Everything you needed to know about LNG but were afraid to ask. - - PowerPoint PPT Presentation

Everything you needed to know about LNG … but were afraid to ask. – Part II

James Ashworth Lead Consultant TRI-ZEN International Pte Ltd, Singapore Glasgow Technology and Innovation Centre (TIC). , 14-17 September 2015

Chicken and egg

 The Chicken and Egg live on but are fading  Disappearance is accelerating

Today we see two big drivers for change

 Cost

• In spite of current phenomena, Oil is
• n an upward long-term price

trajectory

• Gas is now structurally 50% cheaper
• 250 years’ gas availability
• Cheaper to operate
• Reduced Maintenance

 Environment

• Progressive tightening of emissions

controls mitigate away from oil-based fuels

• LNG ticks all the current boxes to 2050

3

www.tri-zen.com

Oceans under threat

 Populations of marine mammals, birds, fish and reptiles have declined by 49% since 1970.  The study says some species people rely on for food are faring even worse, noting a 74% drop in the populations of tuna and mackerel.  In addition to human activity such as overfishing, the report also says climate change is having an impact.

www.tri-zen.com 4

Marine population halved since 1970

World Wildlife Fund and the Zoological Society of London

Emissions Challenges

5

SOx NOx PM

Driving Forces - Emissions

Future ECAs

7

www.tri-zen.com China Seaports 2020 River Ports 2025

LNG meets all current and planned emissions standards

…but you need more to go the same distance vs. diesel and HFO

0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9 1 Diesel LNG CNG

Energy Density (MJ/kg)

IMO/IGC Tank Types

Membrane Independent Type A Oil Type B Type C Pressurised Tanks

Spherical (Moss) Prismatic Cylindrical Bi-lobe

Rolls-Royce Hybrid Drives

www.tri-zen.com 11

Source: Rolls-Royce Source: Rolls-Royce Source: Rolls-Royce Source: Rolls-Royce

THE FUTURE “A LOAD OF SLUSH” – SUPER-COOLED LNG

Future Technology

Slush Gun

Slush Advantages  Lower temperatures reduce boil-off gas  Densification advantage ~13.4% (CH4)

• More fuel carried – go further

 Regas opportunity for superconducting electric propulsion and other chilled utilities  Commercial opportunity for “premium” (low temperature) bunkers?

LNG SUPPLY CHAIN

Glasgow 2015

Joining up the dots

www.tri-zen.com 16

How are we doing?

www.tri-zen.com 17

A trans-Atlantic divide and Asian procrastination

www.tri-zen.com 18

 The North American ECA came into force in August 2012.  Since then, it has been left to private enterprise to develop LNG bunkering infrastructure.  Predictably, this has led to developments by noteworthy pioneers, projects and specific routes, some of whom are happy to share their infrastructure, but little, so far, dedicated to general shipping. The message is clear.  Accelerated LNG bunker port development is directly related to state or regional funding availability.

North American developments

www.tri-zen.com 19

Source: Harvey Gulf Source: Crowley

Asian action

www.tri-zen.com 20

 Finally, Singapore has sent out a RFP for LNG bunkering  Korea’s Busan has announced plans for LNG bunkering capability  China has ordered 200 LNG fuelled vessels – infrastructure must follow

Thailand – The Kra Canal

www.tri-zen.com 21

 The Malacca Strait traffic is expected to be over-saturated in 10 years  By 2025, there will be around 140,000 vessels passing through the strait, but it can only safely accommodate about 122,000 ships  The Kra-Canal would shorten shipping distances by 1,200  Construct a sea-level canal capable of accommodating vessels up to 500,000 dwt with two lane traffic and a transit speed of 7 knots  Canal depth 33m and base width of 500 metres

Source: International Institute of Marine Surveying

Conventional LNG Supply Chain models do not work  Large scale LNG project ~ $12–15bn  Gestation period ~ 10 years  Take or pay contract over 20 years (in advance)  Shipping will double today’s global LNG demand (300 mmt)

Then and now  Once, computers were so large, their buildings were constructed around them

23

 Today, our smart phones have more computing capacity than that which accompanied the first men to the moon.

LNG in a Box

Port Infrastructure Options

Custody Transfer

Glasgow 2015

26

Source: Shell

What is Natural Gas?

Component Formula Percentage

Methane CH4 70-90% Ethane C2H6 0-20% Propane C3H8 Butane C4H10 Carbon Dioxide CO2 0-8% Oxygen O2 0-0.2% Nitrogen N2 0-5% Hydrogen sulphide H2S 0-5% Rare gases A, He, Ne, Xe trace

27

LNG Custody Transfer calculation

E = (VLNG x DLNG x GCVLNG) – Egas displaced ± Egas to ER, where:

• VLNG= volume of LNG transferred (m3)
• DLNG = density of LNG transferred (kg/m3)
• GCVLNG = Gross Calorific Value of LNG transferred

(MMBtu/m3)

• Egas displaced = energy of gas displaced from the receiving

tank (MMBtu)

• Egas to ER = energy of gas despatched to the ER or other

locations (MMBtu)

28

29

Gas Chromatograph

www.tri-zen.com

Confidential

30

Costs of LNG supply

LNG port case large medium small Throughput/year 343,000 m3 204,000 m3 52,000 m3 Tank size no separate tank 20,000 m3 2 x 700 m3 Tank turnover/year n/a 20 40 Installations

• ne bunkering berth,
• ne jetty
• ne bunkering berth,
• ne jetty
• ne bunkering berth
• ne small-scale

bunkering verssel (4,000 m3) two small-scale bunkering vessel (3-4,000 m3)

• ne tank truck, 50 m3

two tank trucks, 50 m3

• ne tank truck, 50 m3
• ne truck filling station
• ne truck filling station
• ne truck filling station

Costs of LNG distribution at 10 years payback €118/tonne (US$2.2/MMBtu) €137/tonne (US$2.6/MMBtu) €194/tonne (US$3.7/MMBtu)

31

Source: DMA/EU

CURRENT ISSUES

Glasgow 2012

32

Glasgow 2015

Challenges

Scope for infrastructure and systems improvement Loading arm challenge

Challenges

Regulatory Issues Custody Transfer

Commercial Issues

 What guarantees are there for investors?  What size should a LNG bunker barge be?  How will LNG bunkers be traded? Mass, Volume or Energy content?  Who will be responsible for the Custody Transfer? Seller or Buyer?  Who will pay for the BOG and BOG management?  Who will monitor gas quality? Existing bunker surveyors?  Will we develop standards for delivered temperature and pressure?  Does colder gas have a higher commercial value than warmer?  If excess BOG generation is reduced by lowering pumping rate, who pays for the extra bunkering time?  Which infrastructure investment model works best?

Technical Issues

 All LNG design problems were solved in the 1960s  Gas grade/class/quality/measurement  Ship design optimisation (cradle to grave philosophy)  Total Energy Management  Risk Management

• HAZID
• HAZOP

 BOG Management  Filling Operations - the last metre  Manpower Competency

IMarEST Alternative Fuels SIG

www.tri-zen.com 37

10 Collyer Quay, Ocean Financial Centre 40-00, Singapore 049315 Tel: 65 6734 5550 mgmt@tri-zen.com Strategy Asset optimisation Sector studies Market studies Forecasting Commercial/technical studies Commercial representation New market entry Detailed business cases Project finance/management Mergers & Acquisitions Organisational development Based in Singapore with consultants in: Bangkok Beijing Calgary Hong Kong Jakarta London Melbourne Perth

James Ashworth T: +66 (0)9 5491 6888 E: james.ashworth@tri-zen.com jamesashworth55