UNECE WPG LNG Chapter 2

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Contents 1. Introduction .......................................................................................................................................... 1

1.1. Definition of the LNG value chain ................................................................................................. 1

1.2 History ........................................................................................................................................... 3

2. Segments in the LNG Value Chain ......................................................................................................... 6

2.1. Gas Resources and Reserves ......................................................................................................... 6

2.1.1. Definitions ............................................................................................................................. 6

2.1.2. Global Gas Reserves .............................................................................................................. 7

2.1.3. Unconventional Gas .............................................................................................................. 8

2.1.4. Shale Gas in North America .................................................................................................. 9

2.1.5. Shale and other unconventional gas potential beyond North America ............................. 15

2.2. Liquefaction ................................................................................................................................ 21

2.2.1. Description of current applicable technologies for liquefaction ........................................ 22

2.2.1. Summary of Liquefaction Technologies .............................................................................. 31

2.2.2. Global liquefaction capacity ................................................................................................ 32

2.3. Shipping ....................................................................................................................................... 34

2.3.1. Tanker Technologies ................................................................................................................. 34

2.3.2. Tanker Completions and Capacities .................................................................................... 37

2.3.3. Small-Scale LNG Tankers ..................................................................................................... 40

2.3.4. LNG as a marine fuel and air quality considerations .......................................................... 41

2.4. Regasification .............................................................................................................................. 43

2.4.1. Main components in a regasification facility ...................................................................... 43

2.4.2. Global regasification capacity ............................................................................................. 48

2.5. Floating LNG ................................................................................................................................ 51

2.5.1. Floating Regasification LNG ................................................................................................ 51

2.5.2. Floating Liquefaction LNG ................................................................................................... 54

2.6. Market Technologies .................................................................................................................. 58

2.6.1. Industrial Process and Feedstock Technologies.................................................................. 58

2.6.2. Electricity generation .......................................................................................................... 59

2.6.3. Residential and commercial uses ........................................................................................ 61

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UNECE WPG LNG Chapter 2

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2.6.4. Natural gas vehicles (NGVs) ................................................................................................ 62

2.6.5. Satellite and Peak Shaving plants........................................................................................ 67

3. Economics and Commercial Aspects of the LNG Value Chain ............................................................ 71

3.1 Capital Investment Requirements .............................................................................................. 71

3.2 LNG Business Model Structures ..................................................................................................... 73

3.2.1 Traditional Structure ........................................................................................................... 73

3.2.2 Integrated Project ............................................................................................................... 74

3.2.3 Role of the Aggregator ........................................................................................................ 76

3.2.4 The Tolling Model ............................................................................................................... 77

3.2.5 LNG SPA Contracts .............................................................................................................. 77

3.3 Risk Analysis and Allocation ........................................................................................................ 79

3.3.1 Catalogue of LNG Project Risks Pre-Completion .............................................................. 79

3.3.2 Insurance ............................................................................................................................. 82

3.3.3 Risk Allocation ..................................................................................................................... 84

Figures

Figure 1 Illustrations of LNG and Pipeline Value Chains ............................................................................ 2

Figure 2 First LNG cargo ship, the Methane Pioneer ................................................................................. 4

Figure 3 History of LNG Liquefaction Plants .............................................................................................. 5

Figure 4 IEA Projection of Rising LNG Global Trade ................................................................................... 5

Figure 5 Conventional and Unconventional Gas Resources ...................................................................... 9

Figure 6 Map of US and Canadian Shale Gas Resources .......................................................................... 10

Figure 7 Illustration of Horizontal Drilling and Hydraulic Fracturing (EIA) ............................................... 11

Figure 8 IEA Estimate of Unconventional Natural Gas Resources, Tcm .................................................. 15

Figure 9 US EIA Estimate of Shale Gas Resources, Tcm ........................................................................... 17

Figure 10 Map of Unconventional Gas Development Activity ................................................................. 19

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UNECE WPG LNG Chapter 2

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Figure 11 Location of Shale Gas Resources in Eastern Europe ................................................................ 20

Figure 12 Block Flow Diagram of an LNG Liquefaction Plant ................................................................... 21

Figure 13 Natural gas phase diagram....................................................................................................... 22

Figure 14 Inverse Brayton Cycle, T-S Diagram ......................................................................................... 23

Figure 15 Nitrogen Expansion Process (APCI) .......................................................................................... 24

Figure 16 EcoRel Process (Cryostar) ......................................................................................................... 25

Figure 17 OCX-2 Natural Gas Expansion Cycle (Mustang) ....................................................................... 26

Figure 18 Inverse Rankine Cycle, T-S Diagram ......................................................................................... 27

Figure 19 LiMuM Process (Linde) ............................................................................................................. 28

Figure 20 C3-MR process (APCI) ............................................................................................................... 29

Figure 21 ConocoPhillips Optimised Cascade .......................................................................................... 30

Figure 22 Photo of QFlex and Standard Vessel ........................................................................................ 34

Figure 23 Photo of Spherical Moss Vessel ...............................................................................................