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11/18/2006

CNG carriers on the trail of stranded gas

Search Site from: Asian Oil & Gas
by: Ian Fitzsimmons
Sunday, August 01, 2004

The potential for transporting compressed natural gas (CNG) by sea

has been discussed for some time. In this article, consultant Ian
oilonline.com Fitzsimmons examines the loading and export implications of
Web employing CNG carriers to recover stranded offshore gas.
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Features
Offshore Engineer
Features The objective of this article is to discuss the potential application of
Asian Oil & Gas Features compressed natural gas (CNG) carriers to facilitate the beneficial
Drilling Contractor exploitation of stranded offshore gas reserves.
Features
Stranded gas could comprise associated gas production, which would
Ads by Google otherwise have to be either flared or reinjected, and small offshore
gas accumulations that could not justify the installation of an export
Small LNG carriers pipeline to shore. However, the discussion is equally applicable to the
4,000-20,000 cbm
use of CNG carriers generally such as shoreto- shore transportation
LNG carriers Lauritzen
Kosan Denmark
of CNG where the high cost of an LNG production facility and LNG
small-lng.com carriers cannot be economically justified by the available gas
reserves.

Waterborne LNG The concept of transporting CNG by sea rather than by the use of
Statistics
subsea pipelines is not new, but thus far has not been developed for
Detailed forward &
historical LNG global large-scale application. The application discussed here envisages the
movements and offshore loading and export of sales quality gas from an offshore
statistics production facility using dedicated CNG carriers with a capacity for
www.waterbornelng.com 600mmcf of sales gas. The major implication here is that the
production of sales quality gas will probably require the use of
dewpoint control and conditioning on the production facility prior to
export. The delivery point could be either offshore or onshore.

The CNG concept is not intended to compete with the production and
transportation of LNG on a large intercontinental scale. It is aimed at
local markets with an immediate requirement for compressed natural
gas, thus avoiding the need for an LNG storage facility and a
complicated long term gas sales contract.

Thus far, all LNG production plants have been located onshore,
receiving their gas supplies by pipeline. LNG plants are extremely
expensive and require dedicated LNG tankers to export the product
to the industrial market place. The buyer will also have to construct
and operate his own onshore storage and distribution facility. In
order to justify the huge capital expenditure involved, a large gas

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resource is required with a typical 25 year sustainable production
life. As a consequence, long term gas sales contracts for LNG
production are extremely difficult to negotiate and arrange.

The perceived advantage of CNG is that it avoids the expense of

export pipelines and onshore treatment and storage facilities, and
aims to deliver compressed sales quality gas to an existing gas
transmission system or onshore facility. Compared with LNG it is a
low capex option.

A gas transmission system may typically comprise an existing

offshore production facility connected to a gas export pipeline
system, which in turn supplies an onshore gas treatment terminal
connected to a gas transmission network. Onshore outlets could
typically include refineries, LNG plants, power generation and
feedstock consumers. Tanker berthing and offloading facilities would
probably already be in place for a direct onshore operation, whereas
offshore transfer to an existing offshore platform would require a
new tanker mooring facility.

It can be readily seen therefore that one potential advantage of CNG

is that individual cargos of sales gas could be sold on the spot
market to one or more dedicated delivery points. A cargo of
600mmscf of sales quality natural gas is equivalent to about 100,000
barrels of oil. In monetary terms therefore the cargo will be worth at
least $3 million based on the current price of crude. In the market
place, CNG delivered by carriers will almost certainly obtain a
premium over the equivalent crude price.

A physical comparison of CNG with LNG storage can be summarised

as follows:

The cargo volumes for CNG carriers are predicated on current

proposals. But it is not impossible to conceive that future
developments could aim for double the suggested volume. The cargo
volumes for

LNG represent current standard sized carriers. It is also worth noting

that if the CNG storage volume could be kept at a temperature lower
than ambient by closed loop refrigeration, the storage ratio of 200:1
could be substantially improved.

From the foregoing it can be readily seen that the great benefit of
LNG transportation is the high efficiency of the low pressure tank
storage. By comparison, the high pressure storage required by CNG
carriers will result in a need for multiple, small diameter pipe storage
(say 42in diameter maximum). It is clear that an optimum solution
has to be found for CNG storage in order to keep costs down, and to
keep the tanker within the typical size range of a suezmax tanker
hull (280m x 48m wide x 26m o/a depth x 18m draught) or some
similar bulk carrier.

The net CNG pressurised gross storage volume described above can
be represented by a 'box' within the hull measuring 32m x 36m x
86m (3,000,000cf/100,000m3). But allowing for 66% storage
efficiency due to the use of small diameter pipes, the available

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volume of the 'box' for CNG storage would need to be about
150,000m3, the same as an LNG carrier. In effect the length of the
'box' would then be increased to about 130m. The typical 'box'
volume and dimensions suggested would therefore fit into the plan
and elevation of a suezmax envelope, leaving adequate room for the
engine room, fuel and consumables, power generation, safety
systems, utilities, accommodation and other CNG facilities. The 'box'
would protrude above the weather deck.

Several manufacturers have proposed the use of high strength steels

and composite alloys for CNG storage facilities. There is every reason
to believe that these materials will have a role to play in CNG
storage systems. However, it has to be remembered that fatigue,
cost and economic reality will all have their part to play in the
determination of the final choice of storage materials.

Various manufacturers and shipowners have made various proposals

in respect of the actual gas storage facilities. These vary between the
use of either large diameter tubes, which can be installed either
vertically or horizontally, or small diameter tubes that can be wound
onto permanently installed carousels, and then inserted into the CNG
hull storage 'box'.

Once such reeled small diameter tube proposal has been made and
patented by Calgary-based Cran & Stenning and has been named the
'Coselle'. The carousel contains a continuous length of about 10.6
miles of 6.625inOD pipe with 0.25in wall thickness. This
arrangement can store about 3.2mmcf of sales gas at a pressure of
about 3000psig. Each Coselle weighs 500t and 200 would be
required to accumulate a cargo of 600mmcf of sales gas. The overall
carousel diameter is 50ft and it is 16ft tall. An initial study indicates
that it should be possible to accommodate 200 Coselles within a
suezmax configuration and the weight of the Coselles would be about
100,000t.

However, the application of the concept is not without some

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concerns. The use of the single continuous tube 10.6 miles long does
not represent a desirable and optimum configuration for a pressure
vessel, particularly in respect of eventual blow-down operations.
Another concern is the inability to inspect either the interior or
exterior of the pipe within the bundle.

The large diameter tube proposal envisages the tubes stored either
vertically or horizontally. From a purely installation and retrieval
point of view, the vertical tube option will be selected here as the
discussion point.

The tubes will be assumed to be 36m long x 42inOD x 1in wt (90ksi

smys). The tubes will therefore protrude vertically above the
moulded depth of the hull. It is assumed that permanent protective
covers will be provided above deck level. The tubes can be readily
inspected both internally and externally. In plan, the tubes will be
closely packed and clamped together in bundles between lateral
bulkhead beams and the main longitudinal beams.

It is estimated that 3700 tubes will be required to store 600mmcf of

sales gas at 3000psi and an ambient temperature of 15°C. Estimated
total weight of the storage tubes will be about 80,000 tons. If the
ambient temperature can be reduced around the storage pipes by
closed loop refrigeration, then either the storage pressure can be
reduced with a corresponding reduction in pipe wall thickness or, as
an alternative, the storage capacity could be increased.

Optimisation of the CNG storage facilities cannot be determined in

isolation from the CNG storage and transportation system as a
whole. Critically, it cannot be finalised without the identification of
competitive gas sale outlets. With that in mind, it is necessary to
discuss the other critical drivers within any CNG carrier development
proposal.

It is assumed as the starting part of the system discussion that sales

quality gas will be collected offshore from a permanent production
facility. It will also be assumed that associated gas production is
initially 200mmcf/d. It is a given that the gas has been dehydrated
and conditioned to sales gas specification on board the main
production facility. Apart from any gas sale consideration, it also
means that storage maintenance will be minimal, and subject only to
regulatory inspection.

From the foregoing we can determine that it will take three days to
load the CNG carrier. Assuming it to be 1000 nautical miles from its
delivery destination, a sailing time of two days will be required.
When it reaches its delivery point it will begin to blow down and
discharge its cargo. That will probably be the most critical offshore
activity, having due regard to the entry conditions for the sales gas
at the delivery point.

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It is likely that an existing offshore facility in the North Sea, which is
already connected to a gas export system, will be operating at an
export pressure of about 1500-2000psi. This is typical for the export
of North Sea gas due the onshore minimum entry pressure
requirement for the UK national gas transmission system of about
1000-1100psi at a temperature above 2°C. A controlled blow down
of the cargo from 3000psi to 150psi (say) will be required if cargo
gas is introduced at the facility compressor low pressure inlet.
However, this approach will be time consuming.

It would be more expedient and cost effective to install a compressor

onboard the CNG carrier. It would then be possible to blow down the
cargo to 1500psi and introduce it downstream of the compressor
outlet onboard the platform facilities. The gas compressor onboard
the CNG carrier could then be used to discharge the remainder of the
cargo, leaving ambient gas pressure within the storage vessels.

Gas heating will be required during any operational cargo blowdown.

It is a critical activity and will also have to be provided onboard the
CNG carrier. The amount of heating will of course be dependent upon
the eventual blow down scenario at the delivery point.

The foregoing schedule indicates that a speedy blow down to a high

pressure gas transmission system either onshore or offshore will
probably produce better economic results than a low pressure
onshore industrial consumer. Assuming a 48-hour blow down
offshore, the CNG carrier will require a round trip time of about nine
days, weather permitting. It is obvious therefore that the beneficial
exploitation of stranded gas may require more then one CNG carrier.
In fact, in the scenario described, three CNG carriers would be
required to enable the producing field(s) to remain in continuous
operation. As gas production declines, cargo compression becomes
the critical schedule activity. At a certain point, therefore, one of the
carriers could be released for other duties. Clearly there exists an
economic cut off for gas production.

Assuming a round trip of nine days as described above, an individual

carrier could transport 40 cargos of CNG each year. Assuming 75%
efficiency of the offshore loading/unloading systems, 30 cargoes
could produce annual revenue of $90 million. With three carriers in
operation, the annual revenue would be $270 million. The eventual
economic benefit of the CNG system as a whole would of course
depend on the sustained production of sales gas from the stranded
source.

The use of a CNG carrier for offshore loading and unloading presents
itself with uncertainties derived from adverse weather conditions.
The technical considerations for loading gas offshore are not
oppressive and many competitive and proven loading/unloading
solutions are currently available. These range from surface moored
buoys to submerged/ disconnectable buoyant flexible risers. But they
do not guarantee 100% availability under adverse weather
conditions. However, the availability of the loading system can be
enhanced by the provision of DP thrusters on the CNG carrier. The
cost of the DP system will be small compared with the benefit of
increased loading availability to about 90% (North Sea type
environment).

Obviously the geographical location of the stranded gas will influence

costs and rewards derived from the CNG carrier approach. For
example, an offshore CNG carrier operation in Southeast Asia is
likely to be more efficient from both a capex and opex viewpoint.
This will be largely due to more clement weather conditions (which

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will benefit loading availability), shallow water depths and reduced
transit times to delivery points by comparison with the North Sea
and Europe.

But the overall conclusion is that CNG carriers do offer a substantial

opportunity to exploit gas reserves that would otherwise be either
wasted or would deter the development of a potentially beneficial
offshore development project.

Safety concerns will likely be raised in respect of the transportation

of high volumes of CNG by ships. Hull configuration could become an
issue. Such concerns can be answered and the appropriate safety
case and FSA could be produced. The certification authorities will
have their part to play with formulation of the design rules and
procedures for this new class of carrier. But the endeavour is no less
daunting than the earlier introduction of LNG and LPG carriers.

Many shipyards and owners have already begun the design process
for the new CNG carriers. Their confidence is justified. Society now
demands that every molecule of produced methane is put to good
use and not wasted. This benefits the environment and our
economies. However, the use of CNG carriers for offshore loading
and transportation does not automatically guarantee the profitability
of every incidence of stranded gas. That has to be adjudicated on a
case by case basis.

The important thing is that a new tool exists which could enable the
beneficial production of stranded gas, which would otherwise remain
wasted and undeveloped. It is incumbent on explorers and operators
alike to examine the potential of the new tool and the benefits it
could deliver.

About the author

Ian Fitzsimmons is an independent consultant and
associate of Pegasus International. He was the principal
development engineer for the first Shell Expro North Sea
FPSO Anasuria. He was also the principal development
engineer for the subsequent Woodside Laminaria/Corallina
FPSO Northern Endeavour. During his Woodside assignment he was
responsible for development studies relating to the production,
storage and offloading of LPG offshore as a tandem FPSO application.

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