ADVANCED TECHNOLOGIES THROUGHOUT THE VALUE-CHAIN OF LNG

A Research Report

School of Petroleum Management

By:
1. 2. 3. 4. 5. Mohit Suri Narsimha Murthy Nishit Jain Rishabh Diwakar Tushar Shah 20121033 20121035 20121037 20121045 20121058

(MBA Energy & Infrastructure) School of Petroleum management Gandhinagar, Gujarat

7/13/2013 0

Table of Contents:

Executive Summary A. Introduction...3 Natural Gas, Where natural gas is found B. Natural Gas Utilization In India..........3 C. Liquefied Natural Gas (LNG) .....5 LNG Imports to India, Why LNG required, Current Scenario D. LNG Value Chain.....8 E. Advanced Technologies Used in LNG Value Chain......9 1. Natural Gas Production 3D-4D Seismic Imaging, Measurement while drilling, Hydraulic Fracturing 2. Gas transportation by pipelines Hydraulic testing of pipelines, SCADA systems 3. Liquefaction LNG Floating Production Storage Offloading (FPSO) 4. Regasification Floating Storage Regasification Unit (FSRU) F. Challenges and Opportunities for developing LNG in India......17 G. References....19 H. Appendix......24

EXECUTIVE SUMMARY

In last decade, Indian economy has shown incredible growth. Steadily and slowly, India is gaining strategic importance globally owing to the impressive economic growth pattern and market attractiveness. Soon India will become Gas based economy replacing the diesel based economy. With the massive rate of urbanization, the demand for energy has grown manifold in the past few years and will continue to grow in future. Last decade also showed tremendous growth in Indian gas sector and gas has slowly emerged as a primary source of energy for India along with coal and oil. The demand of natural gas has sharply increased in the last two decades. In India natural gas was first discovered off the west coast in 1970s, and today, it constitutes 10% of India's total energy consumption. As a result of growth in demand and supply, Indian gas sector offers large value creation potential across upstream, midstream and downstream of gas value chain. Recent Technology, Innovative Practices and Development have already started shaping and reflecting a change in natural gas business. This report examines the current status of LNG in India and identifies the various advance technologies which are being used throughout the value chain of LNG by the gas industry. Each step of LNG value chain is examined and the technology associated with it has been studied. Technologies such as 3D-4D Seismic Imaging, Measurement while drilling, Hydraulic Fracturing, Hydraulic Testing of pipelines, SCADA systems, LNG Floating Production Storage Offloading (FPSO), Floating Storage Regasification Unit (FSRU) have been analyzed to look at the merits and demerits of these advance technologies. From this research report it is concluded that to have a continuous and compounding growth of our Nation, it is very essential to build, develop and foster our research and development sector, as they carry the seeds of running the economy. Imports of liquefied natural gas (LNG) by India will soar in the next decade to fuel an expanding economy as the countrys domestic gas output struggles, hinting, Indias future lies in Liquefied natural gas (LNG).

A. INTRODUCTION: Natural gas is a naturally occurring hydrocarbon gas mixture consisting primarily of methane, but commonly includes varying amounts of other higher alkanes and even a lesser percentage of carbon dioxide, nitrogen, and hydrogen sulfide. Natural gas is an energy source often used for heating, cooking, and electricity generation. It is also used as fuel for vehicles and as a chemical feedstock in the manufacture of plastics and other commercially important organic chemicals. Natural gas is one of the most abundant energy resources on the planet, yet more than one-third of global natural gas reserves remain stranded and undeveloped.70% of gas traded internationally is exported by pipeline; 30% by liquefied natural gas (LNG). Where Natural Gas is found? Natural gas is found in deep underground natural rock formations or associated with other hydrocarbon reservoirs in coal beds and as methane clathrates. Petroleum is also another resource found in proximity to and with natural gas. Most natural gas was created over time by two mechanisms: biogenic and thermogenic. Biogenic gas is created by methanogenic organisms in marshes, bogs, landfills, and shallow sediments. Deeper in the earth, at greater temperature and pressure, thermogenic gas is created from buried organic material. Before natural gas can be used as a fuel, it must undergo processing to remove impurities, including water, to meet the specifications of marketable natural gas. The by-products of processing include ethane, propane, butanes, pentanes, and higher molecular weight hydrocarbons, hydrogen sulfide (which may be converted into pure sulfur), carbon dioxide, water vapor, and sometimes helium and nitrogen. Natural gas is often informally referred to simply as gas, especially when compared to other energy sources such as oil or coal. But not to be confused with gasoline especially in North America, the term gasoline also is often shortened in colloquial usage to gas. B. NATURAL GAS UTILISATION IN INDIA: 1. Natural gas has emerged as the most preferred fuel due to its inherent environmentally benign nature, greater efficiency and cost effectiveness. The demand of natural gas has sharply increased in the last two decades at the global level. In India too, the natural gas sector has gained importance, particularly over the last decade, and is being termed as the Fuel of the 21st Century. 2. Production of natural gas, which was almost negligible at the time of independence, is at present at the level of around 87 million standard cubic meters per day (MMSCMD). The main producers of natural gas are Oil & Natural Gas Corporation Ltd. (ONGC), Oil India Limited (OIL) and JVs of Tapti, Panna-Mukta and Ravva. Under the Production Sharing Contracts, private parties from some of the fields are also producing gas. Government have

also offered blocks under New Exploration Licensing Policy (NELP) to private and public sector companies with the right to market gas at market determined prices. 3. Out of the total production of around 87 MMSCMD, after internal consumption, extraction of LPG and unavoidable flaring, around 74 MMSCMD is available for sale to various consumers. 4. Most of the production of gas comes from the Western offshore area. The on-shore fields in Assam, Andhra Pradesh and Gujarat States are other major producers of gas. Smaller quantities of gas are also produced in Tripura, Tamil Nadu and Rajasthan States. OIL is operating in Assam and Rajasthan States, whereas ONGC is operating in the Western offshore fields and in other states. The gas produced by ONGC and a part of gas produced by the JV consortiums is marketed by the GAIL (India) Ltd. The gas produced by OIL is marketed by OIL itself except in Rajasthan where GAIL is marketing its gas. Gas produced by Cairn Energy from Lakshmi fields and Gujarat State Petroleum Corporation Ltd. (GSPCL) from Hazira fields is being sold directly by them at market determined prices. 5. Natural gas has been utilized in Assam and Gujarat since the sixties. There was a major increase in the production & utilization of natural gas in the late seventies with the development of the Bombay High fields and again in the late eighties when the South Bassein field in the Western Offshore was brought to production. 6. The gas produced in the western offshore fields is brought to Uran in Maharashtra and partly in Gujarat. The gas brought to Uran is utilized in and around Mumbai. The gas brought to Hazira is sour gas which has to be sweetened by removing the sulphur present in the gas. After sweetening, the gas is partly utilized at Hazira and the rest is fed into the HaziraBijaipur-Jagdhishpur (HBJ) pipeline which passes through Gujarat, MadhyaPradesh, Rajasthan, U.P., Delhi and Haryana. The gas produced in Gujarat, Assam, etc. is utilized within the respective states. 7. Natural Gas is currently the source of half of the LPG produced in the country. LPG is now being extracted from gas at Duliajan in Assam, Bijaipur in M.P., Hazira and Vaghodia in Gujarat, Uran in Maharashtra, Pata in UP and Nagapattinam in Tamil Nadu. Two new plants have also been set up at Lakwa in Assam and at Ussar in Maharastra in 1998-99. One more plant is being set up at Gandhar in Gujarat. Natural gas containing C2/C3, which is a feedstock for the Petrochemical industry, is currently being used at Uran for Maharashtra Gas Cracker Complex at Nagothane. GAIL has also set up a 3 lakh TPA of Ethylene gas based petrochemical complex at Auraiya in 1998-99.1

Journal of Petroleum Technology Natural gas utilization in India

C. LIQUEFIED NATURAL GAS (LNG): Natural gas at -1610c transforms into liquid. This is done for easy storage and transportation since it reduces the volume occupied by gas by a factor of 600. LNG is transported in specially built ships with cryogenic tanks. It is received at the LNG receiving terminals and is degasified to be supplied as natural gas to the consumers. LNG projects are highly capital intensive in nature. The whole process consists of five elements:1. Dedicated gas field development and production. 2. Liquefaction plant. 3. Transportation in special vessels. 4. Regasification Plant. 5. Transportation & distribution to the Gas consumer. LNG supply contracts are generally of long term nature and the prices are linked to the international crude oil prices. However, the LNG importing countries in recent times had started asking for medium/short term contracts with varying linkages.

LNG Imports to India: 1. The major exporting countries of LNG are Algeria, Qatar, Indonesia, Malaysia, Australia, whereas, the major importers are Japan, South Korea, Taiwan and Western Europe. The LNG trade started in mid-60's and has increased rapidly. In 1992 it was around 80 Billion Cubic Meters (BCM) per annum and crossed the 100 BCM mark in 1996. World trade in LNG is currently in the range of 150 BCM. 2. Geographically, India is very strategically located and is flanked by large gas reserves on both the east and west. India is relatively close to four of the world's top five countries in terms of proven gas reserves, viz. Iran, Qatar, Saudi Arabia and Abu Dhabi.

Why LNG is required? LNG has been the worlds fastest energy growing option over the last two decades. The worlds proven reserves of natural gas are abundant and estimated to be more than 155.8 tcm equivalent to approximately 140 btoe. This quantity is almost three quarters of the proven oil reserves. The efficient and effective movement of natural gas from producing regions to consumption regions
5

requires an extensive and elaborate transportation system. In many instances, natural gas produced from a particular well will have to travel a great distance to reach its point of use. The transportation system for natural gas consists of a complex network of pipelines, designed to quickly and efficiently transport natural gas from its origin, to areas of high natural gas demand. Pipelines can be characterized as interstate or intrastate. Interstate pipelines are similar to in the interstate highway system: they carry natural gas across state boundaries, in some cases clear across the country. Intrastate pipelines, on the other hand, transport natural gas within a particular state. LNG is principally used for transporting natural gas to markets, where it is regasified and distributed as pipeline natural gas. It can be used in natural gas vehicles, although it is more common to design vehicles to use compressed natural gas. Its relatively high cost of production and the need to store it in expensive cryogenic tanks have hindered widespread commercial use. However transportation of natural gas can directly be transmitted through pipelines but for places where transportation of natural gas is not possible through pipelines we go for LNG. 2

1m cube of LNG corresponds to 600m cube natural gas (S=Standard rate, 15C and 1 atmosphere). At temperature above -110C, LNG vapour is lighter than air. LNG is lighter than water.

Figure 1: LNG Density vs. Natural Gas

National Energy Board

Current Scenario: India is currently 13th largest gas consumer (190 MMSCMD) and 6th largest LNG importer (44 MMSCMD), Economy increasing at CAGR of 7-8% p.a. with similar increase in Energy consumption. Consumption of LNG in India is expected to grow in view of the potential increase in gaseous fuel consumption. Various pipeline projects are coming up in India. Currently India has 2 LNG Terminals (+ 5 planned) and 15 Gas Carriers belonging to SCI, Great Eastern and Varun Shipping. So far, this has not been sufficient to meet Indias LNG demand. 3

Figure 2: Gas Supply Demand in India

Mantrana Maritime Advisory

D. LNG Value Chain: The LNG value chain is composed of large scale, complex segments. It consists of discreet functions of finding and producing natural gas, transporting the gas to the liquefaction plant, liquefying that gas for shipment, shipping it to the final destination and regasification at import terminals.

Gas production

Gas transportion

Liquefaction

LNG Shipping

Regasification

Sales

The first step in the LNG value chain involves exploring the gas by an upstream company either in onshore or offshore fields and identifying the recoverable prospects of the field. The gas is then recovered at the production stage after drilling and developing the wells, which after being processed by the processing unit is transported through the pipelines to the liquefaction plant unit. The efficient and effective movement of natural gas from producing region to consumption regions requires an extensive and elaborate transportation system. In many instances the natural gas produced from a particular well will have to travel to great distance to reach the liquefaction plant. The transportation system for natural gas consists of a complex network of pipelines, designed to quickly and efficiently transport natural gas from its origin to liquefaction plant. At liquefaction facility first the gas is pre-heated to remove natural gas liquids and all components that would freeze under cryogenic temperatures. Under atmospheric temperature using cooling process the gas is cooled down to 111k or -161decree C, thus becoming liquid and shrinking to about 1/600th of its original volume. The LNG is then transported into specially designed ships with double hulls protecting the cargo system from damage or leaks. These carriers are insulated to prevent the evaporation of LNG. These carriers offload their cargo at the regasification terminal and the LNG is returned to cryogenic storage tanks, usually varying in capacity from 100,000 to 160,000 cubic meters. Regasification consists of gradually warming the gas back to the temperature of over 0 degree Celsius under a high pressure of 60 to 100 bars.4

Energy Economics Research Introduction to LNG

E. ADVANCED TEHNOLOGIES USED IN LNG VALUE CHAIN: 1. Natural Gas Production: Natural gas is a fossil fuel formed when layers of buried plants and animals are exposed to intense heat and pressure over thousands of years. It primarily consists of methane but commonly includes varying amounts of other higher alkanes and even a less percentage of carbon dioxide, nitrogen and hydrogen sulphides. Natural gas is a common resource often used for heating, cooking, electricity generation, fuel for vehicles, as a chemical feedstock in the manufacture of plastics and other important commercial applications. The first step in natural gas production involves carrying out exploration activities to locate the probable reserve of the fuel. Various seismic data and computer simulations are studied to assess the underground formations and select the best location to drill. The next step includes drilling the well until the well reaches the gas formation. As we drill the well, we install protective steel casing that maintains the integrity of the well and protects the surrounding formations, including any groundwater aquifers. Once the drilling has reached the reservoir, and we are confident that there are sufficient quantities of natural gas, the next step is to complete the well for production. We install the proper equipment to ensure an efficient flow of natural gas out of the natural gas out of the well and up to the surface. Production tubing is placed inside the casing and connected to the well head, a device containing valves to control production rates. Once the well is completed and natural gas is flowing, the natural gas is ready to be moved from the wellhead by pipeline to the treatment plant. At the treatment facility, the gas is processed to meet market specifications and the gas is then transported through the pipelines to residential, industrial and commercial customers. The technological innovation in the exploration and production sector has equipped the industry to continually increase the production of natural gas to meet the rising demand. The advanced technologies help in unlocking the resources so that they can be commercially viable. Also these technologies serve to make the exploration and production of natural gas more efficient, safe and environment friendly. Some of the major technological innovations in exploration and production sector include:

3D Seismic Imaging One of the biggest breakthroughs in computer-aided exploration was the development of threedimensional (3-D) seismic imaging. Three-D imaging utilizes seismic field data to generate a three dimensional 'picture' of underground formations and geologic features. This allows the geophysicist and geologist to see a clear picture of the composition of the Earth's crust in a
9

particular area. This is tremendously useful in allowing for the exploration of petroleum and natural gas, as an actual image could be used to estimate the probability of formations existing in a particular area, and the characteristics of that potential formation. This technology has been extremely successful in raising the success rate of exploration efforts. In fact, using 3-D seismic has been estimated to increase the likelihood of successful reservoir location by 50 percent. Although this technology is very useful, it is also very costly. Three-D seismic imaging can cost hundreds of thousands of dollars per square mile. Therefore, it is usually used in conjunction with other exploration techniques. For example, a geophysicist may use traditional 2-D modeling and examination of geologic features to determine if there is a probability of the presence of natural gas. Once these basic techniques are used, 3-D seismic imaging may be used only in those areas that have a high probability of containing reservoirs.5

Figure 3: 3D Seismic Survey

4D Seismic Imaging

Four dimensional (4D) seismic imaging is an extension of 3D imaging technology. However, instead of achieving a simple, static image of the underground, in 4-D imaging the changes in structures and properties of underground formations are observed over time. Since the fourth dimension in 4-D imaging is time, it is also referred to as 4-D 'time lapse' imaging. Various seismic readings of a particular area are taken at different times, and this sequence of data is fed into a powerful computer. By studying how seismic images change over time, geologists can gain a better understanding of many properties of the rock, including underground fluid flow, viscosity, temperature and saturation. Although very important in the exploration process, 4-D seismic images can also be used by petroleum geologists to evaluate the properties of a reservoir, including how it is expected to deplete once petroleum extraction has begun. Using 4-D imaging
5

Offshore technology 4D Seismic Imaging

10

on a reservoir can increase recovery rates above what can be achieved using 2-D or 3-D imaging. Where the recovery rates using these two types of images are 25 to 30 percent and 40 to 50 percent respectively, the use of 4-D imaging can result in recovery rates of 65 to 70 percent. 6

Logging while drilling (LWD)/ Measurement while drilling (MWD) LWD helps locate target layer during drilling and select the correct combination of wire line evaluation tool, for detailed well analysis. The main objectives of drilling were safe drilling and accurate formation evaluation. By reducing total logging time, LWD operation also provide significant rig time saving. For example, where a well cannot be with wireline tools or if the hole is lost, LWD logs may prove invaluable.

Figure 4: LWD Technology

MWD tools enhance drilling performance and safety. This helps in taking corrective action while drilling. The use of real time caliper has revealed that hole shape and condition, thus making it easier to evaluate formations and make appropriate completion decisions. The purpose to use this technology is to save rig time, promise quality formation and risk reduction with faster drilling. Key Features of MWD: a. Accurate formation evaluation: Provide a comprehensive multifunction formation evaluation without a chemical radioactive source. It also provides critical data to optimize completion quality. b. Real time formation compositions:

Rigzone- How does MWD work

11

It saves rig time by providing all measurements close to the bit. Therefore, increases efficiency and safety by integrating all sensors in one collar, and avoids complex sidetracking and lengthy fishing operations. c. Reduce risk: Source less formation evaluation LWD eliminated the risk of leaving a chemical source in hole without sacrificing the acquisition of petro physical data in the challenging environment of this exploration well. d. Reduce rat hole expenses: By acquiring the complete dataset in real time while drilling, the operator saved the costs associated with additional open hole logging. Hydraulic Fracturing Hydraulic fracturing is the fracturing of rock by a pressurized liquid. Hydraulic fracturing also known as fracking is a technique in which typically water is mixed with sand and chemicals, and the mixture is injected at high pressure into the wellbore to create fractures which form conduits along which fluids such as gas, petroleum and groundwater may migrate to the well. The fluid injected into the rock is typically, slurry of water, proppants, and additives. Additionally gels, foams, and compressed gases, including nitrogen, carbon dioxide and air can be injected. Typically, of the fracturing fluid 90% is water and 9.5% is sand with the chemical additives accounting to about 0.5%.

2. Gas Transportation by pipelines: Pipeline transport is the transportation of goods through a pipe. Natural gas travels from the wellhead to end consumers through a series of pipelines. These pipelines -- including flow lines, gathering lines, transmission lines, distribution lines, and service lines -- carry gas at varying rates of pressure. These are usually buried underground. Pipelines are generally the most economical way to transport large quantities of oil, refined oil products or natural gas over land. For natural gas, pipelines are constructed of carbon steel and vary in size from 2 to 60 inches (51 to 1,500 mm) in diameter, depending on the type of pipeline. Although pipelines can be built under the sea, that process is economically and technically demanding, so the majority of oil at sea is transported by tanker ships. Some of the major technological innovations in exploration and production sector include:

Hydrostatic testing of pipelines A hydrostatic test is a way in which pressure vessels such as pipelines, plumbing, gas cylinders, boilers and fuel tanks can be tested for strength and leaks. The test involves filling the vessel or pipe system with a liquid, usually water, and pressurization of the vessel to the
12

specified test pressure. Pressure tightness can be tested by shutting off the supply valve and observing whether there is a pressure loss. The location of a leak can be visually identified more easily if the water contains a colorant. Strength is usually tested by measuring permanent deformation of the container. Hydrostatic testing is the most common method employed for testing pipes and pressure vessels. Using this test helps maintain safety standards and durability of a vessel over time. Buried high pressure oil and gas pipelines are tested for strength by pressurizing them to at least 125% of their maximum operating pressure (MAOP) at any point along their length. There are several types of flaws that can be detected by hydrostatic testing, such as:

Existing flaws in the material, Stress Corrosion Cracking (SCC) and actual mechanical properties of the pipe, Active corrosion cells

SCADA Systems

Supervisory control and data acquisition (SCADA) is a type of industrial control system that monitors and controls industrial processes that exist in the physical world. These systems are essentially sophisticated communication systems that take measurements and collect data along the pipeline (usually in compressor and metering stations and valves) and transmit the data to the centralized control station. Flow rate through the pipeline, operational status, pressure, and temperature readings may all be used to assess the status of the pipeline at any time. The SCADA system works in real time so there is little lag time between taking measurements along the pipeline and transmitting them to the control system. The status of the equipment is taken every 6 to 90 seconds depending on the communication technology used in the field. Natural gas pipeline companies have customers on both ends of the pipeline the producers and processors that input gas into the pipeline and the consumers and local distribution companies that take out gas out of the pipeline. To manage the natural gas that enters the pipeline and ensure that all customers receive timely delivery of their portion of gas, sophisticated control systems are required to monitor the gas as it travels through all sections of a potentially very lengthy pipeline network. To accomplish the task of monitoring and controlling the natural gas that is travelling through the pipeline, centralized gas control stations collect, assimilate, and manage the data received from monitoring city gas stations and compressor stations all along the pipeline. This information allows pipeline engineers to know exactly what is happening along the pipelines
Figure 5: SCADA System

13

at all times, which permits quick reactions to equipment malfunctions, leaks or any other unusual activity along the pipeline, as well as to monitoring load control. Some SCADA systems also incorporate the ability to certain equipment along the pipeline remotely, including compressor stations, which allow engineers in a centralized control center to adjust flow rates in the pipeline immediately and easily. Pipeline companies use SCADA systems to monitor and record operating data and to evaluate the role of SCADA systems in leak detection. Advances in technology have reduced the cost of SCADA systems, facilitating widespread SCADA implementation for pipeline control. 7

3. Liquefaction: Feed gas to the liquefaction plant comes from the production field. The contaminants found in produced natural gas are removed to avoid freezing up and damaging equipment when the gas is cooled to LNG temperature (-256oF) and to meet pipeline specifications at the delivery point. The liquefaction process can be designed to purify the LNG to almost 100 percent methane. The liquefaction process entails cooling the clean feed gas by using refrigerants. The natural gas is liquefied for shipping at a temperature of approximately -256oF. By liquefying the gas, its volume is reduced by a factor of 600, which means that LNG at -256oF uses 1/600th of the space required for a comparable amount of gas at room temperature and atmospheric pressure. LNG is a cryogenic liquid. The term cryogenic means low temperature, generally below -100oF. LNG is clear liquid, with a density of about 45 percent the density of water.

LNG FPSO A floating production, storage and offloading (FPSO) unit is a floating vessel used by the offshore oil and gas industry for the processing of hydrocarbons and for storage of liquefied gas. An FPSO vessel is designed to receive hydrocarbons produced from nearby platforms or subsea template, process them, and store liquefied gas until it can be offloaded onto a tanker or, less frequently, transported through a pipeline. All of this is done at sea in close proximity to relevant gas field. Floating production, storage and offloading vessels are particularly effective in remote or deep-water locations where seabed pipelines are not cost effective. FPSOs eliminate the need to lay expensive long-distance pipelines from the processing facility to an onshore terminal. The LNG FPSOs has many potential advantages over traditional on-shore liquefaction plants. This can provide an economically attractive solution for smaller oil fields which can be exhausted in a few years and do not justify the expense of installing a pipeline. Furthermore, once the field is depleted, the FPSO can be moved to a new location. The new FPSOs for LNG will now be able to provide a means to develop gas reserves that were
7

SCADA and Telemetry in Gas Transmission Systems

14

previously impractical or unprofitable for development by means of traditional pipelines or onshore liquefaction plants.

Figure 6: LNG FPSO

The new FPSOs will be able to solve the remote gas problem i.e. liquefying the gas so that it can be delivered and sold as a commercial product.8

4. LNG Regasification: To return LNG to a gaseous state, it is fed into a regasification plant. On arrival at the receiving terminal in its liquid state, LNG is pumped first to a double-walled storage tank, similar to those used in the liquefaction plant, at atmospheric pressure, then pumped at high pressure through various terminal components where it is warmed in a controlled environment. The LNG is warmed by passing it through pipes heated by direct-fired heaters, or seawater, or through pipes that are in heated water. The vaporized gas is then regulated for pressure and enters the pipeline system as natural gas. Finally, residential and commercial consumers receive natural gas for daily use from local gas utilities or in the form of electricity.

Floating Storage Regasification Unit (FSRU) An FSRU represents a new technological approach to providing import terminal services. Under this approach LNG storage, offloading and vaporization equipment is housed on a floating, L shaped structure equipped with positioning thrusters. An FSRU would resemble an oversized LNG carrier and provide storage capacities between 250,000 and 350,000 m3 of LNG, over the twice the capacity of most typical LNG carriers. An FSRU would be permanently moored to an
8

Cathexis Consultancy Services Ltd. (CCSL)

15

offshore platform or floating buoy, and LNG carriers would berth alongside it to accomplish of their LNG cargoes. After offloading LNG stored in the FSRU would be vaporized and sent out at capacities up to about 1 Bcfd through sub-sea pipelines and interconnect with existing interstate pipeline infrastructure. The LNG market in India has grown significantly since 2004 with Government of Indias push to switch to natural gas as the fuel of the future, and the increased availability through the Statebacked Petronet 5 MTPA LNG import terminal at Dahej and Shells 2.5 MTPA Hazira LNG terminals. Many more projects are in planning stage to meet future demand. Although till now LNG terminal were like receiving terminal in India. The perceived safety risks and resistance from the public have resulted in an increasingly difficult and lengthy permitting process for new onshore terminals and terminal expansions with - sometimes uncertain outcome.

Figure 7: FRSU terminal

Figure 1: 12th five year plan for Natural Gas (Source: India Energy Handbook, 2012)

12th Five year plan shows LNG have vital role to play in India energy basket to meet demand. Therefore, every year LNG project will increase in number. This results in a good market for emerging technology in LNG business.
16

Most of the LNG terminals operating all over the world are onshore LNG terminals. However, there are following disadvantages of building onshore LNG terminal: Onshore LNG terminals are relatively costlier. It takes a very long time to construct onshore LNG terminal. Typical time frame for constructing LNG terminal is 4-5 years, starting from conceptualization. It suffers from NIMBY (not in my back yard) syndromes as lots of communities are concerned about safety issues and aesthetics.

In view of these limitations of onshore LNG receiving terminals, the concept of Floating Storage and Regasification Units (FSRU) has been developed and is rapidly becoming very popular amongst all potential LNG import terminals being planned and built. Typically, existing LNG ships are converted to FSRU by making necessary changes to accommodate unloading arms, regasification system and utilizing the storage tank on the ship as storage media. The FSRU can be either moored in the mid sea with turret mooring with seabed or can be permanently moored using single buoy mooring or can be berthed at jetty near the shore permanently. One of the biggest advantages of FSRU project is that FSRU conversion and its operations can be commenced within 1 to 1.5 years if no new port related facilities are required to be developed.9

F. CHALLENGES & OPPORTUNITIES FOR LNG IN INDIA:

Challenges Pricing and affordability has been the key issue in introducing LNG into Indian Market. The reasons are very obvious, and one of them is big difference in price of Natural Gas produced by domestic national oil companies where the price of gas was Government controlled and the price of LNG, which is certainly higher comparatively. Price of delivered regasified LNG to consumers in Indian market is almost double compared to the domestic gas and consumers were hesitant to take regasified LNG at that price. In such a situation the affordability of regasified LNG for the core sectors like power and fertilizer was always an issue as these major consumers were drawing Government price controlled gas. In order to tackle this issue the structure for LNG from Dahej terminal was designed in such a way that LNG is procured at most competitive price and facilities are also created through international competitive tender route to supply regasified LNG to consumers at competitive rates. This lead to a great success and majority of consumers in India tied up the regasified LNG from first LNG terminal at Dahej. Pricing of LNG and affordability is a key and sensitive issue particularly in developing countries, which have been for long under subsidy regime. Both India and China have remained protected markets due to Government policies and to provide subsidies to power and fertilizer sector in order to keep enhanced agriculture production and lower food prices to meet the social obligations.
9

Infraline Energy FSRU, a promising opportunity in the waiting for India

17

Government in India is finalizing setting up of regulatory board to address the issue of pricing and other issues. Opportunities: India with low per capita gas consumption is projected to have more than 6% growth in gas consumption. This projected growth of natural gas can be met only through developing domestic resources of gas and also developing LNG and pipeline gas import infrastructure in the country. Feasibility of transporting natural gas in compressed mode by cosselle design CNG ships and its economic viability is also being worked out. India has chalked out a development of large gas based infrastructure during next 20 years. India is a developing nation and has projected an economic growth of more than 8% to meet the expectations of the people and this level of economic development will require energy consumption to grow at about 5 to 6% during next two decades. Government has given a large emphasis on development of gas-based infrastructure to meet the increasing demand of gas in the country. The IndiaHydrocarbon vision document prepared by Government of India projects the share of natural gas to grow from current level of 9% to 20% by the year 2025. The Hydrocarbon Vision 2025 has projected the demand of gas to increase from around 150 million standard cubic meters per day (MMSCMD) in 2001-2002 to 391 MMSCMD in 2024- 2025. Natural gas demand as per the Hydrocarbon Vision 2025 is given below in the table:

Table 1: Natural Gas Demand in India

18

G. REFERENCES : 1. Journal of Petroleum Technology Natural gas utilization in India 2. National Energy Board 3. Mantrana Maritime Advisory, http://www.mantrana.in 4. Energy Economics Research Introduction to LNG 5. Offshore technology 4D Seismic Imaging 6. SCADA and Telemetry in Gas Transmission Systems 7. Cathexis Consultancy Services Ltd. (CCSL), http://www.energyclaims.net 8. Infraline Energy FSRU, a promising opportunity in the waiting for India

19

H. APPENDIX :

20