Technological Change And The Transport Of Natural Gas
By Dr. Gary K. Busch 28/14/14
Nov 30, 2014 - 9:00:08 AM
Natural gas is one of the cleanest burning fossil fuels. It has always been relatively abundant as a by-product of the refining of petroleum, although often 'flared' as a result of the difficulties in storing and transporting the large volumes of gas produced. It is also very "green", as it consumes less fresh water and takes up less land per unit of energy delivered. Now, with the staggering advances of 'fracking' in North America, the supply of natural gas has emerged as a major commodity in international trade and the 'fuel of choice' in an ever-growing series of applications, including a feedstock source in important chemical applications.
There are large volumes of natural gas produced in the U.S. and Canada; in fact in volumes larger than the ability of the North American market to consume on its own. Fortunately the new abundance of natural gas coincides with the political problem of European states; reliance on Russia as a prime supplier of its gas and the fallout over the question of the Russian quest for dominance of the Ukraine.
The concatenation of these developments will have both an economic as well as a political impact on the market for natural gas. However, the resolution of the problems of delivering regular and unimpeded gas supplies to Europe and other consuming nations in Asia depends on the ability to store and deliver the gas from its source to the consuming nation efficiently and cheaply. Fortunately the development and expansion of a natural gas market has been done in parallel with the new technology of gas delivery systems.
Traditional transportation of natural gas has been done through a web of pipelines which criss-cross North America as well as through a smaller concentration of pipelines in Europe, Asia and the Middle East. Natural gas is pumped through these pipelines and delivered to distribution points which take the gas received and deliver it to customers. Nothing is done to the gas but pressuring and blowing it through the pipeline. The nature of the gas remains unchanged. This is a sufficient system to transfer and deliver gas on land as the pipeline carries the gas from point to point. However, it is very inefficient in the moving of gas between non-adjacent countries as the volume of the gas is too great to handle by non-specialised marine vessels.
The response to the challenge of storing and shipping natural gas was to use cryogenic procedures to liquefy the natural gas through refrigeration to less than -161 degrees Centigrade (the boiling point of methane at atmospheric pressure).By liquefying the gas the volume of the gas is reduced 600 times, making it easier to store and to ship. The freezing of the natural gas is done in a specialised unit, called a 'train'. It includes a process of purification of the gas before it is frozen so the Liquefied Natural Gas is free of impurities.
Each LNG plant consists of one or more trains to compress natural gas into the liquefied natural gas. A typical train consists of a compression area, propane condenser area, methane, and ethane areas. They are very expensive to build. These trains are fed by pipelines on the land and pass the liquefied gas into specialised marine vessels docked at the train. These vessels are loaded at the train and sail to a receiving train at the import end. The process is reversed on delivery in a receiving, regasification, train.
A typical LNG train
Specialised Marine Vessels:
The liquefied gas cannot be loaded into normal bulk carriers or tankers. The vessels used to carry LNG are like giant Thermos bottles. They are built like conventional tankers but include a variant of one of two systems. For the most part the majority of LNG vessels use the Moss Bottle system. The have these 'bottles' inside the vessel.
Moss-style LNG tankers use individual, spherical storage tanks built separately and set in place in the hull.
The other type of vessel is a 'membrane' carrier where, instead of bottles, the refrigerated sections are built into the vessel itself. They carry less gas but are easier to sail. However, unlike the Moss bottles they are subject to 'sloshing'. Sloshing refers to waves being generated inside an LNG tank as the vessel plies the ocean... These waves can damage the tank and the vertical pump so, for safety's sake the amount of LNG it can carry ranges between 10% and 70% because of coping with sloshing.
Keeping a minimum of 10% in the tank (or 'heel') is required to keep the tanks cold for the next load but adds to the effect of 'boil-off' in both types of carriers as some gas leaks inevitably occur in transit.
These LNG carriers have grown in size and number as the trade in LNG has increased.
There are some important trade-offs in the size of LNG vessels. While the new Q-max vessels are 1,132 feet long and 177 feet wide, they have a draught of 39 feet of water (about 12 metres).The draught (the depth of water available for a vessel alongside a berth) is often too deep for many existing ports with receiving trains for LNG. They are called Q-max vessels as they have been designed for the draught restrictions of Qatar. Most LNG vessels are around 950 feet, with about 10.2 metres draught and carry between 125,000 to 175,000 cubic metres of gas. In 2013 these LNG vessels carried about 11.5 trillion cubic feet of LNG.[i]
These vessels are very expensive to build and maintain. They cost around USD $200 million each and have a safe, useable life of around 35 years. They take around two and a half to three years to build and require specialist yards (mainly in South Korea). Traditionally these vessels were built with a specific project in mind. As the deal is made by the supplier to the receiver a vessel contract is agreed for a time charter of around thirty to thirty-five years. The strength of the contract between the parties makes the financing of the vessel much easier than if it were a purely ship-finance contract. The banks know how the vessel will be used and its guarantee of full employment. About 74% of all LNG vessels are on long-term charters for specific projects and aren't available for hire on a 'spot' basis. This is reflected in the rate for the hire.
It is relatively recently that a spot market for LNG vessels has developed. Because these vessels were predominantly matched to a specific project they were not available for the spot market. So an LNG vessel would load, for example, at Woodside in Australia and sail to Lake Charles, Louisiana to discharge its LNG cargo; a distance of 16,705 km or 10,380 mi. It would then sail back in ballast (without cargo) to Australia to load again. This was terribly expensive and a waste of a voyage. As the spot market developed it was possible to discharge in Lake Charles, sail to load another LNG cargo in Trinidad, discharge that in Fos in France, sail to Algeria to pick up another cargo for Turkey, leave Turkey for Qatar to pick up a cargo for Korea, discharge in Korea to go back to Woodside. Gradually there has been a development of a spot business in LNG which is reducing net costs per cubic metre substantially.
Apple-Shaped Cryo Bottles:
In late November 2014 Mitsubishi introduced the Sayaringo STaGE, a next-generation LNG carrier, built to meet New Panamax category, i.e. capable of passing through the newly expanding Panama Canal which is expected to go into service early in 2016. The new structural configuration succeeds in efficiently increasing LNG carrying capacity. The basic design of the Sayaringo STaGE has now been completed, with the vessel's LOA (length overall) set at 297.5m, width at 48.94m, depth at 27.0 and draft at 11.5m. Four apple-shaped tanks are featured. The developed design provides 180,000 cubic meters in total LNG tank capacity, but capacity can be set in accordance with the customer's transport needs. Plant efficiency has been significantly improved through the UST's effective use of the engine's waste heat, resulting in a propulsion system enabling high-efficiency navigation throughout a full range of speeds.
LNG Floating Storage Regasification Unit (LNG FSRU)
By far the most innovative change in LNG shipping is the world's first new-build liquefied natural gas (LNG) floating storage regasification unit (FSRU). It has been built at Hyundai Heavy Industries' (HHI) shipyard in Ulsan, South Korea, for floating LNG services provider Hoegh LNG. The vessel is chartered to Klaipedos Nafta in Lithuania on a ten-year lease agreement signed in March 2012, which also includes an option for purchase.
It is a vessel which sits in the port, receives LNG cargos from vessels alongside and regasifies the LNG without the need for an expensive regasification train on the quay. The FSRU, built at an estimated cost of $330m, will supply LNG in Lithuania. It was ordered in June 2011 and the first steel was cut in September 2012. It was christened Independence in a naming ceremony held at Ulsan in February 2014. The ship has undergone successful sea trials and has arrived in Klaipeda Port to start operations next month, December 2014.
The LNG terminal project, of which 72.32% is state-owned, is being implemented by Klaipedos Nafta. The terminal is located at the southern part of Klaipeda sea port near Kiaules Nugara Island. "It has a regasification capacity of around 400,000scf/d and is powered by a dual fuel diesel electric propulsion system."
It will receive and store LNG on the FSRU, which will regasify it to its original form, and supply to the main transmission system. The main components of the terminal include the LNG FSRU, a 450m-long jetty and associated facilities, and an 18km-long gas pipeline connecting the terminal to the gas metering station.
The Independence's storage capacity is significant (at 6 million cubic feet or 170,000 m3), it can handle almost 140 billion cubic feet a year of natural gas. This means the FSRU has the capacity to supply 100% of Lithuania's current demand of natural gas, allowing them to forgo reliance on pipelines and unpredictable Russian supplies. To this point, Lithuania like many of its neighbours had relied almost exclusively on Gazprom to fulfil domestic consumption demands. More Baltic nations may follow Lithuania's lead, turning seaward for energy supplies rather than the traditional overland gas pipelines. Poland is in the process of preparing an LNG import terminal of its own, projected to be complete next year. If the Independence model proves successful, other Baltic nations will almost certainly follow suit.
The Independence is the first of four FSRUs being constructed by HHI for Hoegh LNG. The FSRU will serve Klaipedos Nafta's LNG terminal. A fifth FSRU vessel will be delivered during the first half of 2017. With this order, the company has seven modern, large size and fuel efficient FSRUs in operation or under construction, the most modern FSRU fleet in the market.
Floating Liquid Natural Gas:
In addition to the vessels like the Independence which can create an almost instant LNG import facility in the port, Shell has pioneered the use of a floating vessel to liquefy natural gas at sea.
After years of discussion and investments, the first Floating LNG project Shell's Prelude, was announced in 2011. Today there are over twenty other FLNG projects and its business is sized to exceed 60 Billion USD for the next decade.
While liquefaction is traditionally performed onshore, Floating LNG literally displaces the entire process on top of a vessel, located nearby an offshore gas field. Thanks to this shift, the need for an extensive pipeline structure to shore as well as a production platform is eliminated, thereby potentially reducing the cost of taking the gas to the market. Moving the liquefaction offshore also facilitates the permitting process, reduces the risks for neighbouring communities as well as the impact on the environment. Additionally, there is a possibility to relocate the vessel at the end of its project life.
By stacking components vertically and using deep-sea water to cool the gas to its liquid state, the FLNG saves dramatically on deck space and enables the whole facility to occupy an area of roughly 4 football pitches: 28,500 square meters. One of its most innovative features involves the plant's unique location: an assembly of eight one-meter diameter pipes will extend 150m below the ocean's surface, delivering around 50 million litres of cold seawater an hour, used to cool the gas.
Harvesting Gas Hydrates:
The growth in the supplies of shale gas and oil is not the end of technological achievements. The supply of natural gas using methane hydrates is on the brink of a major expansion with the success in reaching commercial exploitation in Japan. The Japan Oil, Gas and Metals National Corporation (JOGMEC) reported on March 12, 2013 that it had successfully extracted natural gas from methane hydrate deposits from around 1,000 feet under the seabed offshore Japan. Methane hydrate is a compound in which a large amount of methane is trapped within a crystal structure made up of water, so forming a solid that is similar to ice in its composition (although it looks like slush). For methane hydrate deposits to form the right conditions in terms of pressures and temperatures are required. These conditions are normally found in four kinds of environment: Sediment and sedimentary rock under Arctic permafrost Sedimentary deposits along continental margins Deep-water sediments of seas and lakes (e.g. the fresh water Lake Baikal, Siberia) Beneath Antarctic ice There are some 40 trillion cubic feet of methane held in methane hydrate deposits under the sea in the eastern Nankai Trough, off the southern coast of the Japanese island of Honshu, according to JOGMEC. This is equivalent to around 11 years of the amount of liquefied natural gas that is currently imported into Japan
There has been a patent filed (E02F7/00) for a system which allows the efficient method of extracting the methyl hydrates on the seabed in a catcher unit which heats the frozen crystals to sublimate the gas which rises to a vessel on the surface which compresses the gas for shipment on compressed gas carriers.
There are many sites with large deposits of methyl hydrates across the world
As these are brought into the market using floating processing vessels there will be an enormous extra supply to the natural gas market.
The current state of the gas market is rapidly changing. As the U.S. and Canada produce large quantities of shale oil and gas there is every likelihood that they will start exporting to the rest of the world. To that end they are building export trains on the costs. The receiving countries have no need for building receiving trains to receive this gas, and the gas produced from methyl hydrates because the FPSU, FLNG vessels make receiving gas more flexible and available. The new generations of marine gas carriers are more efficient and capable of reaching shallower-draught ports.
It is clear that the Russian dominance of the gas industry is a thing of the past and the importing nations have been afforded a much greater range of choices by modern marine technology.
[i] Stan Jones, "LNG Carriers Called Floating Pipelines", Alaska Natural Gas 29 April 2014
Source: Ocnus.net 2013