG production unit to an import
terminal, where the commodity product is fed into a national
pipeline grid system. Small scale LNG on the other hand is
more of a regional business, moving hundreds of thousands of
tonnes from the LNG source, using various modes of transport
ranging from ships to semi-trailers and ISO containers, directly to
end users - thus providing an attractive energy supply solution
previously not available. The objective is to make LNG, and
subsequently the gas, as easy to access and use as any other
liquid fossil fuels currently used.
Using smaller ships supplying a market with smaller demand,
the receiving terminals are small as well. A terminal the size of
20 - 30 000 m
3
will be more than enough to ensure efficient ships
logistics, allowing for full drops while at the same time maintaining
a sufficient stock level. Comparing this with the normal terminal
sizes of 150 - 300 000 m
3
, not only will a smaller terminal tie up a
lot less capital, but it will also be faster to build and probably easier
to get through the local approval process.
Marine LNG
LNG is by far the cleanest and most efficient fuel available for
vessels today. The overall economic picture may actually be
even brighter, as burning LNG can reduce the need for engine
maintenance. Therefore, the marine bunkers market is a large
market opportunity for LNG supplied in smaller parcels.
As already mentioned, legislation for emissions from ships will
become tighter and tighter, initially SO
x
and NO
x
, but later surely
also for CO
2
and particulate matters (PM). Natural gas is the only
fuel that can address these issues from the source, and avoid
extra clean up equipment such as scrubbers and SCRs. If used as
a marine fuel, natural gas can reduce NO
x
emissions by 80 - 90%,
Figure 3. Overview of new regulations as per MARPOL Annex VI
(DNV).
Figure 2. SO
x
limits: world, ECA and EU ports (Wrtsil).
Figure 1. NO
x
limits as per Annex VI (DNV).
www.lng16.org
SixteenthInternationalConference&
ExhibitiononLiquefiedNaturalGas
BOOKBEFORE
15JANUARY2010
18-21April2010
EARLYBIRD
DISCOUNT
OranConventionCentre
ORAN+ ALGERIA
REGISTERNOW!
SO
x
and particulates to effectively zero, and also reduce CO
2
by
20 - 25%.
This market is still embryonic and mainly developed in Norway,
but with NO
x
Tier III and 0.1% sulfur limits coming into effect as
of 2016, there are an increasing number of ferries, RORO and
ROPAX ships destined for ECA zones being designed with gas or
dual fuel engines. Norway already has a number of coastal ferries
as well as offshore supply vessels, gas carriers and coast guard
vessels in operation on LNG, and as such the technology is well
proven. The first ferry was put into operation as early as 2000.
Both pure lean burn gas engines and dual fuel engines
are available in the market, and both concepts are proven in
operation. LNG bunker tanks and onboard fuel supply systems
are also available, and this is an area where development work is
ongoing for more cost-effective solutions that can also utilise the
hull spaces better.
The main challenge at this stage is to supply the fuel in the
form of LNG to the ships bunker flange in new areas and major
ports. Pipeline gas is not suitable for this need, as the volume
needed to store sufficient amounts of natural gas in gas phase
onboard would not be practicable. LNG and small scale LNG
infrastructure and supply chains are the solution.
Alternatives
The alternatives to comply with upcoming emissions limits would
be to use scrubbers for reduction of sulfur emissions and SCR for
cleaning of the NO
x
in the exhaust gases.
Modern scrubber systems work in closed loop with fresh
water and the exhaust gas system, to which caustic soda is added
for the neutralisation of SO
x
. Up to 97% cleaning efficiency can
be achieved. The drawbacks, however, include consumption and
price of caustic soda, which can be quite costly, space required for
the system onboard and the need for disposal of wastewater in
ports. In addition, the system takes some of the power and needs
maintenance. As an alternative to scrubbers, one could operate on
pure distillate (MGO) with extra low sulfur content.
Selective catalytic reduction (SCR) is a means of converting
nitrogen oxides with the aid of a catalyst into nitrogen and water.
This is done in a reactor where the exhaust gas is mixed with
urea. 80 - 90% reduction of the NO
x
emissions can be achieved.
The main disadvantage of the SCRs is the urea consumption,
and again, it would be another system to be fitted onboard and
maintained. The urea consumption is typically around 20 l/MWh,
and the urea price is significant.
Of course, the cost and payback of different means for reduced
emissions and compliance with new regulations depends on vessel
type and operating profile. However, analysis shows that LNG as fuel
Figure 4. The Nordic LNG 300 000 tpy reliquefaction plant in Norway.
Figure 5. Emissions from natural gas compared with MDO-1% S
(Wrtsil).
Figure 6. I.M. Skaugens 10 000 m
3
LNG/LEG/LPG/VCM carrier.
in many cases comes out as a more attractive alternative, compared
to post combustion cleaning systems such as scrubbers and SCR.
Supply chain for LNG bunkers
Currently LNG is not available as bunkers in any major ports.
Thus, transport capacity for smaller parcels, as well as storage and
bunkering infrastructure in the ports are needed. I.M. Skaugen,
with its subsidiary Norgas Carriers, is building a fleet of such small
scale LNG ships. These 10 000 m
3
(four units) and 12 000 m
3

(two units) multiage vessels are able to carry ethylene, LPG and
VCM in addition to LNG.
The Multigas carriers are suitable to load LNG at smaller LNG
plants and terminals, but also designed to load at large scale LNG
terminals. The vessels are 137 m and 152 m long respectively, and
with draught of approximately 6.3 m, they are able to call at most
ports.
For the bunkering facilities in
the ports a few alternatives may
be relevant, depending on the
site and size of market. First of
all a fixed storage able to receive
a shipload, or at least a half load
(5 - 6000 m
3
) is needed. From
there on there are at least three
alternative ways to transfer the
LNG to the ships bunkers flange:
Semi-trailers moving between
the storage tank and where
the ships are moored.
A fixed pipeline to a fixed
mooring point in the harbour
where all ships bunkering
LNG have to dock when they
are bunkering.
A self-propelled bunker
barge, or vessel moving
around in the harbour area
bunkering alongside the
vessels berthed.
The semi-trailers are proven
and simple to operate. The
problem is however, that their
capacity and discharge rate is
low, and thus they are unsuitable
for large quantities. With a fixed
line and fixed mooring point the
bunkering rate can be specified
according to the needs, but with
many vessels using the same
bunkering point and limited time
available in the port, congestion
may be an issue. Therefore,
a bunker barge is probably
the most flexible and effective
solution for larger ports. For
smaller vessels bunkering only
smaller amounts, semi-trailers
may be suitable, and for ports
with few users and sufficient
time to re-position the vessel for
bunkering, a fixed bunkering
point would be suitable.
l
l
l
Summary and conclusions
Using LNG as fuel will make it possible to meet all known future
emission requirements from regulatory bodies. NO
x
will be
reduced by at least 80%, SO
x
more or less eliminated and PM
down to a minimum. In addition, LNG will reduce the
CO
2
emissions by approximately 20%. The emission problem will
be solved at the source, and not by adding additional post
treatment system and chemicals. Marine LNG is a very
cost-effective and simple solution, and compares well to all
other known alternatives. The cost benefit is likely to increase
in the years to come, as the cost of emissions will increase.
LNG as a product is readily available on a global basis and the
only missing link - small scale LNG supply chains and
bunkering infrastructure - is well underway to be established.

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T
he long term outlook for LNG is bright, the market fundamentals are strong. It just requires the industry to weather the
difficult market conditions that seem likely to persist for the next few years.
The global economic downturn has hit demand for energy of all types and from all quarters. At the same time, the worlds
capacity to produce LNG is surging. CERA has estimated that by the end of the year there will be an additional 48 million tpy
of LNG coming onto the market.
1
Further, CERA forecasts that global production capacity, currently around 190 million tpy,
will rise by an unprecedented 50% over the next three years. Much of this increase will be in Qatar, although Russia, Indonesia and Yemen
will also play significant parts in sustaining the glut in supply. A further factor in the supply and demand equation is the upsurge in the
production of gas in the USA (9.1% in 2008), which is the result of technological advances that have unlocked shale gas reserves in the
region.
Most leading analysts expect that it will be 2012 at the earliest before the market recovers and prices begin to strengthen. Thereafter,
the market is expected to swing right around. Many believe that the reluctance to commit funds to new LNG plants in the present
economic climate, will inevitably lead to a capacity squeeze in the years beyond 2012.
leliverin,
. new l3lU
BLAKE BLACKWELL, GOLAR LNG ENERGY, UK, PRESENTS AN
INSIGHT INTO DELIVERING THE WORLDS FIRST FSRUS BASED
ON THE CONVERSION OF AN EXISTING LNG CARRIER.
Image: FSRU Golar Spirit and Golar Winter, the worlds first two floating storage and regasification
units converted from existing LNG carriers - captured pierside at (Petrobras) Pecem Terminal,
Brazil, in service under their current long term charters to Petrobras.
A new approach with further growth
potential
Economic jolts of the magnitude experienced last year are always
going to cast a shadow over a business that, until now, has been
characterised by massive capital investments in highly integrated,
long term projects spanning the entire value chain, from wellhead
to consumer.
Floating Storage and Regasification Units (FSRU) provide
a striking contrast with this traditional, complex LNG business
model. Arguably, it is this contrast that is the prime reason for the
interest that the new concept has generated, and continues to
generate even during the current severe downturn.
To complement the dozen or so committed or operational
floating storage and regasification projects today, expressions
sof interest are increasingly coming from non-OECD countries.
This is in line with the statistic that energy demand from
non-OECD countries outstripped that from OECD countries for
the first time in 2008, (see Figures 1 and 2). Though not among
the worlds major demand centres, these countries are developing
economies for which floating storage and regasification provides
a fast track way of opening their energy market to natural gas,
thus increasing diversity of supply, reducing costs and introducing
environmental benefits.
A business case for floating storage
and regasification
The case for floating storage and regasification centres on three
issues: its economic attractiveness, its technical acceptability and
its flexibility. FSRUs cost much less than land based schemes of a
similar size.
FSRUs provide a faster return on the capital invested: time is
saved by not having such an extensive planning and permitting
process as that normally associated with onshore developments;
and the construction time is reduced, assuming the conversion of
an existing LNG carrier, because much of the required equipment
(storage, power and utilities) is already available and in place.
The conversion projects carried out on the Golar Spirit and
the Golar Winter suggest two years from the final investment
decision to the delivery of the vessel: 18 months for engineering
and procurement, and six months for the shipyard work.
The ability of FSRUs to quickly establish new markets for
LNG, benefits suppliers and customers alike. Suppliers get the
benefit of access to new markets and greater trading flexibility;
and customers gain from increased diversity of supply, which can
improve negotiating positions with their existing energy providers.
Overall, the conditions are created to stimulate economic growth
more rapidly than with traditional energy infrastructure projects.
That most of the technology involved in the floating storage and
regasification of LNG is proven in related applications, is an added
inducement to investors in these schemes.
What appears to seal the arguments for FSRUs with potential
investors, is the flexibility that they provide in terms of location
and use. Depending on their design and configuration, FSRUs
can be moved from one demand centre to another and may
retain the ability to trade as LNG carriers. This flexibility makes an
FSRU an interesting option in countries where energy demand
is particularly seasonal or where there is an intermittent market.
Equally, the attraction is obvious in areas where economic growth
is uncertain or where there is an element of political or economic
instability.
Not in my backyard
Interest in floating storage and regasification is not coming
exclusively from the developing economies. The concept has
not gone unnoticed by developed nations seeking to enhance
the diversity and security of their energy supplies. Part of the
attraction of floating storage and regasification seems to lie in
the fact that the residents of such countries, while supporting
the idea of enhancing their energy supply position, tend to
favour solutions that are situated
as far away from where they live
as possible that are not in their
backyards.
Opposition to onshore LNG
regasification plants has certainly
been fierce in many places.
Floating storage and regasification
offers a way of distancing the
energy solution from possible LNG
opponents and potentially avoiding
a lengthy and difficult approvals
process.
Project experience
Converting an LNG carrier into an
FSRU is simple in principle, most,
if not all the technology has been
Figure 2. By 2009, seven projects were operational, a further four had been formally sanctioned, and many
more had been proposed.
Figure 1. OECD vs non-OECD LNG demand. In 2009, non-OECD
members accounted for 13% of global LNG demand. This is forecast
to increase to over 22% in 2020. (Graph courtesy of Wood Mackenzie/
Golar LNG).
proved elsewhere. Add booster pumps, vaporisers and high
pressure discharge lines to the LNG carrier while at the same time
upgrading its power plant together with electrical supply and
control systems - and you have an FSRU. The experience of two
completed projects plus those in progress, has shown that this
could not be further from the truth: converting an LNG carrier
into an FSRU is a complex exercise requiring a wide range of
technical and commercial skills. Further, it is clear that, although
the lessons learned on one project can be applied to the next,
each conversion creates its own set of challenges. Put simply,
there is no such thing as a generic FSRU project.
Completed conversion projects
Built in 1981 as the first LNG carrier delivered from a Japanese
shipyard; the Golar Spirit has a Moss cargo containment system.
The vessel was contracted for LNG shipments between Indonesia
and South Korea from 1986 to 2006. The decision to convert
the vessel was taken in 2005, and Moss Maritime was chosen as
the main engineering contractor. The vessel entered the Keppel
shipyard in Singapore in 2007 and emerged in June 2008,
(see Figures 3 and 4 and Table 1).
The Golar Winter was built in 2004 and has a GTT NO96
membrane tank containment system. The vessel was selected
for conversion in 2006, and the engineering and procurement
activities started in 2007. Moss Maritime again acted as the
lead contractor. The vessel entered the Keppel shipyard in
Singapore in September 2008 and emerged an FSRU in
May 2009, (see Table 2 and Figure 5).
The decision to convert the first vessel, the Golar Spirit, was
taken without a contract on the vessel. However, subsequent
negotiations with Petrobras resulted in a charter arrangement
signed in April 2007 under which Petrobras will charter the
vessel for 10 years with options for up to a further five years. The
Golar Winter is similarly contracted to Petrobras.
New committed projects under
development
The Golar Freeze was built in 1977 and has a Moss tank
containment system. The final investment decision for the
conversion was made in April 2008 and work on the vessel
started in September 2009. Delivery is planned for the second
quarter of 2010, (see Table 3 and Figure 6).
The Dubai Supply Authority has taken a charter on the vessel
for 10 years, with an option for a further five years. The vessel
will be used to import gas during the very hot, six month summer
season, when the load on the electricity grid from air conditioning
systems is greatest. The vessel is not expected to trade.
FSRU technology and integration:
tailoring the solution
There is no single overwhelming factor affecting which kind of
LNG carrier makes the best FSRU. Indeed, availability and cost
have to be prime considerations when seeking a candidate vessel.
The technical community tends to favour (older) vessels with
Moss (spherical tank) type cargo containment systems, especially
if the intention is to moor the FSRU in an offshore location.
The self supporting spherical Moss type tanks have a strong
reputation for structural integrity and do not have any operational
cargo filling level restrictions. The older vessels had tanks with
even more conservative scantlings and the design gives full
access for hull steel maintenance and major steel modifications
related to the conversion. A more modern membrane tank vessel,
however, will probably have a more efficient propulsion system,
Table 1. Golar Spirit
Use FSRU, with retained capability
to trade as an LNG carrier
LNG storage capacity 129 000 m
3
Regasification capacity 2.5 bcm/y
Location Moored at an existing
upgraded jetty at Pecm,
Cear, northern Brazil
LNG transfer Over the jetty via loading arms
fixed on the jetty
Gas transfer Via high pressure loading arms
fixed on the jetty
Vaporisation system Direct steam in a closed loop
Table 2. Golar Winter
Use FSRU, with retained capability
to trade as an LNG carrier
3
Location Moored at a new purpose built
jetty at Guanabara Bay,
Rio de Janeiro, Brazil
LNG transfer Over the jetty via loading arms
fixed on the jetty
Gas transfer Via high pressure loading arms
fixed on the jetty
Vaporisation system Two stage propane and
seawater in closed or open loop
Table 3. Golar Freeze
Use FSRU
3
Location Moored at a new purpose built
jetty at Jebel Ali, Dubai
LNG transfer Side by side via loading arms
on the FSRU
Gas transfer High pressure loading arms
fixed to the jetty
Vaporisation system Two stage propane and
seawater in open loop
Figure 3. FSRU Golar Spirit receiving cargo across the pier for storage
and regasification from LNG carrier. (Photo courtesy of Petrobras).
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and may be more attractive if the intention is to continue using
the vessel to trade LNG.
It makes economic sense to use as much of the existing
equipment aboard the LNG carrier as possible during the
conversion process, but the list of potential modifications can be
daunting. As well as the addition of the regasification unit, the
most fundamental modification, there are numerous other aspects
of vessel design to consider. These include changes to the:
LNG transfer system.
Cargo handling equipment.
Gas export and metering systems.
Power and utilities.
Process controls and communications.
Emergency shutdown and fire and gas detection systems.
Vessels mooring arrangement.
Lessons learned
A number of lessons have emerged from the projects completed
so far. The first relates to project definition: time spent with the
vessels end user is well spent. This effort will not be wasted
if it is used to define as closely as possible the operational
requirements of the vessel, and to convert these into a robust
technical specification, against which detailed engineering can be
performed, and the procurement process started early. With lead
times on the specialised equipment needed by an FSRU running
into many months, and space for extra equipment on the vessel
severely limited, any shortcomings in these early project stages are
bound to result in major difficulties and delays later on.
A second major lesson is about integration. Although this
is a factor in the success of most large engineering projects,
converting an existing LNG carrier into an FSRU presents an
extreme example of the effort needed. Appointing one strong
main engineering contractor is essential.
A third lesson involves commissioning and testing. Upon
delivery of the FSRU, the charterer and the owner need to agree
and execute a test protocol to ensure the charterer accepts the
condition of the delivered FSRU. For the charterer, this a critical
time when some initial adjustments to the vessel are inevitable.
It is vital the charterer has people with sufficient experience and
capability to see this aspect of the agreement through.
Finally, not to be overlooked is the issue of the operation
and maintenance of the vessel. Golar has relied largely on using
vessels existing marine crews to operate and maintain them after
conversion to FSRUs. However, FSRU operations present many
new challenges for those onboard and so appropriate training
and development become very important.
Conclusions
Floating storage and regasification has made a strong impact on
the LNG industry: enquiries about the concept have not fallen
off, despite the recent severe economic downturn. Much of the
new interest in floating storage and regasification is coming
from countries with developing economies, rather than from the
traditional major demand centres.
Cost, speed of delivery and flexibility are the main advantages
of FSRUs. In this respect, FSRUs contrast strongly with traditional
land based LNG developments.
The FSRU business is challenging. It involves the sound
aggregation of shipping and energy technology, LNG market
awareness, commercial skills and marine operating experience.
Success depends on having a deep understanding of both
the technical requirements of the FSRU and the surrounding
commercial issues from the projects outset.
References
Midwest Power Market Fundamentals, 200913, CERA, 29 April 2009.
Note
This article is adapted from a paper previously presented at the
24
th
World Gas Conference in Buenos Aires, October 2009.
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1.
Figure 6. Golar Freeze - designed for side by side mooring and LNG
loading. (Image courtesy of Shell/Dubai Supply Authority).
Figure 5. Worlds second FSRU based on conversion of an existing
LNGC- Golar Winter in Guanabara Bay, Brazil. (Photo courtesy of
Petrobras).
Figure 4. Worlds first FSRU based on conversion of an existing
LNGC- Golar Spirit at Pecem, Brazil. (Photo courtesy of Petrobras).
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T
he ability of the offshore industry to find new
solutions from old solutions remains one of its
most impressive characteristics. Like certain animals,
which continually shed their skin to reveal a new
coat, the offshore industry continues to show an uncanny knack
of being able to take an existing concept and revamp it, helping
it to continually develop into a new, improved version of its
predecessors.
In the world of LNG this is perhaps more true than with most
industries. During the early 1980s, the attractiveness of LNG import
and export terminals, i.e. the FSRUs and LNG FPSO units, was
identified. However, only after the successful installation and proven
track record of crude oil import/export terminals, LPG terminals and
FPSOs, is the LNG industry now looking with great interest into
these offshore terminals.
In general, the LNG export or import terminals are used to
moor LNGCs alongside piers or jetties to export or import LNG
via onshore liquefaction plants. When there are no existing
regasification plants, FSRUs can be used to import gas from LNGCs.
The FSRU is moored near the shore, receives LNG from an LNGC,
stores and regasifies the LNG on demand, and transfers the gas to
shore via a gas pipeline. The LNG FPSO can either be part of an oil
development in which it liquefies associated gas, or a standalone
field development of remote green gas fields. In the associated gas
case, the LNG FPSO also makes remote oil developments feasible
on environmental grounds, by turning the problem of associated
gas disposal into a moneymaking opportunity. In the green gas
field case, the LNG FPSO is an economical tool in making remote
offshore gas fields economical.
Like the FPSOs, the key to attractiveness of a greenfield LNG
FPSO lies in the integration of well control, processing, storage and
offloading from the LNG FPSO, positioned over or very near to the
reservoir. It replaces the offshore platform, pipeline, liquefaction
plant, storage and export system. This produces a significant
opportunity to reduce cost and project time. The topsides and the
vessel can be built and commissioned in a yard under controlled
conditions, using highly experienced staff. Once installed onsite, the
LNG FPSO, such as FPSOs, can be operated with trained personnel.
Additional advantages are that after depletion of a reservoir the
barge may be moved to a different field and at the end of its
service life the barge can be economically decommissioned.
Technically, the LNG FPSOs or FSRUs are similar to FPSOs;
they consist of a basic hull with accommodations, an SPM turret
mooring system, storage tanks, LNG processing or regasification
equipment and offloading facilities. In the LNG FPSO case, the
incoming gas is liquefied after preconditioning and the LNG is
stored at ambient pressure in thermally insulated tanks onboard
the LNG FPSO. When sufficient LNG is accumulated in the storage
tanks, it is offloaded to an LNGC and shipped to the customer.
Similarly, any produced condensates are stabilised and stored
onboard to wait for offloading. The technical challenges are the
marinisation of the process plant, and the offloading of LNG at
temperatures below -162
C.
As previously mentioned, the idea of LNG import/export
terminals, FSRU and LNG FPSO is not new. The main reasons for
the renewed interest in LNG terminals are:
Extensive experience gained with oil and LNG terminals.
Extensive experience, and the confidence gained with oil
floating production storage and offloading units (FPSOs).
Technological advances made over the past years, and recently
installed liquefied petroleum gas (LPG) FPSOs with relatively
complex topsides, storage and offloading at -45
C.
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LEEN POLDEVAART, JEAN-PIERRE QUEAU AND
PERRY ADAMS, SBM OFFSHORE, MONACO, DISCUSS THE
LOGISTICS OF OFFSHORE LNG OFFLOADING.
LNG TANDEM
OFFLOADING
The LNG technology itself has become mature, and process
plants and LNGCs have proven capable of operating past their
initial 20 year design life, while achieving an excellent safety
record. In general, extensive operational experience has been
gained on LNG terminals, FPSO operations and all aspects of the
LNG production, shipping and marketing. Today, all major oil
and gas production companies are studying LNG import/export
terminals, FSRUs and LNG FPSOs.
Vessel to vessel LNG offloading
The safe, reliable transfer of LNG in a possibly harsh, open sea
environment has never been done. Based on the experience gained
from the existing FPSO tandem mooring and offloading, SBM has
performed studies to demonstrate that open sea LNG transfer
is possible today. This has also been confirmed by model tests.
The company has designed different types of tandem mooring
configurations, using different types of hose configurations. These
configurations are presented and discussed hereafter.
Technological development
SBM made a strategic decision to start the development of LNG
technologies back in 1998, when it became apparent that a
gradual shift towards offshore LNG would take place within the
next decade. The company realised that the market would evolve,
but that the right technology was not yet available.
The development of SBMs COOL technology started in
2000, with the creation of the toroidal cryogenic swivel. The
design was completed in 2004, manufacturing took place in 2005,
as well as the start of the testing programme.
In 2006 the extensive testing programme was successfully
completed, demonstrating the performance of the swivel for a
simulated 15 year service life.
As a result of the testing programme and associated
analysis, ABS issued a statement of principle approval in 2007.
Additionally, the design was awarded the 2007 OTC spotlight on
technology prize.
Hose design
Following this successful first step, another major enabling
technology needed to be developed: offshore LNG transfer lines
to enable safe offloading between two vessels, in a manner that
the industry has grown familiar with, both from a safety and
operational aspect.
In 2005, the foundation was laid down for the development
of the COOL hose: a cryogenic marine floating hose that would
enable the tandem offloading of LNG between two vessels.
A long term research and development scheme was set up
and the first list of requirements was drafted including operational,
safety, maintenance and manufacturing aspects.
Several prototypes were built and tested to destruction under
ambient and cryogenic conditions to validate theories and to
demonstrate feasibilities. This resulted in a hose in hose design
composed of:
Inner hose providing LNG containment.
Outer protective hose derived from conventional single carcass
floating hose technology for safeguarding the inner hose
against the environment, specifically modified to handle lower
temperatures.
Insulation between the inner and outer hose that regulates the
temperature gradient.
Radial spacers to keep the inner and outer hose concentric.
Flanges that ensure load transfer, leak integrity and minimise
heat losses.
Leak monitoring system that detects the temperature drops
that a leak would cause.
The design and integration of these components resulted in a
highly flexible hose with both high mechanical and temperature
cycling fatigue life. Plus, very high flow rates associated with low
pressure drops and high safety margins.
Today, this development is culminating in the ongoing
qualification programme with ABS and DNV, that follows the
requirements of these classification societies.
The evaluation of new technology, risk identification and
failure mode analysis, has been successfully completed. The
detailed qualification is currently in progress and follows EN1474-2,
supported by other relevant standards such as API17B, API17K,
OCIMF, SIGTTO where required. Full qualification of the COOL hose
is expected in Q1 2010.
The hose is designed for operation in harsh environments.
It is deployed in the same way as conventional marine hoses. It
is watertight and can be deployed in either floating, submerged
or aerial configurations. It is highly fatigue resistant and
accommodates flow rates beyond the typical capacity of todays
LNG pumps.
Connector design
Simultaneously, the end connector that enables connectivity with
LNG carriers has been developed. The requirements for harsh
environment connectivity, water tightness, load transfer and
operability and functionality, inline with shore based LNG terminals
resulted in a design that incorporates SBMs COOL hose with FMCs
proven cryogenic connector technologies. The COOL connector is
also developed following a qualification programme with ABS and
DNV, that is expected to obtain full qualification Q2 2010.
Tandem offloading
In parallel with the COOL technology development, SBM developed
several tandem offloading configurations that are tailored to
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Figure 1. Artists impression of COOL hose components.
Figure 3. Submerged catenary tandem offloading.
Figure 4. Aerial catenary tandem offloading.
Figure 2. Floating tandem offloading.
overcome the challenges of the environments that the companys
clients require their units to operate in.
Typical challenges were identified and the solutions found
resulted in a set of typical configurations:
Floating.
Submerged short catenary.
Submerged long catenary.
Aerial.
All these configurations were designed for optimal
performance whilst maintaining conventional FLNG marine
operations in combination with DP and non-DP LNGCs, with
dedicated bow manifolds.
Floating tandem offloading
The floating configuration allows for a large separation distance
with a standard mooring arrangement, and has a large excursion
capacity.
Submerged catenary tandem
offloading
The submerged short catenary is derived from harsh Atlantic and
North Sea configurations, where the LNGC is sheltered by the
FLNG. It particularly filters out dynamic loads, and has a large
excursion capacity. The submerged long catenary maintains the
benefits of the short catenary configuration, whilst providing a
large separation distance.
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Aerial catenary tandem offloading
The aerial configuration can be configured to store the hoses in
the support structure. It reduces hose length and benefits from
the associated low pressure drop. From an operation point, it
benefits from gravity purging of the hoses.
Conclusion
The companys tandem LNG offloading configurations using
the COOL technology, offer advantages that the oil industry has
long grown accustomed to:
Access to harsh environments.
A vessel separation distance adapted to the environment,
and safety requirements.
Large excursion capacities, with or without dynamic
positioning capabilities.
Standard mooring equipment.
Known marine operations.
A reelable hose system.
A hose with low pressure drop, high flow rates and high
fatigue capacity.
Wet transfer of hoses between vessels.
Maintenance at FLNG deck level.
Ease of integration in the overall system.
A connector that can be transferred wet and dry.
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Official Publications:
Organized by:
The Plant Asset Lifecycle Event
16TH ANNUAL
March 1-3, 2010
Hilton Americas-Houston
Houston, Texas
COMPANIES INVOLVED IN LNG PLANTS, TERMINALS AND TRANSPORTATION
Discover How the Latest Technologies Can Help You Cut Costs, Leverage
Limited Resources and Improve Plant Productivity Across the
Entire Design, Build and Operate/Maintain Value Chain
WHY SHOULD
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EXHIBITORS
STANDARDISING
OFFSHORE
TRANSFER
LEIV KALLESTAD, TORP TECHNOLOGY AS,
NORWAY, DISCUSSES A STANDARDISED
APPROACH TO OFFSHORE LNG TRANSFER.
L
NG offshore regasification terminals have
been in existence for some time, and offshore
liquefaction projects are about to become a
reality. In order to be a successful offshore
project, the transfer of LNG technology must
be proven and available. However, LNG transfer is faced with
operational challenges.
TORP Technology is developing offshore LNG solutions
worldwide. TORP and affiliated companies have provided
offshore engineering and construction for companies since
1985. The combined experience of the group includes more
than 50 loading systems for crude oil and gas, offshore gas
processing facilities and several drilling modules, as well as a
deepwater drilling vessel.
TORP owns HiLoad LNG Technology, which aims to provide
a cost-efficient and flexible solution facilitating standardisation
of offshore LNG transfer. The HiLoad can dock to any LNG
carrier for loading or offloading, which should simplify LNG
projects significantly.
Challenges with offshore LNG
operations
Offshore LNG operations have been contemplated for decades,
and have finally materialised with the emergence of offshore
regasification terminals in the last few years. Renewed efforts
are being initiated to develop offshore stranded gas reserves
with floating LNG facilities. There are no offshore liquefaction
facilities in operation at present, although the first facility is
expected to be in operation within three to four years.
So why go offshore? The main reasons, in addition to
profitable extraction of the gas reserves, are:
No or limited restrictions on area utilisation.
Deeper water will ease the operations for LNG carriers.
Not in my backyard (NIMBY) or distance to third parties.
Frequently shorter construction time and schedule for
projects.
Operational flexibility.
Lower security risk.
However, there are several challenges associated with
going offshore, with the main ones being:
Weather conditions.
Limitations on technology.
Maintenance and inspection required for high operational
uptime.
Operational issues related to relative motion and tug
operations.
Safety issues related to compact design.
The pros and cons associated with offshore LNG operations
are frequently presented and discussed at industry conferences
and other industry forums. There is general agreement around
what the various issues are. However, there are different ways
to develop commercial solutions for offshore LNG transfer
taking advantage of the location, whilst trying to address the
main challenges of operating in such an environment.
Technical solutions
The two main methods developed for offshore LNG transfer
are:
Side by side loading using rigid arms or aerial hoses.
Tandem loading using cryogenic aerial or floating hoses.
There are several variations developed for both the side by
side and tandem approach, and the technology to be applied
is available, and to some extent proven, for operations in
benign waters. However, it is also recognised that significant
challenges remain to ensure safe operations and high uptime.
This is required to provide customers with a reliable service at
the liquefaction plant or regasification terminal, and to expand
the safe limit for loading operations in waves.
TORPs approach to offshore LNG
transfer
TORP aims to improve the handling of operational challenges
related to relative motion and rough weather conditions, but
also allow for a higher degree of standardisation, with the
main elements being:
Eliminating relative motion between two floating bodies.
Safe connection to LNG carriers.
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
Figure 1. Offshore loading from permanent storage using submerged
cryogenic flexible hose with CALM buoy.
Figure 2. Close up HiLoad tandem LNG transfer with flexible floating
cryogenic hose.
Figure 3. First HiLoad for oil loading under
construction at the Aibel Yard in Haugesund, Norway.
Position keeping system.
Expanding the operational envelope.
Eliminating relative motion between
two floating bodies
The HiLoad is a floating L-shaped loading terminal that can
dock onto any ship - similar to a forklift picking up a pallet.
Equipped with thrusters and a dynamic positioning system
(DP2), it can easily manoeuvre into position on a slow moving
or moored ship. It will attach to the ship using buoyancy and
suction generated by the hydrostatic pressure at the vessels
bottom. The attachment system consists of six large suction
cups. All components of the system have a proven track
record, and the complete attachment system has been tested
thoroughly. With the HiLoad firmly attached to the LNG carrier,
relative motion between bodies will be eliminated allowing for
the safe and simple transfer of LNG from the floating HiLoad
to or from the LNG carrier.
Safe connection to a carrier
The patented, friction based attachment system has undergone
full scale testing and proven successful when docking to ships.
Furthermore, model testing and class review confirmed, that
no damage arises to the ships, when docked or under mooring
operations. Once contact is made underneath the vessel,
the attachment system is activated. The water inside of the
six suction cups is pumped out and the cells are opened to
atmospheric pressure. The top of the pontoon is equipped
with a friction system generating a strong grip onto the carrier,
with a resulting safety factor of 10 - 15. The Hiloads design
l
l
incorporates soft landing fenders to limit the contact forces
between the HiLoad and the carrier during connection.
Position keeping system
Part of the configuration is a traditional SALM (single anchor
leg mooring) buoy, which is used for mooring the LNG
carrier during the offloading process. The distance between
the carrier and the SALM buoy is approximately 70 - 80 m.
The OCIMF strong points in the bow of the LNG carrier will
be connected to the mooring hawsers. The HiLoad, with its
thrusters and DP system, will provide directional control of
the ship relative to the external forces influencing the carriers
behaviour.
Expanding the operational envelope
The present HiLoad configuration will typically require a
minimum water depth of 60 m for acceptable working
conditions for the flexible riser, or 40 m for a floating hose.
A HiLoad system enables a safe, effective and cost-efficient
unloading and regasification offshore terminal operation. The
HiLoad design can accommodate any LNG carrier without
modifications or special arrangements on the main facility or
on the carrier, including the new 265 000 m
3
class Q-Max
LNG carriers. The unit is equipped with a high capacity ballast
system, to keep the time needed to connect to the ship at a
minimum of approximately 2 - 3 minutes.
Once docked, it will be possible to connect, disconnect
and operate safely in significant wave heights of 14 ft. The
survival conditions of the HiLoad have been successfully
model tested in extreme weather conditions and wave
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Reliable and Safe LNG
heights up to 95 ft. The unit was designed for deep to ultra
deepwater conditions and can be placed far offshore, outside
of ports, away from shore communities, and commercial and
recreational fishing areas, as well as being an integral part of
an offshore liquefaction facility.
The HiLoad can be operated remotely and efficiently from
an associated support platform, service vessel or from shore.
For offshore loading of LNG, the HiLoad will require a floating
or submerged cryogenic hose depending on weather and wave
conditions, in order to conduct transfer of LNG from offshore
storage to the LNG carrier.
The next two sections will describe one regasification
terminal currently under permitting in the USA, and one
offshore LNG loading study completed for MEO Australia for
offshore LNG loading.
The Bienville project offshore
Alabama, USA
TORP is moving ahead with a modified solution for the
Bienville offshore energy terminal in the Gulf of Mexico. This
is after the permit application was suspended in autumn 2008
due to concerns from the Governor of Alabama with respect
to the use of open loop vaporisation. The LNG receiving and
regasification terminal is going to be located offshore,
63 miles south of Dauphin Island, Alabama, and will be
utilising the award winning HiLoad Technology for offloading
LNG tankers offshore in combination with closed loop ambient
air vaporisation.
The project has been sited to avoid or minimise adverse
impacts to the biological, physical and socioeconomic
environment. By locating the Bienville terminal deep offshore
and connecting it to nearby existing infrastructure, potential
environmental impacts and ship congestion that may typically
be associated with land based terminals or close to shore
LNG facilities, have been significantly reduced. LNG carriers
ranging from 80 000 - 265 000 m
3
will be able to offload at
the Bienville. The project is being designed to offload one LNG
carrier at a time.
The expected capital expenditures for the Bienville terminal
is approximately half the cost of a comparable onshore
terminal, with a daily regas capacity of 1.4 billion ft
3
/d.
Although the total turnaround time for a ship is 60 hrs, it
will compare favourably to onshore terminals in Texas and
Louisiana due to shorter sailing time and no piloting or traffic
controls. The use of ambient air vaporisers will also reduce
retainage significantly and ensure low operating costs.
Offshore LNG loading for MEO
Australia
MEO Australia Ltd (MEO) commissioned TORP to perform a
conceptual study for the application of HiLoad Technology
for use at an offshore LNG loading facility. The HiLoad LNG
loading facility will be part of a larger LNG complex located
in the Timor Sea, where the LNG will be pumped from the
storage tank through a submarine insulated pipe in pipe to a
PLEM, where flexible cryogenic risers connect the pipeline with
the swivel installed on a CALM buoy.
Flexible cryogenic hoses connect the swivel with the
HiLoad. Conventional LNG loading arms on the HiLoad make
up the LNG connections with the LNG carrier. Vapour return
from the ship is compressed by booster compressors on HiLoad
for return to the LNG storage tank.
Compared to previous projects undertaken, the proposed
site for the MEO Australia LNG facility is located in similar
water depths, indicating that the HiLoad survival conditions
and operating behaviour will be well within the operating
envelope of such a facility. The storm weather conditions in
the Timor Sea are more benign than the hurricane conditions
in the Gulf of Mexico. The metocean conditions show an
uptime of 99.8%.
From vision to reality
The industry is clear on the fact that safety and high regularity
will be the most important drivers for a LNG liquefaction
operation offshore, which is obvious considering the safety
record of the LNG industry and the customers need for being
able to deliver LNG cargos in accordance with its contractual
obligations.
The solution aims to address many of the current industry
concerns by increasing the distance between the visiting
LNG carriers and the liquefaction and storage facility, and
eliminating the need for expensive modifications to the
storage unit.
10 years have passed since the HiLoad technology was
conceived, and more than 100 000 engineering hours have
been used in the development of the technology. The first
HiLoad constructed for offshore oil loading will undergo
sea trials in the first half of 2010 before being ready for
operations.
The LNG business is changing rapidly and continues to
grow. TORP expects that the HiLoad will help in facilitating
the development of future offshore LNG production and
regasification facilities promoting safe, environmentally friendly
and reliable operations in a cost-effective manner.
Figure 5. HiLoad tandem LNG transfer, sector view.
Figure 4. HiLoad tandem LNG transfer.
Efficient
operation
at peak
times
A
s one of the worlds largest consumers of natural
gas, the USA consumed 23.2 trillion ft
3
last
year, according to the US Energy Information
Administration. Although the majority of
natural gas consumed in the USA is produced
domestically, 3.6 trillion ft
3
was imported from Canada and Mexico
last year through the continents network of pipeline systems
and a small amount imported as LNG. The quality of domestic
and imported pipeline natural gas is changing as new fields are
developed, as alternative sources of natural gas are developed, such
as coalbed methane (CBM), and as the economics of gas treatment
changes. In addition, to prepare for the expanded supplies of natural
gas in the future, existing LNG import terminals in the USA have
been expanded and new ones have been built.
As these new sources have started to come online and as
LNG imports have been regasified and added to US pipelines, the
composition of natural gas in the distribution pipelines has started
to change. Much of the infrastructure that supports the natural
gas industry in the USA has been impacted by these changes. LNG
peak shaving plants in the USA have particularly been affected in
their ability to liquefy pipeline gas. Because of this, equipment and
processes in some instances began to work less efficiently. Once
the problems with the changing composition of the gas became
apparent, owners and operators of these peak shavers realised they
needed to seek innovative solutions to address the various issues
that surfaced.
The LNG peak shaving industry
Inevitably, as natural gas demand growth follows spurts of
population growth, infrastructure must be added to provide new
supplies to the population centres that are expanding. Regardless
of whether supplies are being gathered from traditional producing
basins or from LNG import terminals, distribution systems, usually
pipelines, must be added, expanded or modified to meet the needs
of these growing markets.
In the USA, utilities are faced with the problem of determining
the most cost-effective way of adding this necessary infrastructure.
As regulated providers of energy, utilities are obligated to meet the
needs of all the consumers they serve. While regulations vary from
state to state, in general, utilities are required to meet not only the
base load supply needs of their customers, but the peak needs as
well. Peak needs, of course, are largely weather dependent. Tight
supplies in colder than normal winters often lead to severe price
spikes and possible restrictions on gas usage.
As utilities evaluate the impact of demand growth in their
regions, they also continually assess the best way to secure future
gas supplies, especially the peak load needs they anticipate on
the coldest days each winter. Long term gas supply contracts
are expensive, and are often not a practical option to meet peak
supply needs. Purchasing spot market gas can be risky. Capacity
on interstate pipeline systems is also expensive and purchasing
extra capacity to meet peak needs is rarely a cost-effective solution.
As supplies tighten, even small decreases in supply or increases
ERIC FREY, BRIAN EISENTROUT
AND JAN SNYDER, CB&I, USA,
EXPLAIN HOW SOLUTIONS FOR
PEAK SHAVING FACILITIES ARE
REQUIRED AS GAS COMPOSITION
CONTINUES TO CHANGE.
in demand can produce large price swings, making the available
alternatives difficult to manage. Sometimes short term LNG contracts
can be used to import LNG from other countries. For example, in
the UK this has proven to be a successful way of managing peak
supply needs. However, one additional option is available to utilities:
building or purchasing capacity in a peak shaving facility.
Peak shaving facilities are generally used to liquefy natural gas
during the off-season when demand and price are low. The LNG is
then stored in tanks at the site until it is needed. When peak needs
occur, the LNG is regasified and fed into the distribution system.
Peak shaving facilities are, therefore, usually located adjacent to or
at the end of the pipeline network available to the utility. Often,
the cost of building and operating a peak shaving facility competes
favourably with the cost of purchasing additional pipeline capacity to
meet peak needs.
Maturing industry
In the late 1960s and early 1970s, peak shaving facilities
presented an attractive solution to meet peak needs for utility
customers in the USA. During this time, more than 60 facilities
were constructed. As LNG imports slowed in the latter part of the
1970s due to the availability of adequate supplies of natural gas
produced within the country, the construction of peak shaving
facilities declined. The deregulation and restructuring of the natural
gas industry in the early 1990s led to a renewed interest in the
feasibility of peak shaving facilities, but few new facilities were
constructed. With the addition of five in the 1980s, five in the
1990s and one since the turn of the 21
st
century, more flexibility
was added to the nations pipeline grid.
Peak shaving plants have been built all over the world. While
the majority are in the USA, peak shavers have also been built in
the UK, Canada, Germany, Norway, China, Australia, Argentina,
Belgium, The Netherlands and Japan. In some cases, these peak
shaving facilities reduce the pipeline capacity commitments required
to cover peak needs. In other cases, where underground storage
facilities are lacking due to geologic conditions, such as New England
and the mid-Atlantic states in the USA, LNG has played a critical role
in balancing supply and demand through peak seasons, especially
important because of the harsh winters experienced in these regions.
Peak shaving facilities have a high deliverability rate that allows
them to meet peak needs much more efficiently than traditional
underground gas storage facilities.
Today, these plants have matured. Many are undergoing
maintenance, expansion or retrofit projects. As these projects
are assessed, careful evaluation is being given to the changing
composition of the gas that is being fed into the peak shaving
plant from the pipeline grid and the effect this changing gas
composition has on plant operations. Ideally, as plants are taken
down for maintenance or retrofit projects, changes can be made to
accommodate the changing gas composition.
Changing gas composition
The USA imports the majority of its LNG from Trinidad and Tobago,
Qatar and Egypt, but also receives shipments from Nigeria and
Norway. Because the BTU content of this gas can be higher than
gas traditionally produced in North America, peak shaving plant
operators must be able to deal with hotter gas. Additionally, the
gas being imported may have contaminants not found in gas that
has been treated before entering the national pipeline system.
Furthermore, domestically produced natural gas composition is
changing with the methane content trending down and the level
of contaminants, such as CO
2
, and high BTU constituents trending
higher.
As gas imports into the USA have increased over the past few
years and gas fields have matured, these issues have surfaced as
a growing problem for peak shaving operators. In the beginning,
when LNG was first imported into the USA, there were concerns
about the quality of the product and the interchangeability of
domestic natural gas and imported LNG. Much debate ensued and
studies were done to determine how residential burners would
be impacted. However, these concerns have largely diminished.
In general the studies indicated that for residential burners the
composition of the LNG was adequately interchangeable with the
domestic supply of natural gas if their heating value and density
were suitably adjusted.
Even as interchangeability concerns were alleviated for residential
burners, however, peak shaving plant operators were starting to
deal with the effects the changing composition of the gas has
on the equipment in their plants. In some cases, they found they
Figure 2. From this view, various systems of the peak shaving facility
can be seen including the pretreatment system, liquefaction system,
LNG storage tank, sendout system and related utility support systems
with firewater storage.
Figure 1. Tucked away in a forested area, this is the largest LNG peak
shaving facility in the USA and has the ability to store 4 billion ft
3
of
natural gas.
all systems go
To learn more about how Honeywell can help
launch your next project visit www.honeywell.com/ps.
2009 Honeywell lnternational, lnc. All rights reserved.
"For the initia| pro[ect, we required support from a wor|d-c|ass
vendor to he|p us meet a very demanding schedu|e. We
a|so needed an automation partner that we cou|d re|y on
for the next 30 years. Honeywe|| has proved it can de|iver
high qua|ity, re|iab|e so|utions, and consistent after-sa|es
service to meet our standards for safety and performance."
-LNG Projects Manager
Ready for launch. Honeywell not only reduces your overall project
risk and schedule, but ensures your project is prepared for operational and business readiness from
day one. Our integrated main automation contracting (l-MACj approach extends from the field
to the boardroom to deliver safety, reliability and efficiency throughout the entire life of your asset.
to upgrade their equipment or processes to cope with the different
gas mixtures as well as the higher BTU content. As these gas
composition issues grow more complicated, the choices for peak
shaving plant operators become more difficult.
Finding solutions for peak shavers
US gas distribution companies are currently operating
59 natural gas peak shavers. 21 are in the mid-Atlantic and
New England region, 16 in the South, 15 in the Midwest, and seven
in mountain states and the west coast.
The typical design life for a peak shaving facility is 20 years.
However, with proper maintenance and plant operations, virtually all
of the facilities built in the 1970s have operated safely and reliably
since their construction. Because CB&I built many of the original
peak shaving plants, the company is working with the utilities to
find solutions that will adequately address the more complicated of
the problems caused by the changing composition of their supply.
Engineering solutions are being developed to help the
industry with gas quality issues. LNG peak shaving liquefiers
require conditioning of the feed gas similar to base load liquefiers,
effectively removing or reducing the contaminants to a level that
allows liquefaction of the gas without plugging or fouling the
equipment. O
2
, for example, is detrimental to both solvent and
adsorption treatment systems. CO
2
levels above a few hundred
parts per million in the gas to be liquefied may cause plugging or
fouling at cryogenic temperatures; heavier hydrocarbons may also
cause plugging or fouling due to their freezing points.
Removing the contaminants before the gas enters the peak
shaver is the best overall solution. Sometimes the answer lies in
enlarging the plant; sometimes the front-end adsorption beds
need to be rotated sooner. Often solvent-based treatment systems
are added to help with the adsorption of CO
2
. Another method
for removing CO
2
is cryogenic fractionation. Using this process,
methane and lighter components are separated from CO
2
and
heavier components in fractionators, though adsorption and solvent
systems are most cost-effective.
Finding solutions for LNG terminals
Peak shaving operators, who are continuing to seek solutions
for changing gas composition, may look to engineers who
are experienced in developing LNG terminals and other LNG
infrastructure for guidance. As LNG is transported across the
globe, many issues have surfaced that have presented similar
challenges. In seeking solutions, such as reducing BTU content
and integrating LNG terminals with industrial plants to gain
thermal efficiency, CB&I has gained expertise in addressing issues
throughout the LNG industry.
Reducing the BTU content is only a problem in
North America, where the BTU content of the traditional supply
is lower than some supply imported from other regions. Because
of concern that the high BTU content could impact residential
burners, pipeline operators have looked for ways to protect their
consumers, as well as their own equipment. The companys
proprietary BTU reduction techniques have helped to address this
situation.
Thermal integration is a technique that the company has used
effectively when LNG regasification plants are located adjacent
to a power plant. The concept is to apply a heat transfer system,
using waste heat and turbine combustion air from the plant to
heat a heat transfer fluid. This fluid is used to heat the LNG and
then the cooled fluid returns to the plant to cool the inlet air, thus
improving the efficiency of the plant.
Looking ahead
As gas composition continues to change with the increase of LNG
imported into the country, peak shaving operators will need to find
solutions to operate their facilities at optimal efficiency. Conditions
at these plants are currently being evaluated and innovative
remedies for retrofitting or upgrading these plants are being
developed. Peak shaving plants play a vital role in the natural gas
distribution systems across the USA. While peak shavers are still
used only minimally outside North America, the potential for them
to be used effectively in other countries increases as these issues
are resolved and as the LNG industry expands across the globe.
Figure 3. Situated in a residential area, this peak shaver is the first full
containment tank constructed in the USA.
OO!NO
OlLLN
I
nvesting in energy conservation is definitely a winner for all. The
world needs a more sustainable energy system. LNG terminals
are no different, with operators taking a closer look at higher
efficiency, lower environmental impact and saving a portion of the
gas that otherwise would be wasted or not available for future use.
By assessing the environmental impact of regasification operations
and use of alternative technologies, terminal owners can contribute
towards this winning solution. It is not hard for LNG regasification
terminal owners to reduce the carbon footprint, even in colder
ambient conditions either onshore or offshore.
The sociopolitical directives have also pushed for regulations
towards greener technologies. Some of the State Governors in
the Gulf Coast area of the USA have utilised their authority in
rejecting LNG terminal permit applications, where the LNG terminal
developers proposed use of seawater. This is due to a concern
that the use of significant amounts of water required for the
regasification of LNG will impact underwater fish and plant life.
Increased energy costs associated with recent developments in
environmental regulations have challenged LNG terminal developers
to look to ambient air based technologies, instead of traditional
technologies based on fuel gas firing or use of seawater for
vaporising LNG.
Various papers published
1, 2
, previously presented differences
between the fuel gas-fired submerged combustion vaporiser
(SCV), open rack vaporisers (ORV) utilising seawater and specific
ambient air based technologies. It is generally well understood
that the recovery of low grade heat from ambient air to regasify
LNG results in lower fuel consumption and operating cost. In
addition to the savings in operating cost, the reduced fuel gas use
will result in lower air emissions making the overall terminal more
environmentally friendly. It is also generally understood that the
capital cost for ambient air based technologies is higher because of
the duplication or addition of equipment to supplement heat during
lower ambient temperature conditions, to provide the necessary
reliability for terminal operations. The warmer climate in the USA
Gulf Coast and Pacific West Coast regions results in higher thermal
efficiencies and better payback using ambient air based technologies.
Various innovative technologies have been used successfully in other
cryogenic industries. Other ambient air based technologies have
been developed recently to demonstrate the overall savings in fuel
gas and reduced environmental emissions. This paper summarises
various ambient air based technologies and provides a comparison of
thermal efficiencies for the two main ambient air based technologies,
limitations, and other design considerations including operations in
low ambient temperature conditions.
Ambient air technologies
Various approaches have been proposed recently for the use of
ambient air as a source of heat to regasify LNG. The approaches
can be categorised into two basic methods for recovering low level
heat from ambient air. They are indirect contact and direct contact.
The indirect contact approach utilises a closed loop intermediate
fluid that is heated with ambient air, and transfers the heat from
this intermediate fluid to regasify LNG in specially designed shell and
tube heat exchangers. The direct contact approach utilises ambient
air directly to regasify LNG in an exchanger designed for cryogenic
fluids.
Two methods using indirect contact have received a great
deal of attention lately. One of the methods is air fin exchangers.
This method utilises traditional air fin exchangers with forced draft
KAMAL SHAH AND JUDY WONG,
AKER SOLUTIONS US INC., USA, AND
BILL MINTON, ADVANTAGE FUELS,
USA, CONSIDER AMBIENT AIR BASED
TECHNOLOGIES WHEN BUILDING LNG
REGASIFICATION TERMINALS.
fans to push the ambient air through the air fin tubes to heat
the intermediate fluid, which is used to regasify LNG. The second
method is generally referenced as an air tower or reverse acting
cooling tower where induced draft ambient air heats water in direct
contact with circulated water, which can then be transferred to
regasify LNG. Both indirect contact processes are described in further
detail in the subsequent section.
There are two types of direct contact ambient air vaporisers. One
uses a natural draft ambient air vaporiser (NDAAV). The design of
this exchanger utilises the natural draft from the difference in density
for warm and cold ambient air. Ambient air enters the top of the
exchanger, exchanges heat directly to the cold LNG fluid flowing in
the exchangers specialised finned tubes and the air cools producing
a down draft. The cooler air then flows out through the bottom of
the exchanger. The second method uses a forced draft ambient air
vaporiser (FDAAV) and utilises a similar exchanger design, except fans
are installed on the ambient air vaporisers to force a higher mass of
ambient air across the fins of the exchanger for direct heat exchange
with cold LNG. Because of the similarity in exchanger design, only
the FDAAV process is further described in the subsequent sections.
Indirect contact ambient air technologies
One of the two methods described above is the air fin exchanger
based system. Figure 1 shows a schematic of this process where
ambient air is utilised as the heat source to regasify LNG via an
intermediate fluid. The intermediate fluid (such as propylene glycol,
propane, aqueous potassium formate based low temperature heat
transfer fluids
3
, etc.) is circulated in a closed loop system, which
flows inside the finned tubes of the exchanger. The warm air is
forced outside the tubes using fans to promote heat transfer from
the warm ambient air to the intermediate fluid. The cold air as
well as the condensed water outside the tubes flows in a top to
bottom downflow direction perpendicular to the tubes. The warm
intermediate fluid flows to the LNG vaporisers, which are specialised
low temperature differential shell and tube exchangers, to regasify
LNG. The cold intermediate fluid flows back to the air fin exchangers
for reheating. The process generally is provided with a supplemental
heating system to provide heat during low ambient temperature
conditions, where the available ambient heat supply is not adequate
to vaporise the design throughput. The source of supplemental heat
and size of the system can vary widely depending on the variation
in ambient conditions, availability of other waste heat sources in the
terminal or the configuration of the system, which may be optimised
for the specific LNG terminal.
If the expected ambient temperatures are below 35 F, the
supplemental heating system may require 100% redundancy to
maintain design throughput. The overall intermediate fluid system
requires a large circulation rate to transfer the large amount of heat
through a low temperature differential. The cold fluid temperature
is maintained above 30 F to avoid formation of ice outside the air
fin exchanger tubes, which would restrict the air flow and reduce
the overall temperature differential between the warm and cold
intermediate fluid. Higher humidity and higher air temperature
enhances the overall performance of the system. The process
produces significant amounts of water due to the condensation
of moisture from the air providing additional heat input to the
system. The water produced is clean, making the process more
environmentally friendly. Plot space for the ambient air based system
requires special attention. The ambient conditions utilised for design
of the system to overcome a certain lower ambient temperature
differential may lead to a larger plot space requirement and
increased capital expenses. The air fin exchanger design for lower
temperature ambient conditions and its supplemental heating system
(many times requiring 100% redundancy) should be studied carefully
for overall plot space and capital cost optimisation.
The terminal site meteorological data play an important role in
optimising the process. The selection of the intermediate fluid is also
important because of freeze up concerns inside the shell and tube
LNG vaporisers.
Such a process has been in operation since 2004 at a base load
Petronet LNG terminal located in Dahej, on the west coast of India.
The warm ambient air temperature above 80 F in most seasons
at this location provides ideal conditions for this system. Figure 2
provides a photograph showing part of this terminal and overall
general arrangement of air fin exchangers.
The other indirect contact ambient air technology is known as
air tower or reverse acting cooling tower. Figure 3 provides a general
schematic for the overall system. In this process, the air tower
exchanges heat from the warm ambient air to the cold circulating
water in a direct contact air tower. The warmer air from the lower
part of the tower enters the side of the air tower, and moves up
where it comes in direct contact with the cooler water flowing
down the tower. The moisture in the air will condense as it becomes
colder. Similar to the air fin exchanger process described above,
the condensation of moisture provides a significant contribution to
the total heat duty transferred from the air to the water. The cold
air exits the tower through an induced draft fan located on top
of the tower. The closed loop circulating warm water system will
transfer heat to another intermediate fluid system. The intermediate
fluid system design is similar to the air fin exchanger based
system described above. The warm intermediate fluid vaporises
the LNG in the specially designed shell and tube vaporisers, and
returns cold fluid to the water/intermediate fluid cross exchanger.
Figure 1. Air fin exchanger based LNG regasification system.
Figure 2. Dahej LNG Terminal (courtesy of IHI).
GLOBAL LNG INDUSTRY SET TO REGAIN MOMENTUM
The credit crunch and an uncertain market have hit the global LNG
industry, which had been steadily growing during the period
2003 - 08. LNG demand (a function of natural gas demand) is low
across the globe, yet it is set to pick up post 2012 and rise until 2015.
For further information go to www.energyglobal.com
REDEPLOYING AN EXISTING LNG FLEET
Newbuild and converted offshore LNG projects are now under review
by ABS. They are evolving gas technology, that has typically been
developed for land-based facilities, for leading energy operators.
AUSTRALIA: SET TO LEAD THE WAY IN LNG
Australia, with 24 currently active and future LNG projects, could
become the second largest LNG producing nation in the world by
2015, according to the International Energy Agency.
EXCLUSIVE TO
www.energyglobal.com
METHANE FROM COAL MINES PRESENTS OPPORTUNITY TO
RECOVER ENERGY AND GENERATE REVENUES
If captured and recovered for energy, coal mine methane is a
cost-effective resource. Coal mines around the world are increasingly
focusing on the commercially available, cost-effective opportunities to
capture and use this often wasted resource.
Bringing you the power of information
NEW AND
SOUTH AMERICAS LNG MARKET DEVELOPMENTS
Many experts predict that South America will become a net
exporter of LNG in the future, however many challenges remain to
the industrys development.
LNG16 IN ALGERIA
Algeria will be a tting venue for next years LNG16 Conference,
having staked its place as the EUs third largest supplier of foreign
gas.
AUSTRALIA AND INDIA: LNG PARTNERSHIP
ExxonMobils Australian division and Indias Petronet have signed a
20 year LNG supply contract, signaling a step towards approval for
the Western Australian Gorgon project on Barrow Island.
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This intermediate system is designed with fuel fired heaters to
supplement heating requirements during low ambient temperature
conditions.
Similar to the air fin exchanger system, the terminal site
meteorological data is very important in the optimisation of the plot
plan. The circulating water is in direct contact with ambient air and
may dissolve some CO
2
and salt due to the large water circulation in
the air tower system. Special corrosion and microbial growth related
issues must be taken into account during the design. The condensed
water produced from moisture in the air is generally clean and
can be used for beneficial purposes, making the process more
environmentally friendly.
One LNG terminal using the air tower design is
Freeport LNG Terminal located near Freeport, Texas
4
, and has started
up recently. This system is designed with a 100% backup for low
temperature ambient conditions.
Direct contact ambient air technologies
In this type of vaporiser, warm ambient air enters from the top of the
exchanger, and exchanges heat directly to the cold LNG flowing in
the specialised finned tubes to vaporise LNG. The air is cooled and
flows downward along the outside of the finned tubes and leaves
from the bottom of the exchanger.
Figure 4 shows the radial heat transfer mechanism in a direct
contact ambient air vaporiser, the surrounding ambient air begins to
cool while giving up its sensible heat to the cryogenic LNG.
FDAAV are equipped with fans installed on top of the
vaporisers. They also have shrouded sides providing more capacity
for a given shell to force a higher mass of air through the shell for
heat exchange with cold LNG. The forced air units require power
to operate the fans, but result in a more compact layout. Figure 5
shows FDAAV units and the finned tubes arrangement.
As the air flows down the vaporiser and transfers heat through
the fins to the LNG flowing in the tubes, it cools and reaches its dew
point and starts to condense water from the moisture in the air. As the
temperature drops further, the condensed water forms a snow-like
frost on the vaporiser cooling fins. This frost or ice formation process
supplies additional energy to the system from the heat of fusion.
As frost accumulates on the fins, it slowly reduces the performance,
requiring the unit to be regenerated when it reaches a predetermined
heat transfer level. The unit is regenerated by switching it off to allow
for melting of the ice. In order to maintain the overall availability of
the LNG vaporiser capacity, additional units are installed to overcome
vaporiser regeneration activity. At a given time approximately 30% of
the total units operate in regeneration mode.
Figure 6 shows a general process schematic of this process. The
export gas outlet temperature in the system will vary based on the
system design approach from site ambient conditions. This approach
may vary between 20 - 30 F depending on the design of the FDAAV
system. During low temperature ambient conditions, the export
gas temperature can fall below the desired pipeline specification. A
supplemental heating system is provided for low ambient conditions
to maintain the export gas temperature.
FDAAV units have been used for heating cryogenic liquids in
small sizes over three decades. Significant progress has been made in
increasing capacities over the last 15 years. Each of the FDAAV units
shown in Figure 5 are grouped into a bank of four cells and have
shrouded sides with generally four small fans on the top of each
cell to provide higher capacity than the NDAAV units. The units are
40 ft tall. Full scale testing for a number of such units is planned at
Chenieres Sabine Pass LNG facility in Louisiana this year.
Advantages
One of the advantages of direct contact ambient air vaporisers
over the indirect contact ambient air vaporisers (air tower or air
fin exchanger technology), is their ability to continue to transfer
significant amounts of sensible heat from the ambient air to
cryogenic fluids even when the ambient conditions fall below
32 F or below freezing temperatures
5
. Obviously, the regeneration
of the FDAAV requires some means to heat the air to bring
temperatures above 32 F during these low ambient conditions.
Figure 7 shows a schematic of such a process. A heating coil
can be installed in each of the FDAAV to heat the ambient air from
low ambient conditions to above 32 F to allow regeneration of
the units. The moisture content in the air during the low ambient
Figure 4. Finned tubes showing heat transfer mechanism
(courtesy of Cryoquip).
Figure 3. Air tower based LNG regasification system.
condition is low and it takes much longer to accumulate ice on
the vaporiser fins. This allows for longer switching cycles and
provides plenty of regeneration time. A closed loop intermediate
fluid system provides the necessary heat input to the air heating
coils for regeneration. The amount of external heat input required
to regenerate reduces the thermal efficiency, but overall thermal
efficiency is still significantly higher and provides much higher
overall fuel savings compared to indirect contact vaporiser
technologies.
The thermal efficiencies of direct contact FDAAV are generally
higher than the indirect contact ambient air technologies such as air
tower or air fin exchanger vaporisers. An internal study was carried
out using a specific FDAAV design point with ambient air at
70 F and 80% relative humidity (RH). Various thermal efficiencies
were calculated to determine the effect of ambient temperature and
percentage of RH. The design point is considered at 100% thermal
efficiency where no supplemental heat is required.
Figures 8a and 8b provide the performance. The performance
shows the effect of ambient temperature and relative humidity
on overall thermal efficiency for FDAAV. The difference in thermal
efficiencies between the direct contact ambient air technologies (i.e.
FDAAV) and the indirect ambient air technologies (i.e. air tower,
air fin exchanger), is from the fact that the direct contact FDAAV
relies on a single approach temperature compared to multiple
approach temperatures in the indirect contact ambient temperature
technologies. Also, the direct contact with cryogenic LNG provides
a higher overall log mean temperature differential (LMTD) providing
significantly higher sensible heat in comparison to indirect ambient
air technologies, even at lower ambient temperatures and relative
humidity.
Comparison of indirect and direct
contact ambient air technologies
Various internal studies, input from equipment suppliers and recent
publications
6, 7, 8
were utilised in the comparison of direct and indirect
ambient air vaporiser technologies. For specific comparison, air fin
exchanger based LNG vaporisation for indirect contact ambient
air technology and FDAAV based LNG vaporisation for the direct
ambient air technology were evaluated. The design point for
comparison was 1 billion ft
3
/d, ambient air at 70 F and 80% RH,
with export gas delivered at 40 F to the pipeline in an offshore
environment. The design point is where both processes provide
adequate equipment to meet 100% duty with ambient air without
any supplemental heat requirement.
Figure 9 shows a chart for comparison of thermal efficiencies
between the air fin exchanger based vaporisers representing the
indirect contact and FDAAV representing the direct contact ambient
air technologies.
The thermal efficiencies for the indirect contact air fin exchanger
based technology decline significantly as the ambient temperature
falls below the design point. The relative humidity is kept constant
at 80%, but the amount of moisture available in the air reduces
significantly with lower ambient temperatures and so does the
condensation heat available. The sensible heat available is also
reduced significantly with lower than design ambient temperature.
Conversely, the direct contact FDAAV based technology will maintain
significantly higher sensible heat available due to the large LMTD
available.
The overall thermal efficiencies for the indirect contact air
fin exchanger based system approaches zero once the ambient
temperature reaches less than 35 F, requiring 100% duty from the
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supplemental heaters. The FDAAV process is always forming ice,
which is melted by ambient air during the regeneration cycle. Below
freezing temperatures, ambient air vaporisers cannot be regenerated
except by heating the air flowing into the air heating coil located
below the fan to approximately 35 - 40 F. This supplemental heat
or additional energy input into the system reduces the overall
efficiency of the FDAAV process and is the reason for the break in
the performance line shown in Figure 9. The direct contact FDAAV
based system efficiency still remains high even at the lower ambient
temperatures below 35 F.
The overall plot areas were compared for these two
technologies in a previously published paper
9
and internal studies
indicate similar conclusions. The area required for direct contact
FDAAV based technologies is lower compared with the indirect
contact air fin exchanger based technology. The authors estimate
suggests the area required by FDAAV based direct contact vaporiser
system can be 30 - 50% lower. The FDAAV provides much higher
capacities and a more compact design with 40 ft tall units, requiring
less plot area. This is especially beneficial in the offshore environment
where the increased height of the FDAAV provides higher surface
area reducing the overall platform or topside (in case of ship hull)
plot space.
The overall capital cost for all ambient air based LNG vaporiser
systems is higher in comparison to SCV or fuel fired based
technology. The ambient air based technology cost has been
estimated and published in various papers referenced above.
Aker Solutions internal estimates for various clients indicated capital
cost for ambient air based LNG vaporisation system vary between
1.4 - 2.0 times the cost of SCV based vaporiser system depending on
the ambient conditions utilised for the design and supplemental heat
requirement.
The capital cost for indirect or direct ambient air based
technology is in direct relation to the design ambient conditions,
the availability of vaporiser capacity during the lowest ambient
conditions and the level of redundancy provided in the design. The
estimated capital cost difference between the direct ambient air
based FDAAV system and air fin exchanger based vaporiser systems
for an offshore terminal with the design point conditions listed above
shows small difference in favour of direct contact FDAAV based
technology. Both systems were designed with 100% supplemental
heat duty for winter operations. The expected capital cost difference
increases (in favour of lower cost for the FDAAV based technology)
with lower ambient temperature conditions as the lower available
LMTD results in a larger intermediate fluid circulation rate and size
of associated equipment for the air fin exchanger based vaporiser
system. It should be noted that even at temperatures below freezing,
it is not necessary to install 100% supplemental heat duty for the
direct contact FDAAV system if installed with air heating coils needed
for regeneration. It will still maintain high overall thermal efficiency
during winter months when temperatures are approaching freezing.
The overall operating cost difference between the indirect
and direct contact ambient air vaporiser system is dependent on
the specific site meteorological conditions. The higher thermal
efficiency for the direct contact FDAAV system at lower ambient
conditions would result in lower overall energy consumption. The
fan horsepower requirements for the direct contact FDAAV is
approximately 10 - 15% higher than air fin exchangers, but the
intermediate fluid circulation system for indirect contact air fin
exchanger system is much larger, requiring higher circulation pump
horsepower making up for the difference in fan horsepower. The
overall net energy requirement for the direct contact FDAAV based
system indicates savings over the indirect contact air fin exchanger
based vaporiser system for a specific Gulf Coast location. Figure 7. FDAAV system with air heating coils.
Figure 5. FDAAV units and finned tubes arrangement
(courtesy of Cryoquip).
Figure 6. FDAAV based LNG regasification system.
Researched and Produced by:
Sponsored by:
Leading experts include:
Heinrich Hick,
Directorate-General for
Energy and Transport
European Commission
Klaus-Dieter Barbknecht,
Member of the Executive Board
Verbundnetz Gas
Jean Mark Leroy,
CEO
Storengy
& President
Gas Storage Europe
Johannes Kindler,
Vice President
CEER
28
th
- 29
th
January 2010 I
Radisson BLU Scandinavia Hotel, Dusseldorf, Germany
www.gtsevent.com
If you want more information on this event please visit www.gtsevent.com
or contact Richard Jones at richard.jones@wtgevents.com or
call +44 (0)207 202 7574.
The key theme is gas security of supply in
Europe. There is a need to diversify supply
through alternative transport and trade routes
and to stockpile gas reserves through storage.
These issues along with gas market dynamics,
inter-trade between dierent federations, the
eect of the downturn, European Commission
directives and regulations and selected
technical case studies will make up the Gas
Transport and Storage Summit 2010.
What will the event be looking at?
2010
As indicated earlier, the indirect contact air fin exchanger system
thermal efficiency approaches zero when the ambient temperatures
fall below 35 F, while the direct contact FDAAV based system can
provide significant overall thermal efficiency and fuel savings by
adding air heating coils, which further increase fuel savings.
While the application of FDAAV in colder ambient conditions
is a positive aspect and a major difference between the indirect
and direct contact vaporiser systems, there are issues that must be
taken into account in design, where the site location can expect
snow or ice accumulation, which restricts the exit air from the unit.
The temperature of the cold air exiting the unit can vary between
35 F to below -45 F depending on the ambient conditions. This
is important for the design of the surrounding equipment and
facility that can be exposed to this cold air. Depending on the site
conditions, issues related to fog generation from the colder air exiting
from the unit requires computational fluid dynamics (CFD) analysis
for mitigation. In general, these issues can be mitigated with proper
safety analysis followed by appropriate design. In offshore terminals,
the accumulation of snow can be eliminated by proper layout of the
FDAAV system cold air outlet.
The direct contact FDAAV system requires the switching of units
for regeneration on a regular basis requiring many actuated on-off
switching valves. The operation is similar to industrial molecular sieve
or pressure swing adsorption units. Because of the number of these
valves in operation constantly, reliability and maintenance must be
carefully evaluated to maintain the desired availability of the system.
Conclusion
Various indirect and direct ambient air based LNG vaporisation
technologies have been described with their benefits and limitations.
All of the ambient air based technologies described are either in
operation or under construction and soon to be ready for startup. All
ambient air based technologies have positive environmental impacts
by reducing fuel consumption and greenhouse gas production.
All ambient air heated vaporiser systems produce clean water by
condensation of moisture in the air that requires very little or no
treatment, and can be used for beneficial purposes.
The overall thermal efficiency and energy savings for direct
contact FDAAV based technology are higher compared to the
indirect contact air fin exchanger based technology. The difference
in thermal efficiency increases with lower ambient conditions falling
below the design point, favouring the direct contact FDAAV system.
The capital cost for implementing any ambient air based system
is higher compared to conventional SCVs or fuel gas fired systems.
The estimated capital cost was slightly lower for a direct contact
FDAAV system compared to an indirect air fin exchanger based
system in a case study considered for an offshore terminal. The
capital cost difference is expected to increase with lower than design
point ambient conditions listed above, favouring the direct contact
FDAAV based system.
Investing in energy conservation is definitely a winner for all,
and that includes LNG terminal operators, who can reduce their
operating cost, improve their bottom line, and also conserve energy
and build a better world by reducing the environmental impact when
ambient air based technologies are utilised.
References
M.J ROSETTA, B.C. PRICE, and L. HIMMELBERGER, Optimise energy
consumption, Hydrocarbon Processing, January 2006.
J. H. CHO, R. FEMAT, H. KOTZOT, and C. DURR, Optimisation of ambient
air vaporisation processes, AIChE Spring Meeting,
6
th
Topical conference on natural gas utilisation, Orlando, Florida,
23 - 27 April, 2006.
CPTherm
F-Series bulletin, CPI Engineering Services, Inc. Midland,

Michigan.
R. NANDA, and J. RIZOPOULOS, Utilising air based technologies as heat
source for LNG vaporisation, 86
th
GPA annual conference, San Antonio,
Texas, 11 - 14 March, 2007.
P. BILLMAN, D. GRANGER, L.HIMMELBERGER and S. WILEY, LNG
vaporisation turns green, 87
th
GPA annual conference, Grapevine, Texas,
2 - 5 March, 2008.
R. M. SHARP, N. BAUDAT, and F.P. ROSS, An overview of
Mustang Engineerings LNG Smart
vaporisation technology AIChE

Spring Meeting, 6th Topical conference on natural gas utilisation,
Orlando, Florida, 23 - 27 April, 2006.
M. SOUDEK, LNG projects hinging on vaporiser technologies,
presentation at 5
th
annual conference Ecology and Environment,
New York, September 2006.
M. SOUDEK, Mustang in midstream, LNG Smart
vaporisation
presentation, California, December 2006.
J. DAVIES, Understanding ambient LNG vaporisers, AIChE Spring
Meeting, 6
th
Topical conference on natural gas utilisation, Orlando,
Florida, 23 - 27 April, 2006.
1.
2.
3.
4.
5.
6.
7.
8.
9.
Figures 8a and 8b. Top is a graph of FDAAV performance and bottom
shows FDAAV duty from condensation.
Figure 9. Thermal efficiency comparison.
I
n relation to the increasing needs for energy
worldwide, the construction of natural gas
liquefaction plants has seen unprecedented growth
in recent years. By 2013, almost 100 million tpy
of additional natural gas liquefaction capacity will
come onstream in various regions of the world,
doubling the capacity available on the market.
As most of these gas liquefaction plants are installed
in dry regions of the world, or in areas where acceptable
quality cooling water is not available, the lack of suitable
cooling water has made air cooling the preferred method,
for the initial part of the gas cascade cooling process,
which is where the natural gas is cooled to a condensing
temperature level and condensed, before it enters the
sub cooling refrigeration process.
GEA Batignolles Technologies Thermiques, based in
Nantes, France, supplies air coolers to the global LNG
industry, and has equipped most of the existing LNG
trains that are currently coming onstream, or are under
construction.
EMMANUELLE RAULINE, FRANOIS FVRIER AND NICOLAS BILBAULT,
GEA BATIGNOLLES TECHNOLOGIES THERMIQUE, FRANCE, DISCUSS
LOGISTICAL SOLUTIONS FOR REMOTE LNG FACILITIES.
A LOGISTICAL
C H A L L E N G E
Industrial air cooling
GEA started to develop the principle of industrial air
cooling in 1920 and specialises in the air cooling and gas
and vapour condensation for power plants and process
applications. The first large air cooling systems for the LNG
industry were supplied by GEA BTT in 1986, for the first
two trains of the Woodside LNG plant in Western Australia.
With further exploitation of Australian natural gas
resources, the LNG capacity on the continent will
be further expanded in the future. GEA BTT received an
order to design, manufacture and completely assemble
95 air cooler modules for an LNG module with a capacity of
4.3 million tpy. As the locations of the LNG terminals are in
remote areas, where the setup of a complex construction
site would involve high cost, the remote assembly of the
pipe racks, including the air coolers, has been decided on
behalf of the EPC contractor. One of the key issues of the
project has been the necessity to source the components
of the air fin coolers globally, such as motors, fans, and of
course the air coolers, and to assemble them in Thailand.
Global procurement and
manufacturing
This project is set to become the fastest LNG project from
discovery of the gas field in 2005 to first gas in late 2010.
The gas will be exported to Asia, and mainly to Japan.
The key issue in the project execution phase up to
module assembly stage has been to manage this worldwide
procurement and manufacturing of sub components. The
approach needed to be low cost, but was also limited to
approved sub vendors, and under the quality requirements
of one of the most demanding end users for a clean LNG
plant.
Materials have been procured from Australia for motors
and bearings, the UK for belts, the USA for inlet bells,
China for steel structure members and miscellaneous steel
sheet work, and Thailand for lifting beams and tools.
The finned tube bundles, as core components, have been
sourced from the manuacturing site of GEA BTT in Nantes,
France.
With three main manufacturing places (China, France,
and Thailand), it has been a huge project management,
procurement, expediting, inspection and logistics effort,
with material control for each and every component before
departure from supplier and after arrival at final destination.
Also, to ensure the high quality requirements, three
pre-inspection meetings have been performed with the
client, in each main manufacturing location. Each time,
dedicated inspection and test plans have been issued,
along with a set of specific manufacturing and inspection
procedures. These have been checked by the client, from
the audit of the companys main sub-suppliers, through the
full time survey of GEA BTT and client inspectors, all along
the project in China and Thailand, to the release of each
and every module or component with full records of QC
held during manufacturing.
Another quality aspect has been to ensure the required
perfect internal cleanliness of exchangers, essential in a gas
plant where there are very sensitive compressors and pumps
in the process line. Every one of the 42000 ACHE tubes
has been internally brushed and debris ejected, using foam
cylinders blown by high air pressure. To end the cleaning
process, each and every header has been vacuum cleaned.
The bundles have been hydro-tested and further dried in
Nantes, France.
Manufacturing location
Besides the sourcing of all subcomponents, a major challenge
has been to find an assembly and storage area in Thailand,
where the air cooler modules could be assembled and
Figure 3. Module loading for delivery.
Figure 2. Air fin cooler assembly yard.
Figure 1. Air fin coolers mounted on complete pipe rack.
transported to the assembly site, for the complete
pipe racks. GEA BTT has previous experience in
southeast Asia, especially in Malaysia where it has
had to establish such an organisation three times.
In order to find the best location for the
assembly work, seven companies in southeast
Thailand, in the Pattaya region, were shortlisted.
Finding the right partner in an unknown country is
always a challenging issue, as it is difficult to know
what kind of company you are going to find. Thus,
some of the selected companies were among the
largest mechanical contractors in the country, while
others were medium sized companies. After going
through a technical, quality and financial audit of
each company, GEA BTT chose to work with Demco.
The first issue was to find a large yard
suitable for the quantity of air cooler modules
to be assembled. This company was developing
a 30 000 m yard, which corresponded to GEAs
needs. Half of this surface was dedicated to
GEA BTT works. A covered workshop of 3000 m
was also used for storage, and pre-assembly of
mechanical components. 7500 m of the open yard
was prepared and asphalted.
The idea was to maintain work on 20 air cooler
modules, and be able to store 30 finished modules
before the client would be ready to receive the
goods in their assembly yard, located 15 km away.
95 modules were to be assembled and delivered
within six months.
Mechanical and thermal design were checked
and validated by the GEA BTT team and the client.
Vibration level on bearings, air flow quantity
produced by the fan, bearing temperature, sound
pressure and power level checks were among the
tests carried out on each of the 27 processes; all
checked and validated by the client.
A GEA site construction manager was appointed
to manage the work; progress monitoring and
reporting back to GEA Nantes, on the testing and
pre-commissioning of the modules, the packing and
preparation before delivery, and the relationship
with Demcos Managing Director, as well as with the
clients local representatives.
Part of the sourcing work included checking the
road between the Demco plant and the delivery
point for the transported air cooler modules in the
port of Laem Chabang, where the client would take
them to be erected on top of the pipe rack modules
sections.
Finding the right plant, that would allow for
road transportation of 6.5 m wide and 5.5 m
high modules sitting on a flat bed trailer, and
the suitable and safe lifting tools, was a real
challenge. Some of the obstacles faced during the
transportation of each air cooler module included
phone and electrical cables crossing the roads and
poorly maintained roads. These wide transports
occurred only by night in order to cause minimal
traffic delays. A local transportation company
was selected and appointed to do this job. After
six months of work, the job ended on time, and to
the target date of 1 August 2009.
Is your LNG supply chain
ready for the future?

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DDissstiinnguuishheedd Sppeeaakkerrs TToo DDatte IIInclluuddde:
Khalid Al Kuwari, Marketing Executive, RasGas Company Ltd
Rodrigo Vilanova, Gas & Power Trading Manager, Petrobras
Guy Dayvault, Director LNG Commercial Development, Gazprom Marketing & Trading Ltd
Dr David Ige, Group General Manager, NNPC
Franois Borgida, Director, LNG Logistics & Transportation, Total Gas & Power North America Inc
Guy Caruso, Senior Advisor, Center for Strategic & Internatational Studies
Jimmy Straughn, Chief Commercial Offcer, LNG Americas BP
Clay Harris, President & CEO, GDF Suez North America LLC
Joseph P. Berno, Chief Executive Offcer, Torp Terminal
Serapio Sima Ntutumu, Deputy Director General, Sonagas, G.E.
Porter Bennett, President & CEO, Bentek Energy LLC
Rudolf Araneda, CEO,,GasAtacama Chile S.A.
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U
sers of cryogenic liquid pumps have many
important criteria to evaluate when selecting
a pump. For certain pump services one of the
most important is the net positive suction head
required (NPSHR) value. There are many performance and
economic benefits associated with low NPSH ability. To achieve
this, pump designers often incorporate an inducer as the first
stage hydraulic component. Over the years, inducer design has
become more and more important as advances in technology
have allowed for pumps with very small NPSHR values.
This article discusses how different inducer designs can
affect NPSHR performance, and will offer some points to
consider when evaluating pump NPSHR values.
Why is NPSHR so important?
Users of submerged electric motor pumps (SEMP) are
continually requesting pumps with lower NPSHR. This is due
to the great benefits associated with low NPSHR for all types
of SEMPs. For example, the NPSHR value of a loading pump
installed within an LNG storage tank has a direct relationship
to the effective usable volume of the tank. If the liquid is at
saturated conditions, as is the case for most cryogenic storage
tanks, then the minimum tank liquid level is defined by the
NPSHR level of the pump. As such, a lower NPSHR will provide
a greater usable volume of liquid, or allow a smaller tank to
satisfy a fixed volume.
Its all in the
design
MICHAEL CORDS,
EBARA INTERNATIONAL CORP.,
USA, EXPLORES HOW NPSHR
PERFORMANCE CAN BE AFFECTED BY
DIFFERENT INDUCER DESIGNS.
Marine cargo pumps installed inside the storage tanks
onboard LNG carriers are used to offload the LNG product.
In this application, a low NPSHR is important economically
because any product that cannot be offloaded cannot be sold.
Ship designers are always looking for ways to decrease the
remaining dead stock of liquid and have over the years pushed
SEMP designers to decrease the NPSHR.
Even pot-mounted pumps, pumps installed inside their
own containment vessel, can benefit from low NPSHR.
Upstream equipment, such as a re-condenser, must be
physically located at a defined elevation, with respect to the
pump containment vessel, to provide sufficient net positive
suction head available (NPSHA). A reduction in the NPSHR
allows more freedom for placement of equipment and lower
civil engineering costs. Because of these benefits, the NPSHR
value at the rated flow rate of the pump is one of the criteria
to be guaranteed by the pump manufacturer and it is one of
the most important numbers on a manufacturers datasheet.
It should also be noted that NPSHR means different things
to different pump designers. The generally accepted industry
definition of NPSHR is the NPSH that results in a 3% loss of
head. Many pump designers will quote an NPSHR value based
on a 10%, 25% or even more than 50% loss of head. This
allows a lower value to be shown on the datasheet. Therefore,
it is important to always confirm the NPSHR definition being
used by each pump designer when evaluating and comparing
performance. The pump vendor can also be instructed to
provide information per the definition desired. This will ensure
that the pump can be properly selected and the pump designer
can properly design for the pump performance required.
NPSHR and pump operation
Evaluating NPSHR performance is an easy process, since a
pump with a lower NPSHR value is better, right? Unfortunately,
as with most engineering issues it is not as easy as it first
seems. The reality of the service conditions and intended
use play a large role in deciding how to evaluate the NPSHR
performance of a pump. The NPSHR value varies as the
flow rate of the pump changes. Pump designers use various
inducer designs not only to minimise NPSHR, but to control
this variation so as to optimise the suction performance of the
pump to match its intended service.
Some examples will illustrate how pump operation and
NPSH performance relate to one another. An in-tank pump,
such as an LNG loading pump, is installed at the bottom of an
LNG storage tank and is located within the discharge piping
column of the tank. This type of pump tends to operate at,
or near, its best efficiency point (BEP) or rated design flow
rate, with little variation. In this situation a low NPSHR value
at rated flow is important to maximise the usable volume of
the tank. But there is also another point to consider. During
startup the pump must first fill the tanks discharge column,
which can be up to 50 m in height. During this time, the
pump is operating at maximum flow as the liquid has not yet
reached the control valve. If the NPSHR value at maximum
flow is too high, the pump may operate in a transient
cavitation condition until sufficient backpressure is built from
the column filling. In this case, NPSHR at maximum flow is just
as important as NPSHR at the BEP flow rate (see Figure 1).
For a marine cargo pump it is important to strip the ships
tank as low as possible, in order to minimise the dead stock
of liquid. Thus, as the liquid in the tank reaches its minimum,
operators will often reduce the flow rate of the pump to
operate at a region of lower NPSHR. Here, the lowest NPSHR
value, regardless of where along the flow range it occurs, is of
prime importance.
Will the pump operate at a constant flow rate, or will
process conditions dictate a range of flow rates? How
often will low NPSHA conditions occur? These are some of
the questions that must be answered to properly evaluate
the NPSH performance required of a pump. Thus, a simple
comparison of NPSHR values at rated flow is not sufficient
to accurately judge the performance of one pump against
another. A low number may look good in a pump vendors
quote, but it may not tell the whole story, and it may not be
what is required.
Inducer performance characteristics
So how do inducers affect the performance of a pump with
respect to NPSHR? Can different inducer designs influence
NPSHR values at different flow rates? These are key questions
that the pump designer must face. No single inducer design
can do everything. So it is necessary to design an inducer that
has the preferred characteristics that will optimise the overall
performance of the pump. What is good for one type of pump
may not be good for another.
Inducers are basically axial flow impellers intended to lift
the liquid into the eye of the proper first stage impeller. This
improves the suction conditions at the first stage impeller and
allows the pump to operate at lower NPSH conditions. While
fan type designs were once employed, today inducers are
generally of a spiral/helical type configuration. The inducer
vanes are at a low angle of incidence to the inlet liquid stream.
By varying the vane angles, vane pitch, diameter, number of
Figure 2. Various inducers matched with their suction impellers at the
prototype stage (photo courtesy of Ebara Corp.).
Figure 1. Comparison of NPSHR levels at BEP and maximum flow
rates.
vanes and other geometries, the pump designer can change
not only the magnitude of the NPSHR value, but also how the
NPSHR value changes across the operating flow range.
Variation in inducer vane pitch can illustrate just how
effective the design of an inducer can be for optimising
pump performance. Vane pitch is defined as the axial length
travelled by a vane, per degree of vane rotation. In other
words, for a given length, a high pitch inducer will have
more wraps of each vane than a low pitch inducer. This pitch
can be constant or it can be varied along the axial length of
the inducer.
Variable pitch and constant pitch inducers have different
NPSHR characteristics. A variable pitch inducer can generally
achieve a lower NPSHR at the BEP of the pump. It also has
superior performance at lower flow rates. However, at flow
rates above the BEP, its NPSHR values increase greatly. At these
higher flow rates, a constant pitch inducer will have better
NPSHR performance. For pumps where operation at lower flow
rates is necessary, as is the case for tank stripping, a variable
pitch inducer is preferred. For pumps required to operate at
high flow rates, a constant pitch inducer is superior. The
two designs may have the same NPSHR value at the rated flow
rate, but knowing how the pump will be operated in service
will dictate which design is best.
Another design consideration is the specific speed of the
inducer. High specific speed inducers were first developed
in the rocket turbo pump engine industry and were
quickly employed by pump designers for their low NPSHR
characteristics. They have found a place in SEMPs and have
advanced the technology of pump performance.
Figure 3. Computational fluid dynamics (CFD) is now a common tool
used for inducer design (photo courtesy of Ebara Corp.).
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However, one drawback of high specific speed inducers is
their narrow operating range; the higher the specific speed,
the narrower the stable window of operation. Again, it is the
intended service operation of the pump that will dictate the
inducer design. A pump that operates mostly at its rated flow
rate will benefit greatly from a high specific speed inducer
designed to match this flow rate. For pumps that require a
greater operating range, such an inducer may not be ideal.
Engineering an inducer
SEMPs are custom, engineered to order machines. The design
of an inducer is an important step in the overall design of the
pump. The inducer is an integral component with the
first stage impeller. For example, it is a key design
consideration that the inducer outlet flow be matched with the
impeller inlet geometry. This not only affects the NPSHR, but
can affect the overall efficiency of the pump. In fact, it is
now common for the first stage impeller to be a dedicated
suction impeller, designed in harmony with the inducer (see
Figure 2). Experience with various inducer and impeller designs
is necessary to optimise the overall performance of the pump.
Today, computational fluid dynamics (CFD) also plays a key
role in the design of custom inducers (see Figure 3). The ability
to accurately predict not only the NPSHR performance, but also
the overall pump curve shape as its affected by the inducer
design, is enhanced by such modelling tools.
In order to ensure that the best possible NPSH performance
is achieved, it is necessary to identify the true and complete
operating conditions of the pump. It is here that discussion
with an experienced pump designer will pay dividends in the
final pump performance. A complete understanding of how
the pump will be operated, and what is actually required over
the entire flow range, will allow the pump designer to optimise
the performance of the inducer.
Conclusion
Low NPSHR is a valuable performance characteristic of SEMPs.
There are several performance and economic benefits to be
had in which inducers play a very important role. As such,
the design of an inducer is a key aspect of the overall pump
design. Experienced pump designers are necessary to optimise
overall pump performance.
It is also important to discuss the service conditions
and operating characteristics with the pump designer. This
information will help to ensure a correct inducer design is
implemented for overall performance benefit. The best inducer
will optimise all performance conditions. The best inducer
for the job at hand is more than just one number on the
datasheet.
References
RUSH, S. and KAUPERT, K., Submerging Solutions, LNG Industry,
pp.77 - 80, Summer 2007.
KAUPERT, K. and KAMIO, K., Advancing Suction Performance in
Hydrocarbon Liquids, ASME Fluids Engineering Division Summer
Meeting, FEDSM2009-78050, 2009.
STEPANOFF, A., Centrifugal and Axial Flow Pumps 2
nd
Edition,
Krieger Publishing, pp.144 - 151, 1957.
WATANABE, H. and ICHIKI, I., Development of Cryogenic Pump
Inducer using Inverse Design Method and CFD, Ebara Engineering
Review Vol. 221, pp.3 - 11, October 2008.
1.
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ADVERTISERS INDEX
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LNG Industry December 2009

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