Tech Talk: The trade in LNG
Posted by Heading Out on January 2, 2011 - 10:15am
Just before the Christmas break the United Kingdom was going through some concerns over natural gas supply. Stored gas levels were falling and the National Grid posted a “Gas Balancing Alert” for only the second time since they were instituted. But there is no more urgent talk of such a problem – what happened?
Well the answer is that rescue, in the form of Liquefied Natural Gas (LNG) tankers came trundling over the horizon. Just this week the UK opened an expansion of the terminal at the Isle of Grain that can now accommodate larger tankers, at the rate of 5 a week. LNG from the tankers to this terminal can now supply up to 20% of the national need for gas. But that is a little late for the past crisis (due to scheduling problems the first tanker won’t dock until next week) so where did the LNG come from, and where did it go ashore?
LNG tankers arriving at the Island of Grains and at the LNG terminals at Dragon and South Hook fed additional supplies into the grid.
Flows of LNG were at a total 100 million cu m/d Tuesday after South Hook ramped up 10 million cu m/d to 55 million cu m/d, Dragon was at 15 million cu m/d and Isle of Grain contributed 30 million cu m/d to the system. That is a total increase of 25 million cu m/d on levels Monday. LNG is also going to be backed up by fresh deliveries in the next week, with UK port data showing three fresh LNG cargoes expected to berth at South Hook from Qatar in the next week, including the Umm Al Amad expected sometime Tuesday, the Mozah on December 23 and the Aamira on Boxing Day.
(The UK used 468 million cu.m. on Monday Dec 20th).
There is a growing global trade in LNG, and while most of this is committed to long-term contracts there is sufficient flexibility in the system so that when, unexpectedly, a nation may run short or a strike close a port, a tanker may be diverted. The South Hook terminal is 67.5% owned by Qatar Petroleum, and is part of a supply net that takes LNG from the Qatargas 2 train, and sends it to the Welsh terminal where it is re-gasified and fed into the National Grid. Dragon, which is also at Milford Haven, is a smaller terminal, and came on line in August 2009. The term “train” is used to describe a single processing line that produces LNG within an overall plant. Thus, for example, when BP expands its facility in Indonesia, the new plant will be called Train 2, to distinguish it from the existing line, which is train 1.
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Once natural gas is produced from a well it must first be processed, and the non-gas liquids (NGLs) as well as water, carbon dioxide, and other contaminants removed so that a dry commercial gas can be sent on. Where the customer is not easily served by a pipeline (such as the case with gas from Qatar being supplied to the UK), the only viable option is to send the gas by ship. Given, however, that gas in its natural state is of low density, it is most practical to cool the gas down to the point where it liquefies. By lowering the temperature to -260 degF the gas turns into a liquid, and occupies 1/610th of the volume. This makes it much easier to store and transport, though it requires that the liquid be kept at that low temperature for the duration of the voyage.
Because the process involves three steps, liquefying the gas, transporting it in special tankers, and then feeding it through a re-gasification plant into a distribution network, the investment in each requires some assurance of a pre-existing market and agreement between the parties before the investments are made. Thus, for example, NTPC in India is now negotiating with Qatar on the supply of LNG in the future as insurance that, when a pipeline is laid from the re-gasification plant at Kochi to power plants at Kayamkulum, that a supply will be available for it. As with the Welsh plant, this can, to a degree, be assured by having Qatar as one of the partners in the project.
The parties likely agree, when making such a deal, to a fixed-price over a considerable time frame. South Korea, for example, is paying roughly $10 per kcf, somewhat above the current rate, but it will have that price for 20-years. Such an agreement may, however, make it difficult for the buyer to initially find customers in the years when that is a high price, as CNOOC found.
Qatar is the largest producer of LNG, having just announced a capacity for delivering 77 million tonnes of the liquid a year, which it currently delivers to 23 countries. This trade has grown from nothing to its current level in 14 years, with production centered around the port of Ras Laffan. (A tonne of LNG converts into 1,460 cu m of NG, or 51,600 cu. ft).
There are seven separate plants (trains) at Ras Laffan with the last having come on stream last February.
Ras Laffan 3 Train 7 is the fourth 7.8 million tons per year LNG plant brought online by Qatar Petroleum and ExxonMobil joint ventures within the past 12 months. It matches the capacity of Ras Laffan 3 Train 6, one of the largest operating LNG production facilities in the world, inaugurated in October 2009. These mega facilities have sufficient scale to competitively reach markets around the globe. Qatar's giant North Field, which is estimated to contain in excess of 900 trillion cubic feet of natural gas, will supply both trains.
Once the gas is liquefied it is transferred to one of a fleet of ships. The earlier ones had the characteristic spheres on board, as shown above, and, for example, Train 1 at Qatar uses a fleet of 10 of these to carry LNG to Japan, with a round trip taking a month. The more recent fleet is 80% larger and more efficient, this 32-vessel fleet carries LNG from Qatar trains 2, 3 and 4.
While there has been a growing market for LNG around the world, and re-gasification plants, such as those in Wales, are being developed in many countries (note the 23 countries that are customers to Qatar) the availability of LNG, with new facilities being planned in countries such as Australia likely means that there will be a continued relatively cheap supply available for a number of years. The consequences to the profitability of domestic production, such as shale gas in the USA, may become more questionable as a result.
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Nice color. Needs rings and a bulls eye for boasting priveledges.
Dave, the thing that worries me about this LNG strategy is this:
Office for National Statistics
I just don't see how we (the UK) can go on building upon our already huge trade deficit. Its also a wee bit worrying that the source of much of our electricity must now pass through the Suez Canal.
Interesting to see how long growth in production from North field can continue. But cheering to know that all this wealth will be well spent by the Qataris hosting the Greenest FIFA World Cup ever in what is currently unpopulated desert.
Euan:
This is why I cannot but believe that there will be a regeneration of the British coal industry, and an increase in coal use around the world. It is because coal is often the only indigenous fuel of significant volume that a nation is going to be able to exploit, and as gas prices eventually rise to reflect demand it will be the only one that they can afford.
No chance for three reasons:
1.The coal mine seams are way to deep and the quality available is crap.
2.The infrastructure was dismantled,starting from zero is capital intensive and UK is broke.
3.Most important where are the coal miners?The younger generation only wants clean white collar jobs.
Your first point is incorrect, there are still viable seams relatively close to the surface, and many deeper of higher quality.
Mines are started all the time, and some UK mines have been only mothballed.
My great-great-great grandfather pushed his family possessions in a hand-cart and took his young family on foot from Eglingham in Northumberland to Ashington to get a start at a new mine. With enough incentive folk will move for work (ask the Irish or the Poles for a start).
My response:
1.Maybe.It is almost +30 years since coal mining died.Are the seams viable after new capex and at current market price?Only ROI will determine whether to mine or not.
2.Mines are started all the time.Yes but these are not"all the time"times.UK is bankrupt.All the capital is down the black hole to bail out the banks.There is only so much QE UK can do(unlike USA).
Mines have been mothballed.OK.But to quote Matt Simmons"Rust never sleeps".With equipment out in the open for +30 years and no maintenance the value is junk not to mention obsolete and will have to be replaced with newer better stuff to be competitive.
3.What your great-great-great grandfather(or for that matter mine)did is immaterial.We are in 2011 and not 1940.We need today's generation to do the mining and believe me that today's MTV generation whether Irish,Poles or Brits are too soft for this.
They are at the moment, but once the depression really gets going and coal mining becomes the difference between having some sort of security for family or a hobo lifestyle of desperation, the mines will have no trouble recruiting. It may take a dose of harsh reality for the MTV generation to harden up, but underneath all the flab, they still carry the genetic makeup of human beings, and humans have proved to be a most adaptable species.
You're over-generalizing. A lot of today's younger generation are soft. But some of them are not. It doesn't take many miners to run a modern coal mine: a modern underground mine produces 2.6 to 6.5 tons of coal per worker per hour in Australia and the U.S. Assuming there are indeed good seams still available at a reasonable depth, a mine producing a million tons per year (a rather large mine) would only require 100 to 200 miners.
Still, a million tons of coal per year is still only the energy equivalent of about 2.5 million cubic meters of gas per day. So to produce coal to replace a significant part of natural gas usage, say 50 million cubic meters per day, would take twenty such mines. That's still only 4,000 miners. Out of a U.K. labor force of close to 30 million that's still only 0.13%. Surely there are still that number who will undertake dirty and dangerous work for above-average pay.
But I seriously doubt there are indeed enough reasonably shallow seams of good quality coal still available for this kind of development. One or two, perhaps. Twenty of more: I don't think so.
Ird,
Not over-generalizing.I have lived for 15 years in East Europe and now work in Belgium as a CNC programmer/operator.I did my CNC training in Belgium where in the apprentice school we had 4 CNC lathes but only 3 students over a period of 24 months.Only 1 was below 25.Myself(56years) and the other was 50 years.I have worked in 4 factories and the workforce is all old guys in the age group 45-60.Currently where I work from a workforce of 40 only 2 are below 25.Mining is not only hard but also unhealthy and dangerous.If you are going to break ground then might as well do farming,atleast fresh air and not dangerous.
As you mentioned that modern mines need few people.I agree but the mines in UK were mothballed long ago and to modernise them needs capex which as I pointed out is not there.As to manpower the issue is not 200 or 4000.I have seen recruiters from Australia looking for welders,crane operators etc in Serbia and Hungary.Surely you have these skills in Australia.Coal mining is a dead industry in UK.Over a period of time the miners moved on to devolp other skills and now they all are in pension.Nobody to train and nobody to be trained.
Corus steel is investigating opening a new mine in the grounds of one of its steel works to supply coal direct to the plant. This seems to be one contradiction to your points.
NAOM
They are investigating but then so are many companies investigating for oil in the Falklands.Does not mean it is workable or feasible.
UK coal production peaked way back around 1914 - it is a classic peak and decline to ~5% of peak today. All the easy coal was mined decades ago.
To suggest we can dig, dig, dig is like saying the US can dril, drill, drill for oil and all will be ok.
The peak and decline was for good economic reasons, Maggie Thatcher decided that subsidising a load of miners was not the best way to spend Government money. At current prices UK coal is not affordable or profitable to Brits.
@ Dave - HO,
I agree in part with what you say, but it comes down to scale, timing and what happens to UK society. The current system is based on cheap imports, but how long will Norway and Russia and Qatar go on accepting our IOU's? And with Sterling falling, how long will foreign imports remain cheap? I can see a revival in UK coal mining but more of a bump on the tail as opposed to full blooded return to the 19th century.
UK did not import any U for the last 3 years - and nuclear, including Pu fission and fast breeders must surely be the way to go - lest we do return to the 19th Century and have legions of Scots and Geordies lining up to go down pit.
For UK coal to become a cheaper option than Russian coal something pretty spectacular must happen to currencies and living standards (salaries and safety regulations) in the UK.
In agreement with you in entirety.One has to combine economics and geology for a complete picture.Currently due to the problems in Europe the GBP is off the radar,but as soon as this is resolved UK is on the hit list.GBP is a stand alone currency and no ECB or Germany to bail out.The manufacturing base is hollow,North sea is declining and it cannot anymore export dud financial products.I think because of its stand alone situation and the energy deficit this is not going to end well.
What are the implications of peak oil on LNG growth? Anyone see a NG centric energy world replacing the current oil centric anytime soon? Thanks for the insight. Joe B.
No. Gas is a different fuel to oil and is good for fixed, stationary applications or as a feedstock for chemicals. You may be able to theoretically run some road transport on NG but I don't see it becoming massively popular due to the inferior utility, huge upscaling of infrastructure and the economic necessity of keeping the price low for existing power generation investments.
I worked for a Canadian oil company that ran most of its vehicles on compressed natural gas. It is hardly difficult technology to implement - all that is required is a CNG tank, which can be located anywhere on the vehicle, and a fuel conversion kit. Dual-fuel conversions allow a vehicle to switch to gasoline or diesel fuel if a CNG filling station is not available, and it is not difficult to put a natural gas compressor in your own home or business.
There are over 11 million natural gas fueled vehicles worldwide. They are popular in places where liquid fuels are expensive but natural gas is cheap and widely available, which in future may be most of the world.
Pakistan has the highest number of natural gas fueled vehicles in the world - over 2 million of them. In Pakistan people can buy vehicles with CNG fuel systems for a $375 premium over gasoline vehicles.
Top 10 countries in number of CNG vehicles:
1. Pakistan: 2,191,000
2. Argentina: 1,745,677
3. Brazil: 1,588,331
4. Iran: 1,000,000
5. India: 650,000
6. Italy: 580,000
7. China: 400,000
8. Columbia: 280,340
9. Bangladesh: 150,253
10. Thailand: 127,735
sp Columbia => Colombia
NAOM
Two questions:
How much NG is vented (boiled off) from these tankers?
How vulnerable are they to small missiles (RPGs, Stingers, etc.)? PDS's comment above about a bullseye seems appropriate.
Comment: The UK's utter reliance on natural gas imports doesn't bode well at all. This condition is clearly reaching crticallity. Best hopes for development of alternative domestic sources of energy.
I don't know how vulnerable they are, but I do know that when an LNG tanker shows up in Boston harbor, they clear the harbor (I was sailing with friends when this happened once). Lots of official boats, and lots of people with guns. Very impressive, and accomplished pretty quickly.
There's two issues here -- damage to the cities surrounding the ports, versus disruptions to the supply. I think the main concern (right now) is the the potential damage to the city.
Yeah, there's alot of bang in those boats. It would make sense to keep LNG terminals strictly offshore. That Boston situation seems crazy to me.
How big an explosion would occur from a fully loaded LNG tanker? How would it compare to the BP rig explosion in the GOM?
Numerous studies suggest that fire, rather than explosion, is the real risk. Localized overpressure waves from rapid phase transition (a non-combustion "explosion") are possible. Indirect explosions where NG infiltrates a closed structure, reaches the flammable concentration, and encounters an ignition source are possible. It is extremely unlikely that a single large explosion could be produced. Ask the military people how difficult it is to get a fuel-air bomb to work, and they're trying to produce an explosion.
The studies suggest that the fire could burn over an area several hundred feet across, with potentially dangerous heat as far as a mile from the center. The NG portion of the fire would burn out relatively quickly. One study calculated that 25,000 cubic meters of LNG with a 1 meter hole in the tank would burn out in about an hour. If there's enough other flammable material within some distance of the NG fire, it seems reasonable that you could get a firestorm.
"Localized overpressure waves from rapid phase transition (a non-combustion "explosion") are possible"
http://en.wikipedia.org/wiki/BLEVE
Not fun except when watching from orbit.
Explosion doomsters should note that LNG tankers docking at Grain have to sail past the 1500 tons of World War 2 explosives still sitting in the wreck of the SS Richard Montgomery.
http://en.wikipedia.org/wiki/SS_Richard_Montgomery
If you could get a charge into the mass centre of the LNG sphere, large enough to blow out the entire sphere and toss the fuel around widely, you could create a very large boom. The same concept as a fleur bomb. http://www.youtube.com/watch?v=qo6fyWrEYnM But you can't do this with a rocket propelled grenade, you need to get it inside the sphere, and be rather big to work.
And whatever you're inserting has to work at cryogenic temperatures (-162 °C, -260 °F), or be adequately insulated until detonation. One of the concerns about LNG leaks is that the LNG can cool adjacent structural materials to those temperatures, with the potential for additional failures.
i really find it bazar that we are talking about fuel air bombs on this forum but the method is not that difficult. i won't reveal it here for fear of a call from homeland security.
I love these two charts from the Energy Export databrowser as I think they help get across the dire situation the UK finds itself in at the moment.
In the top chart we see that the UK's domestic production of natural gas is plummeting, down 50% in the last decade.
In the bottom chart we see that the UK's domestic production of primary energy is down for oil and coal as well. Total energy production is down 40% over the past decade! Nuclear power will also be in decline if reactors are decommissioned according to schedule.
There is no way that "alternative energy" can make up for this shortfall in time to rescue the UK from energy scarcity. Wind, tidal, solar, etc. should be pursued but the UK needs to embark on a truly massive conservation campaign. Conservation should be priorities #1, #2 and #3 for the next decade if the UK is to avoid damaging energy shortages in the future.
I'd also like to comment on Dave's assessment:
I cannot disagree with this statement until the word "number" is defined. What I will say is that more and more countries are looking to natural gas as the answer to energy shortfalls from other sources. This is true for developed nations like the UK and developing nations like Pakistan. One of the remarkable things one learns by reviewing national production and consumption numbers is that consumption of natural gas can rise remarkably rapidly once the necessary infrastructure is in place. I believe this is because natural gas is so versatile -- it can replace the coal used in thermal power plants; it be used as a transportation fuel in vehicles and it is important as a feedstock for the petrochemical industry.
Natural gas is going to become hugely important as Peak Oil sets in. To focus on this important issue, Mazama Science maintains a linked databrowser and blog primarily concerned with natural gas:
Best Hopes for Dave's "number" being greater than 10 and for natural gas, either piped or delivered as LNG, to be an excellent transition fuel.
Just don't lose sight of the fact that we must still "transition".
Jon
Fortunately in the last few days the temperatures in the UK have risen a few degrees and we are still in holiday mode - one more day before most people go back to work, and the temperatures are due to drop again ... sigh!
Jon, why is it a disaster if the UK has to import more (all) of it's energy? As long as we have something to export? (financial services, hi-tec manufacturing, etc). I'm more worried about the export side of the equation than the import side...
JN2,
The reason I think "damaging energy shortages" are likely is that the UK has not adopted the habits of an energy importing nation. Their shift from oil and gas exporter to net importer has been very swift and the infrastructure developed over the years of energy surplus (suburban sprawl, poorly insulated houses, inadequate mass transit, insufficient long term gas storage) will not serve well in times of energy scarcity.
France has developed nuclear power and is attempting to electrify "every kilometer" of rail in the country. The Germans have pushed the adoption of solar PV with their feed-in tarrifs while they and the Scandinavians have developed very efficient housing standards. The Dutch have husbanded their natural gas patrimony so well that they will continue to be gas exporters for many years to come. The Danes are leaders in wind power. The Austrians have almost half a year's supply of natural gas in storage. The Spanish have pushed solar. The Portugese got 45% of their electricity from renewables in 2010.
These are nations that have learned to live with expensive or uncertain energy imports. I just see the Brits as being about a decade behind. As for exporting "financial services", I will go out on a limb and suggest that the world's appetite for Anglo-American financial services may decline going forward, at the same time that the cost of energy imports increases.
So I see the UK in a situation where their export income will be declining at the same time that the cost of their imports (of energy, food, manufactured products -- all the basics) is increasing.
It doesn't look like a pretty picture to me.
Jon
It is amusing/instructive/depressing to read the accounts of British cyclists (*) on the web. With names like http://grumpycycling.blogspot.com/, http://crapwalthamforest.blogspot.com/, and http://waronthemotorist.wordpress.com/ , you can pretty much get the feel without even reading them. Long story short, the transport establishment in England has no clue/plan/intention to reduce the share of energy devoted to transportation -- it's cars-cars-cars, and more cars, and if you're not in a car, you suck.
(*) some of them prefer the phrase "people who ride bicycles", because of the unfortunate association of "cyclist" with abnormal clothing, which they view as a hindrance to wider use of bicycles. This is not the lycra crowd.
I think that the facility of the month website: http://homepage.ntlworld.com/pete.meg/wcc/facility-of-the-month/
which humourously displays the contempt with which local councils develop cycle paths, best shows how riding bikes in the UK is viewed by officialdom,
Peter.
So WTF is up with all those railings? That's extra money spent on intentionally unfriendly infrastructure. Better to issue hammers to pedestrians, to give drivers an incentive to steer wide.
Thanks Jon for responding. I think we agree; the more energy you import, the more dependent your economy is on exports, eg Japan and, increasingly, the UK. Whether the UK can export its way out of debt and its negative balance of payments situation is another question...
Look at it from export angle or import angle.The point is that there is no money to pay for the energy deficit.
Callahan/mazamascience, you are one of my heroes, I love your charts.
I do not know how to post this other chart of yours, but if you want to see a country in "a dire situation", look at Callahan's chart for Spain
http://mazamascience.com/OilExport/output_en/Exports_BP_2010_gas_ft3_ES_...
Just the other day our ex-president Felipe Gonzalez joined the board of Gas Natural. The man, a Socialist, after all his life in politics is broke (he rents a flat, makes jewels with his own hands to earn some money) so I reckon there must be money in gas.
People are under the somewhat misguided impression that LNG tankers are ticking timebombs. When we offload a ship, the CG does set up a perimeter and patrols it, but it's nothing extreme. It's not like they shut down the entire channel or something along those lines.
And LNG in and of itself won't even burn. In liquid form, there's not enough oxygen for it to burn. Whenever higher-ups visit us, the old standby favorite trick is to get a bucket full of LNG and light it on fire. The only place a flame is sustained is directly above the liquid as it evaporates and a high enough LEL is achieved. The flame front for methane is rather slow to advance as well.
As mentioned, the real fear would be a BLEVE. This would happen if somehow one of the tanks was heated to the point that the LNG underwent a phase change in the tank and built pressure, eventually rupturing in a gaseous form and igniting.
Onshore we protect the tank area with water curtains to help evaporate any liquid that should spill. An LNG tank would make a poor terrorist target. I'd be much more interested in hitting an oil tanker. It would make for a much more dramatic fire in an aquatic environment. Any LNG that hit the water would evaporate and rise into the atmosphere almost immediately.
It's not like they shut down the entire channel
Except in Boston, they do. I was there, I saw it with my own eyes. Every boat in the harbor was pushed far to the side. Do note, it's not like there's a ton of room, so maybe one man's "perimeter" is another man's "entire channel", but from the POV of someone in a boat, you go to the edge, and you wait.
Fair enough, I can't speak for Boston. Seems like a rather unsuitable place for an LNG terminal if you ask me. From what I've heard about their terminal it's rather rudimentary. Our ships offload almost a mile from shore - we have much more room available for ship traffic to continue unabated.
The decision-making process here is specially designed to avoid excess rationality. We've got some islands in the harbor, that for no particular reason that I can discern, are some sort of national park/area with a rabidly noisy constituency. We did manage to put a sewer facility on one of them, and some of them look like they'd make a great LNG terminal. They're all pretty much screaming for windmills, too. Friends of ours mistakenly rented a house near the ocean once, all winter long, there was a door they didn't use because it was too hard to hold it open.
I can't speak for Boston. Seems like a rather unsuitable place for an LNG terminal if you ask me.
It would be a lot safer (from the Boston perspective, at least) to bring the LNG in through Canada.
Canada - Always ready to bail the US out of its energy problems for a sufficiently high price.
Boiloff is a function of the time between loading / unloading, the temperature at which it was loaded, whether the gas is low or high calorie, the insulation on the specific vessel and ambient temperature.
That said, pretty much all new LNG carriers direct the boiloff to the engines where it is used to power either specific gensets or is used in the propulsion engines. Some vessels recompress boiloff using energy coming from the gensets.
That said, boiloff for a typical ME / GOM trip in the summer is somewhere in the 3-4% range.
Rgds
WeekendPeak
I should hope that the engineers who designed these ships were savvy enough to arrange the plumbing in such a way that most or all of the gas that must be vented can be fed to the ships engines.
I have no expertise in such matters, but I have read a bit about the possible consequences of a lng tanker suffering a catastrophic accident;some people who supposedly know whereof they speak say there could be a fireball five hundred feet or more in diameter at ground level, with nearly anything flammable within a couple of thousand feet being ignited;and that under certain conditions, unburned escaping gas might be carried a considerable distance by a strong ground level breeze or wind, as a consequence of a lack of sufficient oxygen for it to burn in the immediate vicinity of the ship.
Such a plume of gas would of course become diluted sufficiently to burn within a fairly short distance, but it might travel far enough to spread secondary fires over a considerable area.
If a hot war breaks out, unescorted tankers of every sort will have a life expectancy measured in minutes or hours at most, according to a couple of friends who are retired military.They tell me one sortie by one fighter or helicopter, armed with the right rockets or even cannon shells , will be more than adequate to sink just about any tanker, or at least burn it down to floating scrap metal;they are sitting ducks, ridiculously easy to find, unarmored, and without significant defensive weaponry.
Ergo, probably the only way anybody who owns one will permit it to leave port is if it is escorted by friendly military forces.
With todays practicly invisible mini-subs I wouldn't bet even on the safety of the protection from a carrier fleet. The americans don't have them (yet) but we do in Sweden and probably most of Europe and, as they say, information wants to be free.
I was at one point advised to invest in a company which made cheap cryosystems for re-refrigerating the boiloff; it turns out to be more sensible to do that and use oil to fuel the ship (ship engines being generally good at burning the cheapest oil available) than to try directly to use LNG.
There is absolutely no comparison between the explosion that could happen in an LNG accident and the Macondo incident. The Rand Corporation, the Coast Guard and others did quite a bit of research on the potential damage from LNG accidents a number of years ago and the danger zones for them are on the order of 10-20 miles for a slow release, delayed ignition event. Under a worst-case scenario, that is enough to effectively wipe a major coastal city off the map. Companies investing heavily in LNG facilities near major cities are essentially betting their companies that they will not have a worst-case accident. Classic black swan risk that appears to be underappreciated by investors and governments.
Catman, Thanks, Joe B.
Hmmmmm .... that would be 16-32 kilometres! ... worst case around 3000 square kilometers!
If the Isle of Grain goes up it could devastate the Thames estuary with all it's power stations and oil refineries - all the way to the outskirts of Greater London!
Do you have a link to this - I'd be interested in reading it. Unless the weather conditions were exceptional, I have no idea how the Methane could be a significant menace 20 miles downwind of a sea-borne spill.
Here's a link to a Randy study from 1975 on LNG disaster scenarios:
http://www.rand.org/pubs/papers/2008/P5411.pdf
Some questions for you both. Has anyone taken a loaded LPG tank and fired a RPG or missile at it? Either in a war situation or test. A second one. Has any loaded tank been involved in a fire? If either of these cases has occurred then what were the results? Given the impact of a worse case I would prefer predictions made from experience rather than theory, however good.
NAOM
Can't say, I'm sure just about everything's been tried at some point or another. I don't have any LPG experience besides the tank I use at my house, but in that case the pressure in the LPG tank is far higher than any LNG tank I'm aware of. For example, I'm sitting at my desk right now looking at my DCS screens, and I have several million bbls of LNG in gigantic tanks sitting about 500ft from my window. Looking at the vapor system, the highest LNG tank pressure is currently 1.1 psig. My LPG tank at home sits around 80 psig when full. I wouldn't expect a large explosion if an RPG were fired at an LNG tank beyond the actual warhead explosion. Our relief valves on the tanks are set to unseat just north of 2 psig. It's happened a couple times and is quite a site to see - not at all violent though. The methane just drifts up into the atmosphere.
This is just guessing on my part, but I wouldn't be at all surprised if it just bounced harmlessly off our tanks. They are double walled with thick steel and several feet of insulation between layers. A small plane probably wouldn't do much damage, I wouldn't be so confident about a jetliner though. Just my opinion there, I don't know for certain.
Now sticking a sealed tank loaded with LPG or LNG into a fire would probably cause a serious BLEVE, and be quite catastrophic. Each of our tanks has its own containment dike to contain any spill, and upon release the water spray would come into effect to evaporate the spill as quickly as possible, and also mitigate heat damage in case of a fire.
A RPG uses a shaped charge and is designed to explode on contact with the warhead a stand off distance from the target. They are quite effective against armour. I would not expect it to have difficulty with a double walled tank unless it struck at a glancing angle. I think there have been enough incidents with LPG to have some confidence in what would happen but I would feel a lot more at ease with LNG if safety was based on testing rather than speculation. For example, we are dealing with a very cold liquid, would it burn the same way as a release of pressurised NG? We seem to be assuming that the RPG would just make a hole that may jet a flame, we are assuming that gas will just float away etc. Makes me nervous.
NAOM
The key words are;
If an LNG tank is holed by an rpg the best response is to light it off immediately to avoid the accumulation of a large volume of fuel air mix. Then apply a heavy spray of water to prevent the structure from heating up and melting. You might be able to save the ship.
Again, for the Boston experience -- at least here, it's often quite windy (e.g., tomorrow, predicted WNW at 18mph) and the prevailing winds blow from NW to SE (i.e., out to sea). A sea breeze would sweep it inland. It would have to leak just-so to form an ignitable cloud. I guess if you were extraordinarily unlucky, the cloud might blow over the airport, yielding a Calvin-and-Hobbes disaster scenario (minus mutated dinosaurs, of course).
Hello and Happy New Year to everyone!
May the concerns over U.K. natural gas supplies resurface later this winter?
The diagram above shows developments of total natural gas in U.K. storage for the contractual years 2005 - 2010 as of the morning of Sunday 02nd January 2011.
As the graph above illustrates the withdrawals of natural gas from U.K. storage has so far been the highest this heating season of all those presented in the graph. This has happened despite the inflow of more natural gas to U.K. in the form of LNG.
The diagram above shows developments of relative withdrawals (or net storage movements) of natural gas from U.K. storage as of December 1st for the contractual years 2005 - 2010 as of the morning of Sunday 02nd January 2011.
The diagram illustrates that despite the growth in U.K. imports of LNG this heating season there has been about 700 Mcm more natural gas withdrawn from U.K. storage between December 1st 2010 and January 2nd 2011 relative to the same dates in the previous heating season.
As of the morning of January 2nd there was a total of about 2 000 Mcm natural gas left in U.K. storage.
The Price
To me the price developments for a commodity normally give a good indication of the true state of the supply and demand balance.
At NBP (U.K.)natural gas is presently trading at above 60 p/therm or the equivalent of $9,30 - $9,50/kcf (Mcf).
At Henry Hub (U.S.) natural gas is presently trading at $4,20/kcf (Mcf).
(Ref also the recent developments in the oil price that in my opinion suggests a tight balance between supply and demand.)
Some analysts predicted earlier that LNG prices in the Atlantic basin would be depressed due to the US natural gas supply situation. Now it looks more like LNG prices are moving towards oil indexation again in the U.K. market.
This is now believed to be due to stronger LNG demand from big economies in the Pacific basin (China, India, Japan and South Korea).
Based upon heating value natural gas has on average in recent years traded around 60 - 70 % of crude oil.
Natural gas futures for U.K. shows a decline towards the spring, which should be expected as the demand for the fuel for heating will decline in the spring.
No new LNG projects sanctioned with startup date after 2016 according to this presentation from Statoil. (pdf)
Fuel Switching
Some electricity production may be switched from natural gas to coal and/or nuclear and this will have the effect to reduce demand for natural gas. This was planned to happen as from December.
The slope, rate of decline) of the 2010 season seems to be somewhat less than that of 2008/2009. However, if the amount of decline in 2010 equals 2009 then the risk of reaching 0 seems to be high. Why on earth did they start 2010 at a lower level than 2009!
NAOM
No, the pipelines have been feeding gas at >100% planned flow rate and that's before winter has started!
Rune's second chart shows this year's is the fastest decline in recent years.
Overall yes, however the slopes, when actually pulling gas, seem shallower for 2010. Previous years had a respite so the overall picture is worse but what struck me is that when they were actually pulling gas it seemed to be at a lower rate. This may just be an artefact from looking at the chart but the numbers would tell.
NAOM
Using a smoothed 30 DMA (Days Moving Average) shows that the (net) withdrawal rates (Mcm/d) has been higher this heating season.
Last winter saw heavy withdrawals in early January, and so far for January 2011 (we are still early in the month) withdrawals has been less.
Thanks for setting me straight Rune.
NAOM
Because we were exporting record volumes to Europe via the Bacton Interconnect in October. And the company was boasting about it!!
INTERCONNECTOR SETS A NEW MONTHLY FLOW RECORD (PDF)
A few days after the company issued that boast, UK wide average temps dropped below normal (1st week November) and have remained below average, according to National Grid data, ever since.
Nice plan, export instead of building your reserve to match previous years. Now what was the thinking behind that apart from kerchang.
NAOM
To me the concerning part is that at the end Christmas period last year there was 3,750MCM in stock falling to a low of 500MCM in March, a decline of 3,250MCM.
At the same point this year there was 2,100MCM in stock.
So at a similar drawdown rate there would be over 1,000MCM short.
Can LNG make up the difference?
Or are Network Gas praying for an early spring?
Hi HO, thanks for another interesting tech talk. Small point, but the GBA on the 21st wasn't the second ever, it wasn't even the second in 2010. GBAs were issued on jan 4th, 7th, and 11th last winter. Doesn't affect the thrust of the article, but it shows on the summary on the front page - so looks bad. I'd also disagree that it was LNG that "came to the rescue", it certainly made a difference on the 21st, but I don't think it caused the tail off in interest in the story. LNG flows have been at a similar (high) level throughout the cold weather in the UK, and haven't increased since the 21st Dec. The reason the gas issue has gone quiet is because it warmed up. Having said that with colder weather forecast next week and everyone returning to work, I expect to start seeing it talked about in the MSM again soon. The levels at rough look pretty bad right now, especially as we didn't see the normal injection over the christmas period.
Thanks I stand corrected on the GBA's, having taken the quote from one of the sources I used for the initial story - same fault in saying that LNG came to the rescue (though I got that one from one of the press releases at the time). I'll keep an eye on the story, and try to be a little more cynical.
I wonder if the Export Land hypothesis will apply to gas as it will to oil. According to A. Berman shale gas will be short lived. I think by 2015 or so there will be a massive swing to CNG as a diesel substitute, say when oil is $150 a barrel. Note some big trucks can use LNG directly in cryogenic tanks. Most however would use high pressure CNG tanks at normal temperature. I understand at present piped gas can sell as low as $4 per million btu's which is close to a gigajoule. At $400 per tonne LNG works out at around $10 per mbtu or GJ. That is 'bottled' gas is twice as expensive as piped gas.
When the diesel to CNG fuel switch kicks in there could be a major NG price shock. While the gas price might be affordable for truckers it will be too expensive for combined cycle stationary power plants. Surely the UK must wonder in hindsight whether they should have conserved gas while they had it.
What about Gas to Liquids technology? I guess the calculation has a couple of components:
1. The energy cost comparison between LNG and GTL diesel at the point of use: which is more efficient? Of course in NG producing countries this may be different to LNG importing countries.
2. Infrastructure in place (the existing diesel distribution network can be used for GTL diesel too)
3. GTL diesel requires no conversion in existing diesel vehicles
4. GTL diesel can be blended with "ordinary" diesel, requiring no change in stock handling processes
The curious question for me is at what price do we start seeing GTL/CTL plants get built. A few years ago the "common" wisdom was that $40 bbl oil was enough to see these things happen. We are now into the fourth year of oil prices being significantly above that level but still seeing no big movements in GTL. Why?
at the current (us) ng price, the break even is about $45.
Piped natural gas currently runs as low as $4/Mcf ($4/GJ) on world markets, so you can buy about 250 megajoules of natural gas for $1. With diesel fuel running around $2/litre in Britain, and diesel fuel containing about 36 megajoules per litre, you can buy about 18 megajoules of diesel for $1.
That means diesel fuel is now 14 times as expensive as natural gas in British economic conditions. If you assume LNG imports at $10/Mcf, it would be 5 times as expensive. The economics are overwhelming. British trucking companies should be converting their fleets to natural gas and bringing in additional natural gas to fuel them. That's assuming the British government doesn't decide to tax natural gas as a transportation fuel, which could wreck the economics.
The economics of natural gas in the US are not as overwhelming since diesel fuel is only about $0.85 per litre, which means you can buy 42 MJ for $1 dollar. However diesel is still 6 times as expensive as piped natural gas, so the conversion still makes economic sense. It would be much cheaper to run their truck fleets on natural gas. The advantage for the US is that it can produce large amounts of shale gas domestically to meet the need.
GTL plants are extremely expensive and inefficient, not to mention causing large amounts of air pollution. They take 1000 megajoules of natural gas and convert it into 620 megajoules of diesel fuel. They are taking a cheap energy source and turn it into an expensive one. Since they are operating at the margin, they will not change the price of diesel fuel by much unless you build huge numbers of them, which you cannot afford to do. By contrast, CNG conversion kits for diesel engines are relatively cheap.
One thing to keep in mind though is that most of that UK diesel cost is made up of tax. Although the tax rate for LPG/CNG vehicle fuels is less that on petrol/diesel, the tax has been increasing in recent years. If people were to switch over in large numbers, I'd expect the tax to increase even further.
If you install a compressor and divert home/business natural gas supplies to a vehicle then you must declare this and pay the tax I believe.
As we currently can't supply enough gas to meet demand on the coldest days (but don't worry we just define that as the new "normal" and expect large customers to go without), I can't see us substantially increasing CNG usage in a hurry.
non gas liquids ? that would be any liquid, except gasoline, why do you call ngl - non gas liquids ?
I think he means natural gas liquid - which is what NGL is usually the abbreviation for. Non gas liquid makes no sense because NGLs are produced with or from natural gas.
From the Society of Petroleum Engineers Glossary of Industry Terminology
H O thanks for this valuable post about the fungibility of nat gas as moved in a liquid state.
Two comments.
1. Several posters here talk about taking precaustions for leakage, so some CH-4 must be lost during transloading/phase change. What percentage is this and would not this have an impact on climate change (CH-4 has 25 or 30 times the effect of CO-2)?
2. How does the energy used for liquifaction, transport and gasification affect the EROEI compared to gas from the North Sea? Seems like a lot of energy must go into the gasification unless some huge heat source like the ocean is used. Even if the EROEI is quite high I think the infrastructure costs would preclude its use in nearly any country that has abundant onshore gas like the US. $10/mm BTU looks pretty expensive to me.
I think something like 4% of methane escapes before reaching the final customer and methane is a very bad contributor to the greenhouse effect ... it doesn't all come from cows.
Not for nothing HO, but it's the Isle of Grain, not Island of Grains. Or more usually just 'Grain', since the channel separating it from the mainland is a muddy ditch at best.
http://en.wikipedia.org/wiki/Isle_of_Grain
Recall the Robert Rapier article about a visit to a GTL plant in Malaysia. If I remember correctly the liquid fuel had less than half the energy of the gas that went into it. Fischer Tropsch conversion burns some of the feedstock to create enough heat and pressure for longer chain hydrocarbons to form. Put it another way GTL wastes half the possible fuel energy. I suggest we abandon liquid fuels except perhaps for aircraft and PHEV range extenders. Not only trucks could switch from diesel to CNG but cars could switch or go dual fuel petrol-CNG as is done in a number of countries.
This sounds like the Pickens Plan. Where I disagree with Pickens is that I don't think we can generate enough reliable electricity from wind. Load following nukes may be better so we don't have to run gas fired power stations as hard to balance wind intermittency. That could free up a lot of gas as a liquid fuel replacement. Those who can get by with an EV or PHEV should do so while truckers, long distance commuters, farmers and builders should get NGVs.
Countries like the US and Australia could then wean themselves off oil imports. Countries that are importing a lot of LNG should use it mostly for domestic gas/CHP and as transport fuel. No country should depend on piped gas or LNG as a major power station fuel.
Pickens has already abandoned wind energy and is focusing his concentration on NG. Incidently, has anyone else here seen the pop in the stock ticker GASS? I got in early and rode it up for a while and then sold (much to early) hoping for a pull back which never came (until last Friday), when I scaled back in. When you look at it on the chart it goes straight up. I'm rather bullish on NG as I'm long LNG, CHNG, ECA, FSYS, CLNE, EXH, and WPRT. Anyone else out there with me on this?
So the new Pickens Plan B is gas-for-everything. Good thing gas will never run out.
Suppose in a few years truckers will pay $2 per litre equivalent or say $8 per US gallon equivalent (contained energy) for CNG. Call that 6c per megajoule which is $60 per GJ or mbtu. My guess is that gas fired power stations in the US are currently paying $4-$8 per mbtu for NG. Buyers of LNG for whatever purpose pay more like $10 per mbtu.
What happens to the cost of gas for power plants when truckers will pay ten times the amount for the same energy? As I said in a previous thread gas cannot serve two masters, both transport and stationary generation. Now we need Pickens Plan C.
Boof... you're conclusions of course are far too logical for a lumbering, bumbling, short-sighted country as the U.S of A. The US doesn't even have a coherent energy plan and believes ordinary capitalistic market forces will solve its problems. I live in Nevada and with its far flung urban sprawl we are especially vulnerable to gas prices. We do however have geothermal but in locations so isolated that to build out the infrastructure to deliver the energy is prohibitively expensive. There is talk that Congress might take up an energy bill this year. The republicans hate green energy solutions because they are in the pockets of "Big Oil" and the subsidies in supporting green energy go against their ideology of "free market entreprenurialism". However, both democrats and republicans agree on developing natural gas resources and it is in this particular area that we may see a breakthrough. Should they pass a natural gas bill watch the stocks I mentioned go sky high on "irrational exuberance" as the United States has a history of booms and busts in ever increasingly compressed time frames.
you mean here:
http://www.theoildrum.com/node/7118
for the shell pearl project:
input: 320 kboe/d
output:140 kboe/d gtl plus 120 kboe/d ngl + ethane
the gtl output is less than half the total wet gas from north dome khuff (140/320). part of the wet gas is recovered as ngl + ethane. the gtl process produces a range ngls and distillates(the l in gtl). iow, some of the ngl + ethane is produced from the gtl process and some is from plain old gas processing of the wet gas stream.
i believe the most often quoted eroei is 0.6 for methane to gtl.
the cost of the pearl project was about $19b, but not all the cost is for gtl, part of the cost is plain old gas processing with sulfur as an additional byproduct.
I agree with the wind deduction. I would include solar. It amazes me how people will grasp at wind and solar and ignore usage.
It is 6:20 AM here in the pacific northwest. It is dark, cold, and there is no wind 'outside'. Somewhere hydro, nat. gas., coal, and nuclear generator are running.
Without these generators it would be dark, cold, and no wind 'inside' for most people.
If I had to wait from wind or sunshine to operate those machines that make my life comfortable, I would be uncomfortable most of the time.
It seems to me that efficiency and reduction and the only viable solutions. Heated and lighted space must be reduced, and efficiency increased. Transportation distances must be reduced.
Because they are the only viable outcome they will happen. Everything else is details or delusion.
Tiny correction - last time I looked it was the Isle of Grain, not the Island of GrainS
http://en.wikipedia.org/wiki/Isle_of_Grain
Corrected, sorry comes from editing too late.
I sometimes wonder if its worth posting comments that won't get read (look a few comments up).
Anyway, you've still missed instances of "Island of Grains", after the edit.
I have a question regarding the NGL acronym. In some places you read it means "Natural Gas Liquids", but here it means "Non Gas Liquids". I think I may be missing something here. What is behind this?
NGL = Natural Gas Liquids (ethane, propane, butanes (EIA lists these as NGPL; Natural Gas Plant Liquids)), IEA (International Energy Agency) also includes condensates)
While there has been a growing market for LNG around the world, and re-gasification plants, such as those in Wales, are being developed in many countries (note the 23 countries that are customers to Qatar) the availability of LNG, with new facilities being planned in countries such as Australia likely means that there will be a continued relatively cheap supply available for a number of years. The consequences to the profitability of domestic production, such as shale gas in the USA, may become more questionable as a result. (emphasis my edit) from Dave's post
No new LNG projects sanctioned with startup date after 2016 according to this presentation from Statoil. (pdf) from Rune's comment
Hi Dave, above is the last paragraph of this key post. The line below it that includes the Statoil link (which is not a particularly detailed presentation) came from Rune's comment. The latter would seem suggest some sort of equilibrium is being reached in the gas supplies. Of course there may be many LNG projects in the pipeline for after 2016 which have not been sanctioned as they are awaiting market signals. No doubt LNG prices will affect just what number it will take to make the bottom line black for shale gas plays.
This is of immediate interest to Alaska. We have a huge stranded gas reserve under the North Slope. I've yet to see the results for this fall's 'open season' bidding (for potential gas shipments in the long talked about Alaska gas line) but don't expect the results will indicate a pipe linking Alaska gas to the midwest through Canada can be expected anytime soon.
Last Alaska legislative session there was a great deal put forward about the state either building its own (we have the money) 48" gasline from the Slope to the oil terminal in Valdez (where the LNG facilities would also have to be built) or building a 12" 'bullet line' direct to Anchorage that would just serve Alaska. Most of Anchorage's power generation and heat are fueled by the quickly depleting Cook Inlet area gas fields, so this is no small matter of concern. There is actually an Anchorage port facility that liquifies gas that comes from Cook Inlet's fast shrinking reserves and ships it to Fairbanks (about 350 miles to the north) in trucks like this one.
The company manages to make a profit.
Anyway, the whole natural gas situation up here is, at the moment, quite volatile ?- )
Correction to my comment http://www.theoildrum.com/node/7270#comment-755396 posted to "Tech Talk: pipelines, a help that can be costly." The last small poor quality picture I posted is also an after the 7.9 earthquake picture. I think it shows distortion way in the background. I did find a before picture in PERFORMANCE OF THE TRANS-ALASKA PIPELINE IN THE NOVEMBER 3, 2002 DENALI FAULT EARTHQUAKE but I've no idea how to post pictures found in pdf format.