1. LNG Technology

2. Capital and Operating Costs of LNG ‘chain’
Exploration & Treatment & Shipping Storage & Distribution Production Liquifaction Regasification & Marketing
15-20% % % %

3. 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

4. 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%

5. 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

6. Offshore Liquefaction
Floating Production Storage
and Offloading (FPSO)

7. 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)

8. 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

9. 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

10. 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

11. 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

12. 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

13. Ship-to-Ship Transfer
Emergence of Offshore regasification and liquefaction
New vessels may now have capability to transfer or receive loads

14. 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

15. 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%

16. 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

17. 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

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

19. 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)

20. Questions?

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

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

23. 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

24. 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

25. Liquefaction Terminals
Wartsila Diesel, 2008

26. Regasification Terminals
Wartsila Diesel, 2008

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

28. Federal Energy Regulatory Commission