spe international - lng - whats happening and why

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those companies that support the programby allowing their professionals

to participate as Lecturers.

And special thanks to The American Institute of Mining, Metallurgical,and Petroleum Engineers (AIME) for their contribution to the program.

LNG Whats Happening and Why!

John Morgan

John M. Campbell & Company

$5 Billion Entry Fee

LNGNGL

Methane

Ethane

Propane

Butane

Pentane +

LPG

96%

3%

1%

0.1%

LPG Liquid Petroleum GasNGL Natural Gas LiquidsLNG Liquid Natural Gas

WHAT IS LNG

Example LNG Properties-162oC [-235oF] at atmospheric pressure

Rich Leannitrogen 0.3 0.5methane 88.7 97.5ethane 8.0 1.5propane 2.0 0.5butanes 1.0 -

approx. kg/m3 465 435

CV (higher) MJ/m3 42 38.5

An LNG Export Terminal with Multiple Expansions - Bontang, Indonesia

2004 LNG Journal & Reproduced with Permission

The Basic LNG Chain

LNG Production

Shipping

LNG Reception

Gas Utilization

Gas Production

Natural GasTransportation Options

5000

1000

500

100

50

MM

scfd

0 1000 2000 3000 4000 5000

Distance to market, km

Pipeline

Uneconomic

Electricity

Gas-to-liquids

LNG

Nominal GasTransportation Efficiency

Ref. OG&J (May 15, 2000), p.64

Historical Developmentof LNG Trade Last 25 Years

Projects grow from less than 1 mta to 4-6 mta New supplies to Japan,

first imports to Korea, 1987, and Taiwan, 1990

Late 1990s present Slower growth in Asian LNG demand economic upsets Growth in LNG demand in Europe, USA and Caribbean New supply projects in Atlantic Basin and Middle East Todays LNG trade

LNG Industry Growth

Source: CERA, CEDIGAZ

0.005.00

10.0015.0020.0025.0030.0035.0040.0045.00

1964

1966

1968

1970

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

Asia Europe United States

5.5%/y

r

Historical

Projected

Demand is Met from DiverseSources of Supply

2005 Source NPC

LNG Imports Are Needed,but Face Obstacles

2005 Source NPC

The Basic LNG Chain

LNG Production

Shipping

LNG Reception

Gas Utilization

Gas Production

The Contract Chain

1. Exploration licenses, production-sharing contracts2. Gas sales to LNG Producer3. LNG production joint venture agreement4. Condensate/LPG production and sale5. Government and local authority agreements6. LNG sale and purchase agreement

between LNG producer and LNG buyers


Gas Production PlatformNorth Rankin A North-West Shelf Project, Australia

The Basic LNG Chain

LNG Production

Shipping

LNG Reception

Gas Utilization

Gas Production

General SchematicGas Liquefaction Terminal


Pre-cooling and

LPG Separation

Contaminants

Whats in gas (besides light hydrocarbons)?

H2O CO2 H2S

S He N2 Cl Hg As

Waxes Asphaltenes etc.

Sand Dinosaur Dust

Lubricants Corrosion Inhibitors

Mystery Stuff, etc.

Mixed Refrigerant

LNG Process

MCR Heat Exchanger Tube Bundle Fabrication


Overview of LNG ProductionFacilities Technologies

Established Technologies ConocoPhillips (Optimized Cascade) APCI (Propane Precooled)

New Process Technologies APCI (AP-X) Linde (MFC) Shell (PMR) IFP (Liquefin)

ConocoPhillips Optimized LNG Process

Courtesy ConocoPhillips Petroleum Company

Overview of LNG ProductionFacilities Trends

Larger facilities Bigger Trains Bigger Turbines

Reduce Environmental Impact CO2

Produced with gas Developed by turbines

NOx Marine Environment

Typical Project ScheduleGreenfield LNG Export Project

Year 0 1 2 3 4 5 6 7 8 9 10

study drilling and appraisal design construction

selection acquisition, approvals prepn.

study concept design FEED EPC - construction

study shipping arrangements ship building

Upstream

Terminal Site

LNG Plant

Shipping

& Evaluation study negotiations -j.v. evaluation first LNGexports

Project Structure

analysis marketing, sales agreementsMarkets

Financingadvice and analysis securing financing

2000 LNG Journal All Rights Reserved

The Basic LNG Chain

Shipping

LNG Production

LNG Reception

Gas Utilization

Gas Production

1959 The Methane Pioneer


Partial Loading of LNG Cargoes

Photo Courtesy of ABS

The Basic LNG Chain

LNG Reception

LNG Production

Shipping

Gas Utilization

Gas Production

Reduce Environmental Impact Reduce CO2

Inject Produced CO2 Install most efficient drivers

Cogeneration Larger Turbines Electric Motor Drivers

Reduce NOx Install Clean-burn technology

Effect on Marine Environment Use of air coolers

Negishi Terminal, Japan : Single Containment Tanks (background) Inground Tanks (foreground)


Costs in an LNG Project

Gas Gathering US$ 1 1.5 billion

Liquefaction (1 train) US$ 1 1.5 billion

Ships 5 @ $180 m US$ 0.9 billion

Regasification US$ 0.5 billion

TOTAL US$ 3.4 4.4 billion

Could easily reach $5,000,000,000

The Basic LNG Chain

Gas Utilization

LNG Production

Shipping

LNG Reception

Gas Production

Seasonal Demand PatternEurope & North America

Gas Markets

Residential & Commercial Heating demand highly seasonal (low load factor) No fuel switching capabilities

Industrial Fuel for factories, chemical plants, steel mills, etc. Power generation for factories, chemical plants,

steel mills, etc. Chemical feedstock ammonia, methanol, GTL High load factor Fuel switching capability

Power Generation Combined cycle most popular

GT + waste heat boiler Eff.~55% Low CO2 emissions

7 8 tonnes/MW compared to25 27 tonnes/MW for coal

Higher load factor than residential & commercial

Quick response to demand swings Summer demand higher than winter (A/C) Fuel switching capability

Gas Markets

GE GAS TURBINESH-Technology

400-480 MW combined cycle output

Firing at 2600F, 1430C

23:1 compressor, 18 stages4 stage turbine

60% combined cycle efficiency

Example Heating Values

36 38 40 42 44 46 48 50

UK

USA - Florida

Japan Power Plant

MJ/m3Adapted from: Bramoulle, Morin and Capelle, LNG Quality and Market FlexibilityChallenges and Solutions, LNG 14, Doha, Qatar 2004

Commercial Trends Continued downward pressure on LNG costs More competition, more risk-taking. Global supply

strategies Building ships/terminals in advance of firm supply/sales

contracts. Merchant facilities Increasing power generation market Regional market trends

Asia. Liberalization of existing markets. India. China. Europe. Open access. Market related prices.

LNG and pipeline supplies. Americas. USA more terminals? Price volatility. Central/South America.

Market niches: small-scale supply projects, reception, satellites.

UK Gas Supply and Demand

South-East Asia to

Australia to Japan

Middle East to Japan (1977), Korea, Taiwan & Europe

Japan, Korea & Taiwan

Middle East, S-E. Asia and Australia to USA

USA (Alaska) to Japan

Nigeria to Europe

Trinidad to USA & Spain

Algeria to USA USA (Alaska) to Japan

Libya to Spain

(1969)

& Europe (1964)

(1972) (1987) (1990)

(1989)

(1999)

(1999)


World LNG Trade

Some of Todays Challenges in LNG..Many

Permits for US Imports

Crews for LNG Carriers

LNG quality variations

Security

Materials and Staffing


John Morgan

John M. Campbell & Company

WHAT IS LNGExample LNG Properties-162oC [-235oF] at atmospheric pressureAn LNG Export Terminal with Multiple Expansions - Bontang, IndonesiaThe Basic LNG ChainNatural GasTransportation OptionsNominal GasTransportation EfficiencyHistorical Developmentof LNG Trade Last 25 YearsLNG Industry GrowthDemand is Met from DiverseSources of SupplyLNG Imports Are Needed,but Face ObstaclesThe Basic LNG ChainThe Contract ChainThe Basic LNG ChainContaminantsMixed Refrigerant LNG ProcessOverview of LNG ProductionFacilities TechnologiesConocoPhillips Optimized LNG ProcessOverview of LNG ProductionFacilities TrendsTypical Project ScheduleGreenfield LNG Export Project The Basic LNG Chain1959 The Methane PioneerPartial Loading of LNG CargoesThe Basic LNG ChainReduce Environmental ImpactNegishi Terminal, Japan : Single Containment Tanks (background) Inground Tanks (foreground)The Basic LNG ChainSeasonal Demand PatternEurope & North AmericaGas MarketsGas MarketsExample Heating ValuesCommercial TrendsUK Gas Supply and DemandWorld LNG TradeSome of Todays Challenges in LNG..Many

spe international - lng - whats happening and why

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