IMRE Prof. Dr.-Ing.

Jan-Henrich Florin TU Freiberg, SS 2009

TU Bergakademie Freiberg
Fakultt fr Wirtschaftswissenschaften
IMRE Programme
MODUL 1
Saturday, 9 May 2009
LNG History & Fundamentals
Prof. Dr.-Ing. Jan-Henrich Florin
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
LNG Trains
An LNG train is a self contained refrigeration processing unit
Most LNG plants consist of 2 or more trains (Indonesias Bontang plant has 8)
Darwin (Australia), SEGAS (Egypt), Equatorial Guinea and Norway are
currently single train projects
Size of trains is increasing
Earliest trains 0.3mtpa capacity
Largest train in operation in October 2008 5.2mtpa Atlantic LNG Train
4, Trinidad and Tobago
Largest trains under construction 7.8mtpa in Qatar (first one is due on-
stream by Q1 2009)
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
Atlantic LNG Plant Trinidad and Tobago in April 1999
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
Atlantic LNG Plant Trinidad and Tobago in 2007
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
The Principle of a Refrigeration Cycle in a LNG Train
Compressor
Coolant as liquid
Expansion
Coolant as gas
Natural
gas
Heat
removal
Heat
exchanger
H
e
a
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x
c
h
a
n
g
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LNG
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
Liquefaction Technologies
Mixed Component Refrigerant (MCR)
Mixed refrigerant (propane, ethane, methane and nitrogen)
Feedgas pre-cooled to 35 deg C
Main cooling in a spirally wound heat exchanger
Cascade
Feedgas cooled in three stages
Propane cools the gas to 35 deg C
Ethylene cools to 105 deg C
Methane cools to 161 deg C
Plate fin heat exchangers
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
The ConocoPhillips Optimised Cascade Process
Source - ConocoPhillips
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
C3 Mixed Component Refrigerant (MCR) process
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
LNG Storage
Provides buffer between plant and ships
Avoidance of delay to load ships
Avoidance of plant shutdown because storage is full
Generally sufficient capacity to load at least 2 ships but is often larger
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
LPG (Propane and Butane) Separation
Propane and butane separate from methane in the liquefaction process
(they liquefy at a higher temperature)
They can be mixed into the LNG for export
or
They can be exported separately
Decision will depend on:
Requirement of buyers (LNG heating value)
Volume of propane and butane available
Economics will the additional investment in LPG storage and
export facilities be remunerated by the additional revenues?
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
Approximate LNG Plant Cost Allocation
Percentage Share
Gas
Treatment
Liquefaction
Nitrogen
Rejection
Fractionation
Utilities
and
Offsites
LNG Storage
And Loading
Total
Equipment 4 14 1 10 1 30
Bulk Materials 3 7 1 5 4 20
Construction 4 6 2 8 15 35
Miscellaneous 1 5 1 4 4 15
Total 12 32 5 27 24 100
Source: KelloggBrownRoot
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
Liquefaction Plant Capital Costs in 2008
0
200
400
600
800
1000
1200
1400
1600
1965-70 1971-75 1976-80 1981-85 1986-90 1991-95 96-2000 2001-05 New
Projects
$
0
8

/

t
p
a

C
a
p
a
c
i
t
y
Range
Pluto
Algeria - Skikda
Angola LNG
Peru LNG
Algeria-GL3Z
Source: Andy Flower Ltd.
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
Why Have Liquefaction Plant Costs Escalated by Three to Five Times?
Increased materials costs steel, nickel, aluminium etc
With their order books full, contractors are not competing as aggressively
for business
Lead times equipment have, in some cases, more than doubled
Construction times have increased from 36 to 39 months to 45 to 54 months
Shortage of experienced people engineers, supervisors, welders etc
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
How Do Increasing Costs Impact on the Economics?
$15.6
5-24
-$25 -$35 -$25 -$15
Cash
Flow
4 3 2 1 Year
Assumptions:
Capex $100/tonne spread over 4 years
Revenue $0.30/MMBtu
Production 1 tonne per annum = approx. 52MMBtu per annum
IRR = 12%
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
Unit Revenues Required to Cover Liquefaction Costs
$0.30/MMBtu for 20 years yields a 12% rate of return (before tax) on an
investment of $100 per tonne made over a construction period of 4 years
Operating costs amount to a further $0.30-$0.50/MMBtu
For a plant costing $1000/tonne of capacity the required income per MMBtu
over 20 years is:
Capital $0.30 * 10 = $3.00
Operating = $0.50
Total = $3.50
This covers only the liquefaction part of the chain gas supply, shipping and
regasification have to be added to estimate full chain costs
Expansion of Existing Facility vs. Greenfield Project
Adding new trains to existing plant takes advantage of already developed
infrastructure
Site preparation
Storage
Jetty and berthing facilities
Utilities
In some cases additional storage and/or berthing facilities may be needed
As a rule of thumb expansion costs around 70% of a greenfield development
NOTE: Actual comparative costs depend on local conditions
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
LNG Liquefaction Plant Operating Costs
Operating costs vary amongst projects
Manpower levels
Additional costs in remote locations
A representative estimate of the annual operating cost is
about 3 to 5% of the initial capital cost
Fuel gas consumption ca.13% of feed gas
LNG Receiving Terminals
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
Principal Layout of a LNG Receiving Terminal
LNG Tanker
Cold Vent
Jetty
Metering
LNG Tank LP Pump HP Pump
BOG
Compressor
Recondenser
Vapour
LNG
Open Rack
Vapouriser
Cold CW
Return
Hot CW
Flow
Gas at
Export
Pressure
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
Marmara Erglesi (Turkey) - LNG Receiving Terminal
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
Types of LNG Storage Tank
Single Containment
Inner tank, generally nickel steel, contains liquid and vapour
Outer tank, generally carbon steel, holds insulation but would not
hold liquid if inner tank was breached
A bund around the tank would contain the spilt liquid
Double Containment
Inner tank holds liquid and vapour
Outer tank would contain liquid in case of breach of inner tank but
vapour would escape
Inner tank typically nickel steel and outer tank concrete
Full Containment
Inner tank holds liquid
Outer tank holds liquid and vapour
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
140,000 m
3
LNG Storage Tank (Double Containment)
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
Storage capacity
Must be sufficient to unload ships without delay
Has to provide back-up storage to ensure supply to market maintained
if ship is delayed
May be required to provide strategic storage (e.g. in Japan and Korea)
May be used to help manage seasonal variations in demand (e.g. Korea)
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
Open Rack Seawater Vaporiser (ORV) Ohgishima Terminal Tokyo
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
Submerged Combustion Vaporiser (SCV)
Source: Linde
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
Submerged Combustion Vaporisers (SCV)
Principal process: Gas is used to heat a bath of water. The LNG is piped
through the hot water and is regasified.
SCVs consume around 1.5% of the LNG
A single SCV unit can regasify up 1mtpa
SCVs can handle large variations in throughput
The capex is low but opex relatively high compared with an open rack vaporiser
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
Air Vaporisers
Principal process: Air is being used as the heat source
Air vaporisers are located e.g. at the Dahej (India), and Freeport and
Lake Charles terminals in the USA
Lower cost that SCVs, however, throughput is low when outside
temperatures are low so back-up from SCVs and/or ORVs needed
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
Advantages/Disadvantages of Vaporisers
Open Rack Vaporisers (ORVs)
Lowest life cycle costs
Generally the preferred choice where warm sea water is available
Impact on marine life is an issue
Submerged Combustion Vaporisers (SCVs)
Consumes around 1.5% of the gas
Often used as back-up to manage seasonal demand fluctuations
Emissions through burning gas
Air Vaporisers (AVs)
Depends on outside temperature
Generally low volume throughput
Most common in combination with SCVs and ORVs
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
Principal Capital Costs for an Onshore LNG Receiving Terminal
Storage
45%
Vaporisers/Send-
out
24%
Utilities
16%
Jetty
11%
General Facilities
4%
Source: KelloggBrownRoot
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
Offshore LNG Regasification
Ships as Floating Storage and Regasification Units (FSRUs)
Regas ships using the Energy Bridge approach
Gravity based structures
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
Use of Ships as FSRUs
Regasifiers can be installed on an existing ship or specially built vessel
Typical base load capacity 300 to 500MMscf/d (2.3 to 3.8mtpa) with peak
throughput of 700MMScf/d (5.4mtpa)
Ship is permanently moored at an offshore location and connected to
shore by pipeline
A second LNG ship comes alongside the moored ship and trans-ships its
cargo
After unloading the shuttle ship returns to the liquefaction plant to reload
The moored ship regasifies the LNG as required by the market
Facilities are now in place in Brazil, Argentina and will be installed in
Dubai, South Africa and Italy
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
Energy Bridge LNG Technology
Ships have onboard regasifiers and connectors for mooring buoy
Offloading buoy floats about 30m below the surface until connected to
the ship
Regasified LNG transferred through submerged turret loading system
First system installed by Excelerate 116 miles offshore Louisiana, USA
Second Energy Bridge terminal off Boston, Massachusetts (N. E.
Gateway) received a part cargo in May 2008
Further terminals using this technology are being planned offshore N.
America (Massachusetts, Florida) and in Europe (UK, Belgium)
IMRE Prof. Dr.-Ing. Jan-Henrich Florin TU Freiberg, SS 2009
Offshore Gravity Based Structures for LNG Receiving Terminals
Concrete structure position on sea-bed with base used for LNG storage
Unloading arms, regasifiers etc positioned on top of the structure
First terminal is located 29m water depth, 15km offshore Rovigi in northern
Italy
Structure was constructed in southern Spain and floated to Italy arriving
in mid-September 2008
Operations now expected to start in the first half of 2009
Plans for similar structures offshore the USA and Mexico have been
abandoned because of costs