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LNGINDUSTRY | May 2014
May 2014
WHY LNG WILL FALL
IN LOVE WITH CNG
www.lngindustry.com
In the quest to find economic reserves to supply liquefaction
plants, the LNG industry has a nimble new friend:
compressed natural gas (CNG) shipping.
Page 49
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Copyright © FMC Technologies, Inc. All Rights Reserved.
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ISSN 1747-1826
CONTENTS
MAY 2014
03 Comment
49 LNG’s new friend
Ian Mallory, Sea NG, Canada, explains how marine CNG is
expanding the transport options of gas producers.
05 LNG news
51 Probing for savings
10 Sleeping giant
Pierre Barere, Jean-Jacques Piclin, Bernard Ribero and
Gilles Tissot, Opta-Periph SAS, France, outline the benefits of
using an LNG probe and vaporiser for sampling and analysis at
custody transfer.
Peter Kiernan, The Economist Intelligence Unit (EIU), UK, debates
whether LNG can feed the awakening South Asian energy market.
55 The good, the bad and the ugly
10
Peter Kiernan, The Economist Intelligence
Unit (EIU), UK, debates whether LNG can feed
the awakening South Asian energy market.
Roger Simonson, Black Powder Solutions, Canada,
looks at solutions to mitigate the effect of black powder in
LNG applications.
59 Apprehending the troublemakers
Torsten Katz, Georg Sieder and Justin Hearn, BASF SE,
Germany, examine the problems that glycols present in acid
gas removal processes and look at ways of overcoming them.
63 Quelling quicksilver
A
sia is the largest regional market for LNG, accounting for around 70% of LNG imports in 2012. The Asian LNG market is also
the fastest growing, being the location for more than half of the global capacity of LNG regasification terminals currently under
construction. Japan, South Korea and Taiwan are well established LNG markets, while China is emerging as a major LNG importer
as well. One overlooked market within Asia for growing LNG demand, however, is South Asia.
The South Asian region consists of four countries – India, Pakistan, Bangladesh and Sri Lanka – with substantial coastline, a combined
population of over 1.5 billion people, and a gas market that accounts for 19% of total gas consumption in Asia. Yet to date, only India has
LNG import capacity in the region, importing just 14 million tpy in 2012 – just 6% of global LNG imports. This volume also comprises a tiny
fraction of India’s total energy consumption. But going forward, South Asia will play a greater role in the global LNG market, with India
planning new LNG import terminals, and capacity expansions of existing ones, which will significantly increase its regasification capacity. In
addition, Pakistan and Bangladesh are also expected to soon join the ranks of LNG importers – albeit on a small scale initially – with the
utilisation of offshore terminals.
Governments in the South Asian region face considerable challenges in meeting rapidly growing energy needs, such as eliminating
power and fuel shortages. The task is made harder by limited energy infrastructure, poor investment regimes to attract capital, and the high
cost of importing oil and gas. Furthermore, India, Pakistan and Bangladesh are not supplied by any cross-border gas pipelines from nearby
gas producers – and will not be for some time – while prospects for rapid domestic gas output growth are not high. These realities make
MAY 2014
LNG_May_2014_10-14.indd 10
02/05/2014 15:27 LNG_May_2014_10-14.indd 11
LNGINDUSTRY
Peter J. H. Carnell and Vince Atma Row, Johnson Matthey
Process Technologies, UK, examine the origins of mercury in
fossil fuels and the means for its removal and safe disposal.
11
02/05/2014 15:27
68 Sweet solutions for sour LNG plants
15 A passage to India
Matt Thundyil, David Seeger and Ramiro G. Vazquez,
GTC Technology US, LLC, assess sulfur recovery for LNG
plants.
Prabhat Singh, GAIL (India) Ltd, provides an update on the
company’s recent activities as it looks to meet India’s growing
energy needs.
18 Genie on the loose!
Compact printed circuit heat exchangers will play an important
part in shrinking the topside bulk of many new FLNG facilities.
John Gaffney, Heatric, UK, explains why.
LNGINDUSTRY | May 2014
27 Unlocking the future
31 Thinking in circles
In the drive to monetise
stranded offshore gas
fields, LNG and CNG
are often thought of
as competitors. This
perspective misses
an opportunity for
synergy. The addition of
a re-deployable, CNG
shuttle to any pipeline
gathering system could
hold significant benefits
for LNG, methanol and
GTL plants. Producers
are examining CNG
as a flexible means to
extend their transport
reach and unlock
stranded offshore
fields.
May 2014
Lars Odeskaug, Sevan Marine, and Tom Haylock, KANFA Aragon,
Norway, discuss cylindrical hull technology in FLNG operations.
36 A shortcut to imports
Ragnar Wisløff, Höegh LNG, Norway, looks at how FSRUs are
enabling LNG to reach new markets.
41 A steady arm
WHY LNG WILL FALL
IN LOVE WITH CNG
Matteo Suzzani, MIB Italiana S.P.A., Italy, looks at ways of
increasing safety in side-by-side transfer of LNG.
S. Maillard, Gaztransport & Technigaz (GTT), France, examines
LNG membrane systems in the harshest environments.
www.lngindustry.com
45 Breaking the ice
In the quest to find economic reserves to supply liquefaction
plants, the LNG industry has a nimble new friend:
compressed natural gas (CNG) shipping.
Page 49
LNG_May_2014_OFC.indd 1
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06/05/2014 14:38
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ON THIS MONTH’S COVER
Christopher Goncalves and Anthony Melling, Berkeley Research
Group LLC, USA, introduce North American LNG and Henry Hub
pricing.
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CALLUM O’REILLY EDITOR
COMMENT
S
ingapore has been named as the host city of
Gastech 2015, which will take place in association
with Singapore International Energy Week from
27 – 30 October next year. BG Group will host the event
for the second time in four years, following its previous
partnership with Gastech London in 2012.
Within days of this announcement, BG Group
confirmed that it is moving its global centre of LNG and oil
marketing business to Singapore from its head office in the
UK. The move is said to reflect the long-term importance
of Asian energy markets. Steve Hill, President for Global
LNG and Oil Marketing at BG, described Singapore as “the
heart of the fastest growing LNG region”, which is driving
an anticipated global LNG growth of around 5% per year
to 2025.
The city-state’s first LNG terminal on Jurong Island
was officially opened in February 2014, although it began
operations back in May 2013. BG Group was appointed
as the exclusive aggregator for the first 3 million tpy
of LNG into the S$ 1.7 billion terminal, which is owned
and operated by Singapore LNG Corp. Pte Ltd (SLNG). A
third tank is now operational at the terminal, increasing
its throughput capacity to 6 million tpy, and plans are
underway for phase 3 of its expansion, which will see the
addition of a fourth tank and more facilities to boost the
terminal’s capacity up to 9 million tpy by 2017.
With reported plans to add yet more tanks and berths,
as well as a second LNG facility mooted for the future,
Singapore has lofty ambitions to become an LNG supply
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hub for the region. Its strategic location between producers
such as Indonesia, Malaysia and Australia, as well as
countries with an increasing demand for LNG, puts it in an
excellent position to achieve this goal.
Singapore is also renowned for its pro-business
environment and its government has launched a number of
initiatives to encourage foreign companies to set up base
in the city-state. It is likely that we will see many more
companies following BG Group’s lead before Gastech
opens its doors in October 2015.
In this issue of LNG Industry, we examine the (largely
overlooked) LNG markets neighbouring Singapore in
South Asia. Starting on p. 10, the Economist Intelligence
Unit (EIU) looks at the latest developments in India,
Pakistan, Bangladesh and Sri Lanka. On p. 15, Prabhat
Singh from GAIL (India) Ltd provides an update on the
company’s recent activities to meet India’s growing energy
needs. Mr Singh explains how GAIL became the first Asian
company to secure LNG contracts indexed to Henry Hub
and discusses the possibility of an Asian gas hub.
Continuing the theme of trade, this issue also includes
an interesting article from Berkeley Research Group,
which looks at the impact of the shale gas revolution
in North America. You can also read an excellent
exclusive on global LNG trade from The Oxford Princeton
Programme in the Special Reports section of our website:
www.lngindustry.com. In it, Malcolm Johnson (Faculty
Instructor) explains why the LNG industry is facing yet
another crossroads...
www.zwick-armaturen.de
LNGNEWS
USA
Committee approves legislation to expedite
exports
T
he House Energy and Commerce Committee has
approved H.R. 6, the Domestic Prosperity and Global
Freedom Act, by a bipartisan vote of 33 to 18. The legislation
aims to increase US LNG exports, which would help free
US allies from reliance on Russian energy supplies while
supporting domestic job creation and economic growth.
H.R. 6, authored by Rep. Cory Gardner, would
expedite US exports of LNG by helping to clear the
backlog of export applications currently awaiting approval
at the Department of Energy (DOE). As amended, the
legislation provides that the DOE must issue a decision
on any current application after the end of 90 days of
enactment or the expiration of the application’s comment
period. It also provides for expedited judicial review for
challenges to the DOE’s decision or inaction on these
applications. Over 24 applications are currently awaiting
action from the DOE, and some have been languishing for
over two years.
“The majority of LNG export applications are waiting in a
long line. We must break the logjam that is currently taking
place at [the] DOE, and move toward construction of these
LNG export facilities,” said Gardner.
Papua New Guinea
PNG LNG starts production ahead of schedule
S
antos has announced that the PNG LNG project has
started producing LNG ahead of schedule.
Production from the first LNG train will increase in the near
future and the first cargo is expected to be shipped to Asian
markets before mid-2014. Work on the second train is also
progressing and it is anticipated that LNG production from this
unit will start in the coming weeks.
David Knox, Santos Managing Director, said that delivery
of the PNG project was a crucial step in Santos’ plans to
become a supplier of LNG to Asian markets. “PNG LNG will
quadruple Santos’ LNG production once the project reaches
full output,” he said.
Sanctioned in December 2009, the US$ 19 billion
PNG LNG project includes the development of gas production
and processing facilities in the Hela, Southern Highlands and
Western Provinces of Papua New Guinea, over 700 km of
pipelines, and a two-train LNG processing and loading facility
with a capacity of 6.9 million tpy located near Port Moresby.
Santos has a 13.5% interest in the PNG LNG project. Other
co-venturers include affiliates of ExxonMobil, Oil Search,
National Petroleum Company of PNG, JX Nippon Oil & Gas
Exploration, Mineral Resources Development Company and
Petromin PNG Holdings Ltd.
Canada
NEB approves two LNG export applications
C
anada’s National Energy Board (NEB) has approved
two applications for 25 year natural gas export
licences.
Both Aurora Liquefied Natural Gas Ltd (Aurora LNG)
and Oregon LNG Marketing Company LLC (Oregon LNG)
have received the approvals.
Aurora LNG’s export point would be in the vicinity of
Prince Rupert, British Columbia (B.C.), at the outlet of the
loading arm of a proposed liquefaction terminal. Oregon
LNG’s export point would be in the vicinity of Kingsgate
and Huntingdon, B.C., via existing natural gas pipelines.
Issuance of both licences is subject to the approval of
the Governor in Council.
Meanwhile, Shell Canada Energy (Shell), PetroChina
Corp., Korea Gas Corp. (KOGAS) and Mitsubishi Corp. have
signed a joint venture agreement to develop a proposed
LNG export project: LNG Canada. The new LNG export
project will be located in Kitimat, B.C. It is subject to
regulatory approvals and a Final Investment Decision by
the joint venture.
MAY 2014
LNGINDUSTRY
5
LNGNEWS
USA
Malaysia
Shell opens LNG fuelling station
Air Products wins Petronas FLNG contract
C
A
hart Industries Inc. has announced the opening
of the first of 20 retail LNG fuelling stations it has
been selected by Shell to design, manufacture and
commission.
The Ontario, California station will be open to
the public and features two fuelling lanes that will
sell LNG to heavy-duty road transport customers.
The remaining contracted LNG fuelling stations will
be built across North America in a phased approach,
based on customer demand at existing truck
stop sites with the intention of adding dispensers
alongside existing diesel fuelling lanes.
Bill Haukoos, President of Chart Distribution and
Storage Americas, said: “Our strategic partnership
with Shell to expand the nationwide LNG fuelling
network is evidence of the demand for alternative
fuels from commercial customer[s].
“Chart has a strong reputation for innovative,
customer-focused solutions and we’ve worked
extensively to design and build a station to meet
Shell’s request for a new global standard in LNG
fuelling.”
The LNG fuelling stations will be fully automatic,
have a low working pressure and be sized to fill
100 - 150 trucks per day with two LNG dispensers. The
20 fuelling stations were ordered in 2013.
ir Products has signed an agreement with JGC Corp.
to provide its LNG technology, equipment and
process license for Petronas’ second floating LNG (FLNG)
project (PFLNG 2) offshore Malaysia.
Air Products’ equipment and technology will be vital
in the production of 1.5 million tpy of LNG, which is due to
come onstream in 2018. The company’s LNG technology
has now been selected for all three offshore FLNG projects
announced and in construction around the world to date.
PFLNG 2, which will be drawing natural gas from
the Rotan Field in the South China Sea, offshore Sabah,
Malaysia, will use Air Products’ AP-NTM LNG Process
and Equipment. Air Products will manufacture this
equipment, including coil wound heat exchangers and
compressor-expanders, at facilities in the US, and the
economiser cold boxes in Tanjung Langsat, Malaysia.
In other news, ABS has been awarded the
classification contract for the PFLNG 2 facility. The
company’s Vice President for Global Gas Solutions,
Patrick Janssens, said: “The search for new energy reserves
is seeing exploration activities shift to the type of remote
offshore fields on which facilities like the PFLNG 2 are
perfectly suited to operate. With the growing demand for
gas around the world, there will be a continued emphasis
on FLNG-related technology, and ABS will continue to
play a leading role.”
NEWS HIGHLIGHTS
XXRiding the LNG roller coaster
XXGladstone LNG pushes through pipeline
Scan to visit
the website
XXRasGas celebrates new safety milestone
To read more
about these
stories go to:
6 LNGINDUSTRY
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http:/ / gettag.mobi
MAY 2014
Image courtesy of Freeport LNG Development, L.P.
Freeport Liquefaction Project
Freeport, Texas USA
WORLDWIDE LNG RESOURCES
WHERE YOU NEED THEM
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resources you need for today’s challenging LNG market.
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resources allow us to design and construct some of the world’s largest projects to
meet changing market dynamics.
Contact CB&I to learn how our innovative solutions can benefit your next LNG project.
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LNGNEWS
Lithuania
Europe
LNG terminal begins capacity allocation
European port authorities enter joint venture
T
T
he developer and future operator of the Lithuanian
LNG terminal, SC ‘Klaipedos Nafta’ has started
LNG terminal capacity allocation. This ‘open season’,
as it is known, will cover the first contracts for LNG
regasification and/or reload services. It will be
concluded in June/July 2014, while the capacity will be
allocated annually.
As the terminal’s activity progresses, unallocated
capacities will be regularly updated and will be
available for booking at any time according to
technical possibilities.
The LNG terminal offers users the opportunity to
acquire terminal capacities, which include: birthing
right to the LNG terminal, loading of LNG into
the terminal, temporary storage of LNG until it is
regasified or reloaded into small scale LNG vessels,
and regasification and/or reloading LNG into small
scale LNG vessels.
Priority will be given to the LNG regasification
activity. Terminal operations are scheduled to start
from the end of this year.
he port authorities of Antwerp, Mannheim, Rotterdam,
Strasbourg and Switzerland have signed a joint venture
for the introduction of LNG.
The venture involves cooperation in research, promotion,
knowledge transfer, legislation and bunker infrastructure. The
agreements follow the LNG Master plan of the Rhine-MainDanube corridor, in which all port participants are involved.
The aim of this plan is to use LNG as fuel for inland shipping
on the Rhine-Main-Danube corridor.
The EU has provided a subsidy of €40 million to support
an LNG infrastructure for the Rhine-Main-Danube area.
The Danser Group, supported by the LNG Master plan, has
commenced refitting its Eiger-Nordwand tow boat to be
powered by LNG.
The cooperation ties in with the Port of Rotterdam
Authority’s aim to see the market for LNG as a fuel develop
to its full potential, and to open an LNG hub in Rotterdam
before the end of 2015. The Port Authority currently invests
in infrastructure, is closely involved in the formation of the
necessary national and international policy and legislation,
and invests in cooperation with relevant partners.
DIARY DATES
02 - 04 June 2014
09 - 12 June 2014
25 - 28 August 2014
Houston, Texas, USA
www.ilta.org
London, UK
http://www.icbi-events.com/event/
flng-conference
Stavanger, Norway
www.ons.no/2014/
ILTA 2014
02 - 05 June 2014
World LNG Series: LNG Americas Summit
San Antonio, Texas, USA
www.lngamericas.cwclng.com
8 LNGINDUSTRY
MAY 2014
The 9th Annual FLNG Conference 2014
ONS 2014
11 - 12 June 2014
22 - 25 September 2014
Stavanger, Norway
www.tekna.no
Houston, Texas, USA
http://pumpturbo.tamu.edu/
Tekna Small Scale LNG
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Peter Kiernan, The Economist Intelligence
Unit (EIU), UK, debates whether LNG can feed
the awakening South Asian energy market.
A
sia is the largest regional market for LNG, accounting for around 70% of LNG imports in 2012. The Asian LNG market is also
the fastest growing, being the location for more than half of the global capacity of LNG regasification terminals currently under
construction. Japan, South Korea and Taiwan are well established LNG markets, while China is emerging as a major LNG importer
as well. One overlooked market within Asia for growing LNG demand, however, is South Asia.
The South Asian region consists of four countries – India, Pakistan, Bangladesh and Sri Lanka – with substantial coastline, a combined
population of over 1.5 billion people, and a gas market that accounts for 19% of total gas consumption in Asia. Yet to date, only India has
LNG import capacity in the region, importing just 14 million tpy in 2012 – just 6% of global LNG imports. This volume also comprises a tiny
fraction of India’s total energy consumption. But going forward, South Asia will play a greater role in the global LNG market, with India
planning new LNG import terminals, and capacity expansions of existing ones, which will significantly increase its regasification capacity. In
addition, Pakistan and Bangladesh are also expected to soon join the ranks of LNG importers – albeit on a small scale initially – with the
utilisation of offshore terminals.
Governments in the South Asian region face considerable challenges in meeting rapidly growing energy needs, such as eliminating
power and fuel shortages. The task is made harder by limited energy infrastructure, poor investment regimes to attract capital, and the high
cost of importing oil and gas. Furthermore, India, Pakistan and Bangladesh are not supplied by any cross-border gas pipelines from nearby
gas producers – and will not be for some time – while prospects for rapid domestic gas output growth are not high. These realities make
MAY 2014
LNGINDUSTRY
11
comprises a small part of India’s total energy consumption
(approximately 7% according to EIU estimates). The potential for
gas demand growth will not just be driven by industrial
development and economic expansion, but also by the
successful implementation of plans at a national level to increase
the role of natural gas in the energy mix (largely at the expense of
coal in power generation).
Like China, coal plays a significant share in India’s energy
supply, due to substantial domestic resources and the lower cost
of coal as a source of fuel compared to other alternatives. As in
China, coal dominates the provision of supply to India’s power
generation sector. According to EIU estimates, coal is the source
of 59% of India’s power generation, while natural gas supplies
just 9%.
Domestically produced coal is less expensive than imported
LNG. But a decline in the development of India’s coal resources
India entered the ranks of the LNG importers relatively late in
will lead to increasing reliance on more expensive coal imports.
the scene compared to other Asian economies, developing
Furthermore, according to a recent report by the Boston
regasification capacity for the first time in 2004. In 2013 its LNG
Consulting Group, chronic power shortages leave an opportunity
import capacity reached 21.1 million tpy from four terminals
for gas-fired power to take up market share, as will proposed
(see Table 1), all of which are located on India’s west coast.
power sector reforms. Unless there is dramatic growth in
India has the fourth-largest LNG import capacity in the Asian
domestic gas production – such as from shale gas or offshore
region, behind Japan, South Korea and China. LNG accounted for
resources – and unless international pipeline projects eventuate,
approximately one-third of India’s total gas consumption in 2013,
expanding LNG regasification capacity will be crucial to meeting
with the balance supplied by domestic production.
India’s growing demand for natural gas.
As LNG is the sole source of India’s gas imports – given the
The prospect for India to import gas via pipeline is not likely in
absence of cross-border pipelines – the further development of
the short to medium-term. India withdrew from a pipeline project
LNG capacity is crucial to bridging India’s projected growing gap
that would transport Iranian gas via Pakistan, and the proposed
between domestic natural gas supply and demand. Since the
Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline is several
opening of the LNG terminal at Dahej in 2004, imports have
years away at best. There have been talks on India to import
taken up a greater share of India’s gas supply as growth in
pipeline gas from Myanmar, but instead a pipeline exporting gas
demand has outstripped growth in supply. This trend is expected
to China from Myanmar opened last year. A gas pipeline option
to continue. According to a report prepared for India’s Petroleum
for India is therefore not on the cards anytime soon.
and Natural Gas Regulatory Board, India’s gas demand will triple
As Table 1 shows, India has been steadily building its LNG
from 46.7 billion m3 in 2012 - 2013 to 189 billion m3 by
capacity. Four LNG import terminals in India have begun
2021 - 2022. Although this forecast may prove to be on the
operating with a combined capacity of just over 21 million tpy, all
bullish side, it does reflect that demand for natural gas in India
of which are on the west coast. Expansions are planned for the
will continue to grow rapidly.
Dahej, Hazira and Kochi terminals, which would boost
Natural gas demand in India is driven by the fertiliser industry,
regasification capacity by 13.9 million tpy. A further four terminals
power generation, the industrial sector, and to a lesser extent by
are either planned or under construction, adding a further
household and transport use. In absolute numbers, India is the
18 million tpy in capacity. In total, India’s regasification capacity
third-largest gas consumer in the Asian region, but natural gas
could reach 53 million tpy by
2017, including three new
Table 1. India’s LNG import terminals
projects on the east coast where
Terminal
Operator
Capacity
Start year
Expansions
Total new capacity
there is currently no capacity to
(million tpy)
(million tpy)
(million tpy)
import LNG.
The vast majority of India’s
Operating
LNG comes from Qatar, in the
Dahej
Petronet LNG
10
2004
5
15
form of long-term contracts. In
2012, 80% of India’s imported
Hazira
Shell/Total
3.6
2005
6.4
10
LNG (which totalled
Dabhol
GAIL (India)
5
2013
13.7 million tpy) came from
Qatar, with smaller volumes
Kochi
Petronet LNG
2.5
2013
2.5
5
from Yemen, Nigeria, Egypt,
Planned
Algeria and Indonesia making up
Ennore
Indian Oil Corp. 5
by 2017
the rest. However, India’s LNG
importers seek to diversify
Mundra
GSPC
5
by 2017
sources of supply, especially by
Kakinada (FSRU) GAIL (India)
5
by 2017
accessing anticipated supplies of
non-oil indexed US LNG.
Gangavaram
Petronet
3
by 2017
GAIL (India), the
(Source: The Economist Intelligence Unit research, Boston Consulting Group, International Group of LNG
state-owned natural gas
Importers)
transmission, pipeline and
the development of LNG import capacity important to meeting
growth in regional gas demand, even if LNG will comprise only a
modest share of the region’s total energy consumption.
Coal-dependent India, the fourth-largest energy-consuming
economy in the world, will have plenty of challenges to
overcome – mainly related to infrastructure and pricing – should
natural gas comprise a greater share of the country’s fast-growing
energy demand. In Pakistan and Bangladesh, where natural gas
already plays a significant role in the energy mix, the absence of
cross border pipelines make LNG important to bridging a
widening gap between domestic consumption and supply. In
these countries, cost will also be a major impediment to more
extensive LNG capacity additions.
India
12 LNGINDUSTRY
MAY 2014
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