This document provides an overview of the liquefied natural gas (LNG) life cycle, including liquefaction, transportation by ship and pipeline, storage, and regasification. It discusses the global growth of LNG trade in recent decades driven by new liquefaction facilities and expanding regasification capacity. New technologies like floating LNG and storage/regasification units have helped increase access to remote gas reserves and new markets. Overall the document outlines the key stages and evolving infrastructure involved in the production and distribution of LNG as a fuel on a global scale.
Incoming and Outgoing Shipments in 1 STEP Using Odoo 17
The Liquefied Natural Gas (LNG) Life Cycle
1. Hassan Z. Harraz
hharraz2006@yahoo.com
Spring 2018
Natural Gas
LNG
http://content.edgar-
online.com/edgar_conv_img/2007/03/30/0000950152-07-
002894_L25400AL2540013.JPG
@Hassan Harraz 2018 LNG Life Cycle@Hassan Z. Harraz 2018
LNG Life Cycle
1
2. OUTLINES LECTURE
• This Introduction to Liquefied Natural Gas (LNG) Life Cycle overview includes:
@Hassan Harraz 2018 LNG Life Cycle
2
LNG
Is LNG a safe fuel?
Quality of LNG
Sales LNG/Gas Specifications
NATURAL GAS VALUE CHAIN
LNG TRANSPORTATION
Global Movement of NaturalGas
Movement of NaturalGas
Movement: Pipelines and Storage
NaturalGas Infrastructure: Pipeline
Systems
Types of Pipelines
Offshore Pipelines
Movement: LNG
Liquefied NaturalGas (LNG)
LNG Markets (R)evolution
LIQUEFACATION
REGASIFICATION
PIPELINE NETWORK:
Revolutionary LNG Technologies: FLNG and FSRU
FLOATING LNG (FLNG)
FLOATING STORAGE AND REGASIFICATION(FSRU)
ENERGY ACCESS
Storage
MARKETS
Global Natural Gas Trade
Market Players
Natural Gas Price Formation
Liberalizing Market Dynamics
Natural Gas Contracts
3. 5
64321
Dock-1
Dock-2
Dock-3
H
G
F
E
A
D
B
C
LPG Tanks
LNG Plant Site
Bontang Indonesia
With 8 trains running, the
capacity of the plant has
reached 22.25 MMT/year
LNG, 1 MMT/year LPG and
10 MMbbl/year condensates.
STORAGE :
LNG : 4 x 95,000 m3 + 2 x 125,000 m3
LPG : 5 X 40,000 m3
Cond. : 10,000 m3 + 12,000 m3
LNG
BADAK
Sources: Ministry of Energy and Mineral Resources of the Republic of Indonesia
@Hassan Harraz 2018 LNG Life Cycle 3
6. Liquefaction Facilities
Source: ALNGSource: ALNG
The main cost-cutting measures put into effect include improvements in the design
efficiency of LNG plant, improvements in liquefaction technology, and improved
economies of scale. The improvements in liquefaction technology have included
optimization of air and water-cooling, and a reduction in design redundancy.
@Hassan Harraz 2018 LNG Life Cycle 6
11. 5%
15%
100%
Over-Rich
Will not burn
Flammable
Too Lean - Will not burnLower Flammability Limit (LFL)
Upper Flammability Limit (UFL)
5%
15%
100%
Over-Rich
Will not burn
Flammable
Too Lean - Will not burnLower Flammability Limit (LFL)
Upper Flammability Limit (UFL)
Flammable Range for LNG (Methane)
LNG Properties
Density: 3.9 ppg (Water 8.3 ppg)
LNG floats on water.
Flammability: range 5 – 15%.
@Hassan Harraz 2018 LNG Life Cycle
13. Comparison of Properties
of Liquid Fuels
LNG Liquefied
Petroleum Gas
(LPG)
Gasoline Fuel Oil
Toxic No No Yes Yes
Carcinogenic No No Yes Yes
Flammable Vapor Yes Yes Yes Yes
Form Vapor Clouds Yes Yes Yes No
Asphyxiant Yes, but in a vapor cloud Yes, same As LNG No No
Extreme Cold Temperature Yes Yes, if refrigerated No No
Other health hazards None None Eye irritant,
narcosis, nausea,
others.
Same as
gasoline
Flash point
o
F -306 -156 -50 140
Boiling point
o
F -256 -44 90 400
Flammability Range in air % 5-15 2.1-9.5 1.3-6 N/A
Stored Pressure Atmospheric Pressurized
(atmospheric if
refrigerated)
Atmospheric Atmospheric
Behavior if spilled Evaporates, forming visible
“clouds”. Portions of cloud
could be flammable or
explosive under certain
conditions.
Evaporates, forming
vapor clouds which
could be flammable
or explosive under
certain conditions.
Evaporates, forms
flammable pool;
environmental
clean up required.
Same as
gasoline
Source: Lewis, William W., Lewis, James P, Outtrim, Patricia A., PTL: LNG Facilities - The Real Risk, AiChE Meeting, New Orleans, April 2003 as modified by industry sources.
@Hassan Harraz 2018 LNG Processes
14. Fuel Auto-ignition Temperature (oF)
LNG (primarily methane) 1004
LPG 850-950
Ethanol 793
Methanol 867
Gasoline 495
Diesel Fuel Approx. 600
Source: New York Energy Planning Board, Report on issues regarding the existing New York Liquefied Natural Gas
Moratorium, November 1998
Auto-Ignition Temperature of Liquid Fuels
14
15. 2.1) Quality of LNG
“Off-Specification
Off-Quality” Gas or LNG
16. Quality of LNG (…cont.)
Wobbe Index:
Soot Index
The dewpoint is a saturation temperature.
Heating value (HV)
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23. LNG as Fuel Applications
Source: Shell
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24. 3.2) Shipping
Source: BGSource: BG
LNG tankers are double-hulled ships
specially designed and insulated to
prevent leakage or rupture in an accident.
LNG shipped in large vessels with
cryogenic tanks.
LNG is a cryogenic liquid and it is stored in
double-walled tanks at atmospheric
pressure.
The LNG shipping market is expanding.
New Technology: Ship-to-ShipTransfer (STS)
Vessel Capacity:
First LNG tankers: 27,400 cubic meters (cu m)
In 2007, vessels averaged 266,000 cu m
Decrease in costs by 45% from early 1990’s due
to increase in vessel capacity.
Limitations: restrictions on import vessel size,
maximum capacity of regasification equipment
166 existing LNG ships, as of Nov 2004
with 105 on order.
The fleet size needs to increase by 3-4
times to meet the projected growth in
trade by 2030.
Source: NLNG
@Hassan Harraz 2018 LNG Life Cycle 24
25. Ship-to-Ship Transfer (STS)
• New Technology: Ship-to-Ship Transfer (STS)
• Emergence of Offshore regasification and liquefaction
• New vessels may now have capability to transfer or receive loads
http://www.thedigitalship.com/powerpoints/norship05/lng/Trym%20Tveitnes,%20HOEGH.pdf
@Hassan Harraz 2018 LNG Life Cycle 25
26. Tanker Cost are Dropping
LNG Shipping Costs
LNG Spot Cargo - Volume
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27. Arbitrage and swap opportunities
Shipping opportunities
Source: BG
@Hassan Harraz 2018 LNG Life Cycle 27
35. 4) LNG MARKETS (R)EVOLUTION
In 2016, a total of 35 countries received LNG
shipments, while global regasification capacity has
doubled in the last decade.
Liquefacation
Regasification
@Hassan Harraz 2018 LNG Life Cycle 35
LNG Markets (R)evolution
38. Note: Liquefaction capacityonly takes into account existing and under
construction projects expected onlineby 2020.
Sources: IHS, IGU, Company Announcements
+40% by 2020 Expected
growth in global
liquefaction capacity.
Liquefaction Capacity by Country in 2014 and 2020
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39. Liquefaction Capacity by Region in 2008, 2014 and 2020
Note: Liquefaction capacity only refers to existing and under construction projects.
Sources: IHS, Company Announcements
@Hassan Harraz 2018 LNG Life Cycle 39
41. Liquefaction Capacity by Region in 2008, 2014 and 2020
Region 2008 2014
2020
(Anticipated)
% Growth
2008- 2014
(Actual)
% Growth
2014-2020
(Anticipated)
Africa 58.7 69.9 69.9 19% 0%
Asia Pacific 81.2 95.3 158.1 17% 66%
Europe 3.4 4.2 4.2 24% 0%
FSU 0 9.6 26.1 0% 172%
Latin America 15.5 20 20.5 29% 3%
North America 1.5 1.5 44.1 0% 2840%
Middle East 46.8 100.8 100.8 115% 0%
Total Capacity 207.1 301.2 423.7 45% 41%
Note: Liquefaction capacity only refers to existing and under construction projects.
Sources: IHS, Company Announcements
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42. Liquefaction Capacity and Utilization by Country, 2014
Sources: IHS, IGU
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45. Regasification Plant in Sabine, TX
to receive LNG from Qatar (2009)
ExxonMobile Corporation: Form 8-K, current report
@Hassan Harraz 2018 LNG Life Cycle 45
46. 4.2.1) Offshore Regasification
New Technology: Offshore Regasification
US to build two Offshore plants, one already under construction
Floating Storage and Regasification Unit (FSRU)
@Hassan Harraz 2018 LNG Life Cycle 46
47. Energy Bridge (Shuttle and LNG Regasification System),
Excelerate, Offshore LA.
The Energy Bridge is a regasification vessel and a buoy system that delivers natural
gas into offshore pipelines.
Source: El Paso
@Hassan Harraz 2018 LNG Life Cycle
48. Offshore Storage & Regasification Terminals
Proposed Cabrillo Port FSRU (Floating
Storage and Re-gasification Unit),
Oxnard, CA.
Source: BHP
Proposed ChevronTexaco Port Pelican Project,
offshore Louisiana - Gravity-based structure
Source - ChevronTexaco
@Hassan Harraz 2018 LNG Life Cycle
57. 5.1) Storage and Regasification Facilities
0
20
40
60
80
100
120
140
mid 1990 2002 2010 2030
$/tonne
Regasification and Storage
Source: IEA
Storage and Regasification Cost is Dropping
Larger capacity
plants, improved
economies of scale
• At the receiving terminal the LNG is pumped into a double-walled storage tank.
• Vaporized by warming in a controlled environment.
• Vaporized gas is regulated for pressure and enters the natural gas pipeline
system.
• Residential and commercial consumers receive natural gas for daily use from
local gas utilities or in the form of electricity.
@Hassan Harraz 2018 LNG Life Cycle
58. Receiving Terminal Import Capacityand Utilization Rate by Country in 2014 and 2020
Sources: IHS, Company Announcements
@Hassan Harraz 2018 LNG Life Cycle
59. LNG Storage Tank Capacity by Country (mmcm) and % of Total,
as of Q1 2015
Note: “Smaller Markets” includes Argentina, the Dominican Republic,
Greece, Israel, Kuwait, Malaysia, Puerto Rico and the UAE. Each of these
markets has under 0.3 mmcm of capacity.
Sources: IHS, Company Announcements
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60. Main Pass Energy Hub
Cavern-based LNG Receiving Facility
McMoran, LA.
The Bishop Process
• receive LNG directly from an offshore tanker,
• pressurize and warm it to 40oF,
• Inject the resulting natural gas into underground salt caverns for storage.
• effectively eliminate the need to build expensive above-ground cryogenic storage tanks
Source: Conversion Gas Import
http://www.conversiongas.com/html/bishop_processtm.html
@Hassan Harraz 2018 LNG Life Cycle
64. 5.1) LNG Liquefaction Terminals
Natural gas market is 60% of the crude oil
market of which LNG forms a small but
rapidly groving part
Japan, South Korea, Spain, France, Italy
and Taiwan impoert large volluems of LNG
due to their shortege of energy
Japan imported 58.6 million tons of LNG
representing some %30 of the LNG trade
around the World in 2005
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65. 5.2) Regasification Terminals
Wartsila Diesel (2008)
@Hassan Harraz 2018 LNG Life Cycle 65
Regassification terminals reheats the LNG and turns into gas.
Regasification terminals are usually connected to storage and pipeline
distribution network to LDC (Local Distribution Companies) or IPP (İndependent
Power Plants)
66. 6) NATURAL GAS MARKETS
@Hassan Harraz 2018 LNG Life Cycle 66
68. 6.2) LNG Value Chain
EXPLORATION &
PRODUCTION
LIQUEFACTION SHIPPING
REGASIFICATION
& STORAGE
$1.0 - $2.5 billion $1.5 – 2.0 billion $0.8 - $2.3 billion $0.5 - $1.0 billion
$0.5-$1.0/MMBtu $0.8-$1.20/MMBtu $0.4-$1.0/MMBtu $0.3-$0.5/MMBtu
TOTAL = $3.7 - $7.8 billion or $2.00 - $3.70/MMBTU
Sources: BG, ALNG, CMS, Industry
Greatest variability is in upstream feedstock for liquefaction and shipping distance.
How Much Does LNG Cost?
Energy companies must invest in the LNG value chain.
@Hassan Harraz 2018 LNG Life Cycle
69. Capital and Operating Costs of LNG ‘Value Chain
Exploration & Treatment & Shipping Storage & Distribution
Production Liquifaction Regasification & Marketing
15-20% 30-45% 10-30% 15-25% Sources: BG, ALNG, CMS
@Hassan Harraz 2018 LNG Life Cycle 69
73. 6.4) Market Players
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10 Largest Importers in 2016 (bcm) 10 Largest Exporters in 2016 (bcm)
Top LNG Importers Top Pipeline Importers
Country
Imports in
2016 (bcm)
Country
Imports
(bcm)
Japan 108.3 Germany 99.3
S. Korea 43.8 US 82.5
China 34.8 Italy 59.4
India 25.0 Mexico 38.4
Taiwan 19.5 China 38.0
Spain 12.9 Netherlands 38.0
UK 9.6 Turkey 37.4
Egypt 9.5 UK 34.1
France 7.3 France 32.3
Turkey 7.3 Belgium 22.2
Top LNG Exporters Top Pipeline Exporters
Country
Exports in
2016 (bcm)
Country
Exports
(bcm)
Qatar 100.4 Russian 190.8
Australia 57.6 Norway 109.8
Malaysia 32.5 Canada 82.4
Nigeria 24.2 US 60.3
Indonesia 21.6 Netherlands 52.3
Algeria 15.0 Turkmenistan 37.3
Russia 14.0 Algeria 37.1
Trinidad 13.8 Qatar 20.0
Oman 10.5 Kazakhstan 16.6
Papua New Guinea 9.6 Bolivia 16.1
74. 6.4) Market Players
@Hassan Harraz 2018 LNG Life Cycle 74
The Most Notable Recent LNG Market Changes:
Volumetric changes observed over the last five years were the entry of Egypt
and growth of China and India on the importing side.
On the exporting side, Australia is the game changer, with exported volume
more than doubling over these five years.
Changes in Top LNG Market Changes, since 2011
76. Why is demand increasing?
Increased installation of Combine Cycle power plants
for increased efficiencies
Environmental concerns: Natural gas is ‘cleaner’ than
petroleum and coal
Worries over the abundance of conventional fuel
supplies: natural gas reserves to last 30yrs longer than
oil.
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80. 7.1) Natural Gas Price Formation
Oil Price Escalation (OPE).
Gas-on-Gas Competition (GOG).
Bilateral Monopoly (BIM).
Netback from Final Product (NET) .
Regulation: Social and Political (RSP).
Regulation: Below Cost (RBC).
Regulation: Cost of Service (RCS).
No Price (NP)
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81. Natural Gas Price Formation Mechanisms
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82. Current LNG Cost Competitiveness
Source: Marcy Darsey et al, Liquefied Natural Gas, Exploring Energy, Inc.’s Future with a Developing Field, UH Law Center, 2004
@Hassan Harraz 2018 LNG Life Cycle 82
83. 7.2) Liberalizing Market Dynamics
Liquidity of global markets continues to grow.
There is a clear trend in moving towards more competitive pricing, as
illustrated by the European imports market chart.
Gas on gas competition drove the pricing of over half of all pipeline
imports and a quarter of LNG, and 49% of all imports combined.
Increasing interconnectedness of the international gas markets is
causing regional price gaps to narrow, with a particular benefit to the
traditionally more - expensive Asian markets.
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Liberalizing Market Dynamics in Pricing
84. Natural Gas World Price Formation Shares (2016)
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90. 7.6) LNG Greenfield Liquefaction Costs
0
100
200
300
400
500
Qatargas Nigeria LNG Atlantic LNG Rasgas,
Qatar
Oman LNG
$/tpy
1 11 1 2
Source: OGJ
The main cost-cutting measures put into effect include improvements in the design efficiency
of LNG plant, improvements in liquefaction technology, and improved economies of
scale. The improvements in liquefaction technology have included optimization of air and water-
cooling, and a reduction in design redundancy.
@Hassan Harraz 2018 LNG Life Cycle 90
91. Tanker Cost are Dropping
LNG Shipping Costs
LNG Spot Cargo - Volume
@Hassan Harraz 2018 LNG Life Cycle 91
92. LNG costs are declining:
Natural gas can be
economically produced and
delivered to the U.S.A. as
LNG in a price range of about
$2.50 - $3.50/MMBTU
depending largely on
shipping cost.
LNG COSTS ARE DECLINING
Does not include feedstock prices
2.5
1.8
0.5
0.1
0.1
0
0.5
1
1.5
2
2.5
1980's Liquefaction Shipping Regasification
and Storage
2000's
$/MMBTU
Sources: El Paso
How Much Does LNG Cost?
@Hassan Harraz 2018 LNG Life Cycle
94. Average Cost Breakdown of Liquefaction Project by
Construction Component
Source: Oxford Institute for Energy Studies
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95. Average Liquefaction Unit Costs in $/tonne (real 2014) by Project
Type, 2000 -2020
Sources: IHS, Company Announcements
@Hassan Harraz 2018 LNG Life Cycle 95
96. Natural Gas Price (2009)
USA 4 $/MMBtu
Europe 6 $/MMBtu
Japan 9 $/MMBtu
16 $/MMBtu (Aug 2011)
(Source) Institute of Energy Economics Japan (IEEJ)
@Hassan Harraz 2018 LNG Life Cycle 96
97. 8) NATURAL GAS CONTRACTURAL
@Hassan Harraz 2018 LNG Life Cycle 97