LNG Technology

Capital and Operating Costs of LNG ‘chain’ Exploration & Treatment & Shipping Storage & Distribution Production Liquifaction Regasification & Marketing 15-20% 30-45% 10-30% 15-25%

LIQUEFACTION Cool Gas to -260oF 1/600th of gaseous volume 30-45% LNG ‘chain’ costs Costs driven by: Train number and capacity Compressor drive efficiency New Technology: Offshore Production Darwin Liquefaction Facility http://content.edgar-online.com/edgar_conv_img/2007/03/30/0000950152-07-002894_L25400AL2540013.JPG

Train Size Train capacity has grown an average of 3 million tons/year Facilities with capacities of 7.8 and 9.6 million tons/yr will come on stream soon (Qatar and Russia) Increasing train capacity, as opposed to # of trains, can reduce costs by 25%

Compressor Drive Efficiency Gas Turbine Improvements Increase in efficiency from 28% to 40% in last 40yrs Decrease in fuel consumption (i.e. cost) by 60-70% Aeroderivative Turbines Advantages: increase thermal efficiency by 25% and total plant efficiency by 3%, less downtime to replace Disadvantages: expensive, high maintenance Currently, industrial gas turbines are used to drive the compressors Electric Drive Alternative Use of smaller turbines in a combine cycle power plant to produce electricity to run liquefaction plant Improve efficiency, cut emissions Liquefaction requires significant compression to liquefy the gas Large turbines are hard to manufacture and are expensive

Offshore Liquefaction Floating Production Storage and Offloading (FPSO) http://braxtonlng.com/LNGFPSOs.aspx

TRANSPORTATION LNG shipped in large vessels with cryogenic tanks 10-30% LNG ‘chain’ costs Costs driven by: Vessel capacity Tanker Propulsion New Technology: Ship-to-Ship Transfer (STS)

Vessel Capacity First LNG tankers: 27,400 cubic meters (cu m) In 2007, vessels averaged 266,000 cu m Decrease in costs by 45% from early 1990’s due to increase in vessel capacity Limitations: restrictions on import vessel size, maximum capacity of regasification equipment

Tanker Propulsion Boil-off gas (~0.15%/day) Three Propulsion Options: Vent to atmosphere Burned Reliquefied Three Propulsion Options: Steam Turbine Dual-fuel diesel engine (DFDE) Heavy fuel diesel engine Talk about all three

Tanker Propulsion Boil-off gas (~0.15%/day) Three Propulsion Options: Vent to atmosphere Burned Reliquefied Three Propulsion Options: Steam Turbine Dual-fuel diesel engine (DFDE) Heavy fuel diesel engine Talk about all three

Tanker Propulsion Boil-off gas (~0.15%/day) Three Propulsion Options: Vent to atmosphere Burned Reliquefied Three Propulsion Options: Steam Turbine Dual-fuel diesel engine (DFDE) Heavy fuel diesel engine Talk about all three

Tanker Propulsion Boil-off gas (~0.15%/day) Three Propulsion Options: Vent to atmosphere Burned Reliquefied Three Propulsion Options: Steam Turbine Dual-fuel diesel engine (DFDE) Heavy fuel diesel engine Talk about all three

Ship-to-Ship Transfer Emergence of Offshore regasification and liquefaction New vessels may now have capability to transfer or receive loads http://www.thedigitalship.com/powerpoints/norship05/lng/Trym%20Tveitnes,%20HOEGH.pdf

REGASIFICATION Facility costs can range from $100 million for a small plant to $2 billion for state-of-the-art ‘greenfield’ plant (usually found in Japan) Costs driven by Storage Gas Composition Control New Technology: Offshore Regasification

Storage 1/3 plant capital costs EIA, Global LNG Status and Outlook 2003 1/3 plant capital costs Storage capacity dictates volume of gas plant can handle Can usually only process 70-75% capacity load Increasing storage can increased capital costs 10-20%

Composition Control Composition of gas delivered to regasification plant can vary significantly depending on source Compounds, such as propane, butane and ethane, can often be left in the LNG in order to reduce liquefaction costs These compounds raise the heating value (HHV) of the gas, which many countries do not have the infrastructure or equipment to handle, the US included Industrial equipment accounts for 60% of natural gas use, and is typically the most sensitive to natural gas quality

Composition Control Technologies to reduce the HHV Injection of inert gas (usually Nitrogen) into vaporized gas Can increase end-user NOx emissions Restrictions placed on amount of inert gas that can be present in fuel Increase in capital and operating expenditures to run injection process, with no increase in value of fuel Natural Gas Liquids Recovery (NGLR) Remove the mid-range (propane, butane, ethane) compounds before or after regasification Profit from petrochemical sales > profit from high HHV when present in gas

Offshore Regasification US to build two Offshore plants, one already under construction Floating Storage and Regasification Unit (FSRU)

Conclusions To keep the LNG market growing and meet increasing natural gas demands, it is most important for future technology to address: Compressor Efficiency Ship-to-Ship transfer Offshore Regasification Increasing cost effectiveness will allow companies to produce gas in harsher environments to help meet demands (deep sea, artic conditions)

Questions?

US Natural Gas Imports Projected to 2030 (Pipeline vs. LNG) Energy Information Administration, Annual Energy Outlook 2006

LNG demand as of 2003 Source: Gas Techology Institute, IEA 2003 Natural Gas Information

LNG Demand in 2025 EIA International Energy Outlook 2004 US only has 4% of gas supplies Russia, Qatar and Iran have more than half of global reserves Therefore, importation in inevitable EIA International Energy Outlook 2004

Why is demand increasing? Increased installation of Combine Cycle power plants for increased efficiencies Environmental concerns: Natural gas is ‘cleaner’ than petroleum and coal Worries over the abundance of conventional fuel supplies: natural gas reserves to last 30yrs longer than oil

Liquefaction Terminals Wartsila Diesel, 2008

Regasification Terminals Wartsila Diesel, 2008

Regasification Plant in Sabine, TX to receive LNG from Qatar (2009) ExxonMobile Corporation: Form 8-K, current report

Federal Energy Regulatory Commission