NGV Transportation Magazine by All Events Group

NGV Transportation

VOL. 22 | APR - JUN 2015

NGV

TRANSPORTATION MAGAZINE

FEATURE:

SINGLE COLUMN DWC FOR OFFSHORE LNG PLANTS

FEATURE:

OPEC’S CATCH 22 SPECIAL REPORT:

THE ORIGINS OF ODOR FADING IN NATURAL GAS PIPELINES NATURAL GAS TRANSPORTATION: KEY FOCUS OF

WORLD GAS CONFERENCE 2015

FORUM SERIES

LNG

MAY 2016 5TH BIOGAS ASIA PACIFIC FORUM 2016 KUALA LUMPUR 25 - 27 MAY 2016 MALAYSIA

6th ANNUAL LNG TRANSPORT, HANDLING AND STORAGE 2016 BALI, INDONESIA

3RD LNG SUPPLY, TRANSPORT & STORAGE PHILIPPINES MANILA, PHILIPPINES

APRIL 2016

BIOGAS AND ENERGY CROPS THAILAND ROUNDTABLE 2015 | 25 - 27 NOV 2015 BANGKOK, THAILAND

2ND NATURAL GAS & BIOMETHANE AS TRANSPORT FUEL IN MINING, PLANTATION & LOGISTIC SECTORS 19 - 20 NOV 2015 JAKARTA, INDONESIA

FEBRUARY 2016

3RD BIOGAS INDONESIA FORUM 2016 23 - 24 MARCH 2016 JAKARTA, INDONESIA

10TH NATURAL GAS VEHICLES & INFRASTRUCTURE INDONESIA FORUM AND EXHIBITION 22 - 24 MARCH 2016, JAKARTA, INDONESIA

MARCH 2016

BIOCHEMICAL 19 - 21 OCTOBER 2015 JAKARTA, INDONESIA

OFFSHORE SUPPORT VESSEL JAKARTA, INDONESIA

OCTOBER 2015

www.alleventsgroup.com | www.cngngv.com | www.icesn.com | www.lng-world.com | www.naturalgasglobal.com

IN CONJUCTION WITH:

ORGANIZED BY:

NOVEMBER 2015

2ND SMALL LNG SHIPPING & DISTRIBUTION FORUM 2015 16 - 18 SEPTEMBER 2015 BALI, INDONESIA

GAS TO POWER MYANMAR 23 - 25 JULY 2015 YANGON, MYANMAR GAS TO POWER INDONESIA SEPTEMBER 2015 JAKARTA, INDONESIA

SEPTEMBER 2015

JULY 2015

2015 - 2016 EVENT CALENDAR

EDITOR’S TWO CENTS

Greetings all! The recent market turbulence caused by the oil price collapse has resulted in quite the ruckus. Throngs of companies are floundering to see if they can cut back enough and continue to produce LNG at current costs. Those feeling it the most are the industry giants who have undertaken mega projects and forecasted earnings far above what they can currently cope with. Even many of the planned US projects have been put on hold for the moment. In our Oct-Dec 2014 issue Rudolf Huber wrote an article on Alaska LNG and how overspending can lead to some very unfortunate circumstances. Perhaps these words of wisdom fell on deaf ears until coupled with reality of tumbling oil prices? Well.. the important thing now, is to look at what one is to do given the current circumstances, however unpleasant they might be. It is important to remember that the energy market has experienced much turbulence throughout history and they will continue to do so in the future. Though past events are not directly indicative of the future, they are our only tool to try to understand what will happen in future markets. It is also important to understand that the market will be exposed to ebbs and flows and sometimes even tsunamis, such as the most recent crash in prices. Yet at the same time we must have the confidence that the market will recover (as it has done time and time again in the past) and gas will continue to flourish for decades to come. The industry is still moving along and investments into FLNG projects are expected to amount to more than $US70 billion by 2020, with many of these new projects coming online in the next couple of years such as Prelude, Petronas and Abadi FLNG. The expansion of the Panama Canal is also set to be completed by April 1st 2016 and this is expected to have some interesting implications to LNG exports from the US that are destined for Asia. The expansion will allow for LNG tankers which currently are too large to take this route, reduce their travel distance by some 13,000 km. Southeast Asian demand for power generation is expected to hit highs of 250 bcm by 2035 and this voracious appetite will have a need to be satisfied. It can be expected that a significant amount of this demand will be supplemented by a LNG imports from US projects; Freeport, Maryland, Texas and Cameron LNG in the Mexican Gulf. We have a very interesting analysis on the possible effects of the expansion inside. As usual, we have our regular assortment of technical articles; one on divided wall columns in reducing LNG plant operation costs, one on odour fading in natural gas systems and another on LNG safety in marine propulsion. IGU President, Mr Jerome Ferrier has also prepared an article stressing the importance of natural gas for transportation and that it is a going to be a key focus at this year’s World Gas Conference in Paris. As with each issue, I implore you again to provide us with feedback, good or bad – your input is invaluable to us! Keep making strides in your business despite the most recent slump in prices. Indeed there is a great amount of fear in the markets at the moment but it is in times like these we should heed the wisdom of legendary investor Warren Buffett, who has said that, “We should be fearful when others are greedy and greedy when others are fearful.” The choice is yours.

Published by:

NATURAL GAS GLOBAL

Managing Director Vincent Choy vincent@naturalgaslobal.com Chief Editor Rizal Rahman

rizal.rahman@naturalgasglobal.com

Editor Ryan Pasupathy

ryan@naturalgasglobal.com

Business Development Samuel Tan Business Development Manager

samuel.tan@naturalgasglobal.com

Stefani Budiman Business Development Manager

stefani.budiman@naturalgasglobal.com

Marketing Manager Denise Lim

denise@naturalgasglobal.com

Graphic Designer Puspo Aurum puspo@olifen.co.id

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Vol. 22 Apr - Jun 2015 NGV Transportation

CONTENTS

NEWS AROUND THE WORLD Editor’s Two Cents Natural Gas Transportation: Key Focus of World Gas Conference 2015 An Analysis of National Policies And Its Impact On NGV Growth in Pakistan

01 36 38

FEATURES:

Safety Aspects of LNG Use in The Marine Sector Single Column DWC For Offshore LNG Plants

11 31

SPECIAL REPORTS: The Origins of Odor Fading in Natural Gas Pipelines Some Initial Results of The Panama Canal Expansion On Gulf of Mexico LNG Trade to East Asia

14 18

FEATURE: OPEC’S CATCH 22 The Origins of Odor Fading in Natural Gas Pipelines

EVENT & EXHIBITION: NGV Transportation Vol. 22 Apr - Jun 2015

2nd LNG Supply, Transport & Storage Philippines 2

NEWS AROUND THE WORLD

UNITED STATES January 2015: Oil Price Collapse Hits LNG Projects

The resulting tremors from the collapse of oil prices has caused the cancellation of one US LNG Project. Excelerate Energy has

backed away from a proposed 8m tpy project in Texas which was supposed to come on stream in 2018. Other projects around the globe have also come face to face with uncertainty as a decline in potential profits spread and there is an increase in the inability to sign up long term buyers to secure financing. In the US alone, only 2 of 13 proposed projects are reported to have enough buyers to be considered feasible. Because most LNG projects are indexed to the price of oil, LNG has followed suit and taken a nose dive. Financiers of LNG projects need to make the call whether or not the oil price

INDIA

collapse will be short lived; many have already decided to pack up. One example being Apache Corp which sold its interests in Canadian LNG ventures. Many producers are lined up to be in production by 2018 but even prior to the oil price collapse, there were numerous delays in completion due to already rising construction costs. Also at risk are ship owners who are due to receive their orders from this year to 2017 as they could be short in securing charters due to forecasts of shortage of specialty tonnage during this period. - Seatrade-Global.com

February 2015: Efforts On For CNG Buses in Rohtang

January 2015: Shell, GDF to Take 26% Stake in Each GAIL LNG Terminal

Officials from the Ministry of Petroleum, GAIL and some bus manufacturers such as TATA and Ashok Leyland are going to hold talks in the aim of using CNG buses between Manali and Rohtang Pass which has been directed by the National Green Tribunal as part of their plans to protect the ecology of Rohtang Pass. The NGT has said that it has issued this order as the area has become a tourist attraction that draws some 1500 vehicles every day during peak tourist season and this was slowly having an effect on the environment. One concern is that the Indian Transport Department is unsure if CNG buses will be feasible in the freezing temperatures in Rohtang, as there are no such similar stations located in the hills where CNG stations are run and testing will have to be carried out.

Shell and GDF Suez are likely to take 26 per cent stake each in GAILâ&#x20AC;&#x2122;s proposed FLNG import terminal at Kakinada, Andhra Pradesh. According to sources from the Economic Times, Andhra Pradesh Gas Distribution Corp (APGDC) - a joint venture of GAIL Gas and Andhra Pradesh Gas Infrastructure Corp (APGIC) will hold the remaining 48 per cent. The Andhra Pradesh Government is pushing for an early start of work on the 3.5 mtpa FSRU off the Kakinada coast. The partners plan to bring an FSRU, import the LNG using ships to the terminal and then pipe it back to land. Beginning work at the Kakinada FSRU will mean that Petronet LNG Ltd will have to put off their plans for their proposed 5 mtpa LNG import facility at Gangavaram. The FSRU is planned to be commissioned within the next 2 years.

- The Tribune - The Economic Times

Vol. 22 Apr - Jun 2015 NGV Transportation

NEWS AROUND THE WORLD

PAPUA NEW GUINEA

AUSTRALIA

January 2015: Exxon-Mobil and PNG Sign MOU

January 2015: Chevron Signs LNG Sales Deal

Exxon has signed an agreement with the Papua New Guinean Government to expand its PNG LNG Project and PRL 3 in the country. Under the MOU, PNG LNG will provide 25 megawatts of electricity and gas for domestic power generation. The MOU also details the provision for an LNG expansion project which includes the award of a petroleum development license as well as relevant pipeline licenses for the P‘nyang gas field in PRL 3. The MOU also delineates an agreement between the PRL 3 co-ventures and the government to a final investment decision for an additional LNG train by the end of 2017.

Chevron has signed a binding LNG sales agreement with SK Group. Chevron will supply SK with 4.15 million tonnes of LNG over 5 years beginning 2017. Chevron has said that the agreement meant that three quarters of its LNG from Gorgon would be destined for customers in Asia during this period. Chevron’s gas and midstream president Pierre Breber said, “As Chevron continues to grow into one of the world’s largest LNG suppliers, this agreement represents further progress and diversification of our sales portfolio.” The US$54 billion Gorgon LNG project is Chevron’s biggest single resource project and is due to be in production by the end of this year.

- MiningAustralia.com.au

- The West Australian

SINGAPORE February 2015: LNG Tankers Lie Unused as Gas Downturn Turns Into Crisis

Over a dozen LNG tankers are idling around Singapore. This is a sure sign that the slowdown is engulfing world gas markets and may be tumbling into a crisis. Leading ship brokers have made estimates that over one tenth of the global LNG fleet of around 400 tankers sit currently unused because of the slowdown in Asian nations. “There are currently 30 to 40 (oil and gas) tankers sitting in Singapore, many without anything to do,” said Javier Moret, head of LNG origination at Germany’s biggest power producer RWE during a conference in Singapore this week. This can be a huge expense for ship owners as an idle tanker could mean a loss of up to $60000 daily of chartering fees per vessel. - Gulf Times

NGV Transportation Vol. 22 Apr - Jun 2015

CZECH REPUBLIC February 2015: CNG Stations Up 50 Percent in a Year There are currently more than 8800 CNG fuelled vehicles in the Czech Republic, which is some 2100 more vehicles, of which 750 are buses. This increase comes in just about a year, which is impressive to say the least. This was also accompanied by a 50% increase in CNG stations over the same time frame. Expansion of the CNG framework is expected to continue this year as many more filling stations will become ready to dispense the gas by end 2015. Czech companies are also very keen to adopt CNG Buses into their fleet as they are able to reap savings of tens of millions a year. - Prague Post

NEWS AROUND THE WORLD

CHINA

RUSSIA

February 2015: East China may see heavy inflows of cheap LNG imports

February 2015: Gazprom to Market Yamal Sourced LNG to Europe and South America

Eastern China could see a large influx of cheap LNG in the coming months as domestic cargoes are available at higher prices and are quite likely to drop further. Imported prices in China are about 3100 – 3200 per tonne which is somewhat lower than the current price of what is traded in East China. Local oil and gas companies such as PetroChina, Sinopec and China National Offshore Oil Corp (CNOOC) as well as some smaller private firms are searching for spot cargoes in the international market in view of lower prices. Importers will still be able to enjoy some notable margins from imported cargoes even after cost adjustments are made to include port handling charges and taxes. Should negotiations go well, a large volume of cheaper spot shipments are expected to be available in March/April.

Gazprom is planning to sell a larger portion of its Yamal LNG supply in the Atlantic Basin including customers in Europe and South America. Gazprom signed a 20 year contract with Novatek in late January to offtake 2.9 mtpa of LNG from the Novatek controlled Yamal LNG project in Russia which is due to be ready sometime in 2017. Alexander Medvedev, Deputy Chairman of Gazprom’s Management Committee, said in an interview with Platts that, “Europe will need more LNG to be used in transportation, there is already infrastructure prepared in Rotterdam for example. You could load trucks from the ship and deliver it to the location.” The Yamal LNG project involves the construction of three LNG trains which each have a capacity of 5.5 mtpa. The first train is scheduled for completion in 2017 with the next two trains planned to be commissioned one year after the other.

- Hellenic Shipping News

EGYPT

LITHUANIA February 2015: Lithuania Signs Non-Binding Deal For US LNG Litgas has signed a non-binding agreement to purchase LNG from the US. Poland and other Baltic States are also looking to secure similar deals with the US to reduce their reliance on Russian gas. Lithuania opened an LNG terminal last year and Poland plans to open one in the later half of this year. Cheniere Energy’s Sabine Pass LNG Terminal is expected to ship out its first cargoes in the later part of this year. Litgas Chief Executive, Dominykas Tuckus said that Lithuania will be able to receive cargoes as early as 2016.

February 2015: Egypt and Russia Sign LNG Supply Deal Egypt’s State Gas company and Gazprom have signed a deal on the supply of LNG to Egypt. The agreement is for supply of LNG for 5 years. In December last year Egypt already secured a deal for LNG imports with Algeria. - Sputnik International

- Reuters

Vol. 22 Apr - Jun 2015 NGV Transportation

NOW

BIOGAS AND ENERGY CROPS THAILAND ROUNDTABLE 2015 Capitalising on the Next Phase of Biogas Development in Thailand: Energy Crops and Biomethane

25 - 27 NOVEMBER 2015 | BANGKOK, THAILAND With waste feedstock almost fully utilised, Thailand will have to depend on energy crops to meet its target for 3,600 MW of biogas generated electricity and 1,200 tons of CBG per day. How will policy and economics play out in one of the biggest markets for biogas in Asia today? Donâ&#x20AC;&#x2122;t miss the Biogas and Energy Crops Thailand Roundtable 2015 for insights, networking and updates on the fantastic business opportunities available between the numbers 3,600 MW and 1,200 T.

Tel: +65 6506 0951 | Fax +65 6749 7293 | Email: info@icesn.com | www.icesn.com

NEWS AROUND THE WORLD

PAKISTAN

February 2015: Pakistan Eyes Qatar LNG as Terminal Nears Start-up Date

February 2015: CNG Stations Ready For LNG Import

Pakistan is facing an energy supply struggle as it is using more of its domestic production than it has not been able to keep up with its demand. The country has to turn to LNG imports and international gas pipelines to avoid a shortfall. The country will focus on importing Qatari LNG which is set to begin in March. The government is finalising a contract with Qatar. It has forgone any interest from major suppliers such as BP and Gunvor Group Ltd. For short term deals that would have helped on top of Qatari imports said Sheikh Imran ul Haque, Chief Executive Officer of operator Elengy Terminal Pakistan Ltd. The plan is to secure a long term supply of 1 – 1.5 mtpa of LNG. Zahid Muzaffar, an adviser to Pakistan’s petroleum ministry, said that it really depends on the price that they can get for the gas, a good deal would mean more gas.

Amidst the chaos among the entire CNG industry in Pakistan, the owners of CNG stations are reported to have made certain binding deals to import LNG from Qatar. The Universal Gas Distribution Company (UGDC) has conveyed to the government that it could open $US60-70 million worth of Letters of Credit (LCs) for importing 3 shipments of LNG that would be able to supply the nation’s ailing CNG sector for 45 days. UGDC CEO, Ghiyas A. Paracha has said that, “We are not at stage of opening L/C through our own resources, having gained required financial strength and can well be in a position to get the LNG in March 2015; the target date set by the government.” He also said that the owners of 1350 CNG stations had contributed the initial pay-up capital required for registration of the UGDC with some 200 more joining the initiative soon. - Hellenic Shipping News

- Gulf Times

BANGLADESH January 2015: Approval Sought for LNG Terminal The Energy and Mineral Resources Division will submit a proposal to build an LNG terminal on Maheshkali Island for approval at today’s meeting of the cabinet committee on Economic Affairs. As of November 2014, the committee returned the proposal to develop the country’s first

FSRU. “We will submit the term sheet of the FSRU unit, popularly known as a Liquefied Natural Gas Terminal, to the cabinet committee meeting to get approval,” Energy and Mineral Resources Division Secretary Abu Bakar Siddique told the Dhaka Tribune. In June last year Petrobangla signed a term sheet with Singapore based Astra Oil and Excelerate Energy Consortium (AE) under the Speedy Supply of Power and Energy, Special Provisions Amendment Act 2014. 7

The cabinet committee enquired as to why the consortium was not signed on to set up the FSRU as a build-own-transfer project instead of a build-own-operate-transfer project. It was explained by the Energy Division that since the handover would not require any payment, there is near negligible difference between the two options. Petrobangla was to implement the project. - Dhaka Tribune

Vol. 22 Apr - Jun 2015 NGV Transportation

NEWS AROUND THE WORLD

DUBAI

February 2015: CNG Shift for Dubai Driving Schools

The Licensing Agency at the Road Transport Authority has been pushing driving institutes in Dubai to consider using CNG to power their fleets as a bid to combat air pollution in the country. The move is supportive of the Road and Transport Authority’s (RTA) initiatives of mitigating environmental impacts, optimising power consumption and supporting the green economy. “The Licensing Agency has held a number of workshops for all driving institutes and brought them together with other concerned parties in the Emirates such as Emirates Gas, Enoc

and Emirates Transport, where they have been briefed about the results and benefits accruable as a result of powering their vehicles by CNG; a clean and environment-friendly fuel,” said Ahmed Bahrozyan, CEO of RTA Licensing Agency. Mr. Bahrozyan also said that, “The Emirates Driving Institute has embarked from the start of this year the switching of their 50 vehicles to gas-powered vehicles as a provisional step towards converting remaining vehicles successively during the year.” - Emirates 24/7 News

ARGENTINA

January 2015: Tank Half Full for NGVs Compared to the NGV industries across the globe, Argentina’s continues to boom. The total number of vehicles converted to gas increased by 8% last year. This is thought to be caused by extremely low regulated gas prices and attractive conversion costs. A total of 1.7 million vehicles have now been converted to gas. The total number of retrofitted vehicles in the country has grown by about 33% over the last ten years. The cost of running an NGV in Argentina is some 51% cheaper than gasoline fuelled vehicles and a whopping 75% cheaper than diesel alternatives. According to calculations carried out by Interfax, a driver in Buenos Aires with an average travel distance of 20,000 km per year would save ARS 13,200-14,400 ($1,5291,668) per year if they converted their vehicle to run on CNG. The calculations are based on fuel economy of 7.65 litres per 100 km and fuel prices on 27 January 2015. - Interfax Natural Gas Daily

February 2015: CNG Price Rise On Hold

PTT is getting ready to import a further 2 mtpa of LNG to alleviate the loss of a gas supply from joint development Area Block 17, which Thailand will have to return to Malaysia in accordance to the contract under the JDA. PTT is confident that maintenance shutdowns of the gas pipelines from Myanmar and the JDA will have no consequence to the stability of domestic electricity supply. COO of PTT’s upstream petroleum, Nuttachat Charuchinda said that PTT will try to secure a long term contract for 1 mtpa of LNG with another 1 million tonnes in the form of short term spot contracts.

Thai Transport Minister Prajin Juntong said the energy Ministry would most likely be pushing back the date for the planned increase of CNG for vehicles until there are measures in place to cushion this effect on the transport sector. He also said that the planned gradual pump increase would be suspended until some form of agreement was reached.In addition to that Mr. Prajin Juntong also said that he has yet to consider appropriate increments in fares and cargo transport charges.

- The Nation

- Bangkok Post

THAILAND February 2015: PTT to Import an Additional 2M Tonnes of LNG a Year

NGV Transportation Vol. 22 Apr - Jun 2015

NEWS AROUND THE WORLD

INDONESIA

February 2015: Wartsila to Power World’s First CNG Vessel

February 2015: Pertamina Completes Seven New CNG MRUs

Wartsila recently announced that it has been selected to be the provider of an energy efficient gas propulsion system for the world’s first CNG sea bound vehicle. The ship is set to feature a 9-Cylinder Wartsila 34DF dual-fuel main engine operating primarily on gas. The company will also provide the controlled pitch propeller and gearbox, all of which are planned to be fully integrated into the vessel to optimise propulsion efficiency. The vessel will be operated by Perusahaan Listrik Negara (PLN) which will also be the first Indonesian owned dual fuel vessel.

PT Pertamina has finished the construction of 7 MRUs (Mobile Refuelling Units) which is part of the government’s plan for implementation of the program assignment conversion of fuel oil to CNG for transport. Vice President for Corporate Communications of Pertamina, Ali Mundakir said that, “The 7 MRUs are a continuation of a program that has been funded by the state budget since 2014. Mr. Mundakir also explained that, “Pertamina has put 3 units MRU on Mother Station Cibubur on Sunday (8/2) for CNG filling before serving the needs of the community will operate CNG which is marketed under the trademark Envogas Pertamina.”

- Ship & Bunker

- Okezone.com

March 2015: PGN to Provide Gas in Bus Terminals

EAST TIMOR February 2015: LNG Collapse Threatens East Timor Trade East Timor’s future as a major exporter of LNG could blow up in smoke after the collapse of the US$17 billion Sunrise project. Woodside Petroleum has decided to abandon its plans to process the offshore gas field after the East Timor Government held up its decision to redraw its maritime borders with Australia. East Timor has insisted that they want a permanent maritime boundary settlement which would put the Greater Sunrise block entirely within East Timor’s territory not in a joint development area with Australia as it currently is now. Woodside has since expressed its decision to abandon the project until the dispute is resolved which would leave the 5 tcf resource undeveloped. This may force East Timor to consider using an FLNG but the government has said that it has confidence that the field would be developed with a pipeline to East Timor.

Perusahaan Gas Negara (PGN) has plans to develop CNG stations in Jakarta’s bus stations as well as to install gas pipelines to low cost apartments in the city. Governor Basuki “Ahok” Tjahaja Purnama said that, “CNG stations in terminals will encourage public transportation to switch to gas.” The reason for the reluctance to convert to CNG is thought to be from a lack of CNG infrastructure which has resulted in extremely long queues at CNG stations. It is hopeful that the addition of CNG stations will encourage more to make the switch to CNG. Currently there are 402 stations whose land could also be used for CNG stations and the plan is to build another 50 this year.

- Global Trade Review

- The Jakarta Post

Vol. 22 Apr - Jun 2015 NGV Transportation

NEWS AROUND THE WORLD

JAPAN March 2015: Cheap Oil Doesn’t Deter Shipbuilders from Betting On LNG

Mitsubishi Heavy Industries Ltd engineers work on the newest fuel efficient engines for LNG carriers while others work on tank design with larger capacity. Many years after the

Korean rivals have dominated the industry, the Japanese are now ready to reclaim a portion of the industry they once dominated. As several LNG projects

are set to take off in the next few years, the world’s largest importer of the gas is foreseeing a shortfall. While lower oil prices are some cause for concern, some are convinced that the industry’s growing pains are just hiccups in a longer end game and that their research and technology will provide them with an edge over their Korean counterparts. Nobutaka Nambu, chief executive officer at World Ships Future, said that, “The wind is in the sails of Japan’s shipbuilders, they are now placed to take a step forward and are now in a position to make a dent in the Koreans oligopoly.” - Bloomberg

GERMANY

SOUTH KOREA

March 2015: LNG Hybrid Barge Completes Technical Trials

March 2015: Dismal Outlook for LNG in South Korea’s Power Market

Becker Marine Systems has reported that it has completed trials on its LNG Hybrid Barge – the Hummel. The barge’s primary function is to serve as an LNG fuelled floating power station that will deliver power to cruise ships docking at Hamburg. The trials have been completed just in time for the beginning of the cruise ship season a representative from Becker Marine said. The ship will be commissioned for low emission power supply by May 2015. The LNG hybrid barge system testing indicated an overall load transfer of 0 – 7.5 MW of power and this was achieved in under 2 minutes. Hans J. Gätjens, Vice President Marine at Bureau Veritas said that, “The overall LNG Hybrid Barge system with gas motors is an impressive technical achievement.”

South Korea’s LNG demand for power generation is projected to continue its fall as many power plants are turning to cheaper alternatives; namely coal and nuclear energy, according to a statement by Korea Power Exchange. Yoo Sang-Hee, chairman and CEO of Korean Power Exchange said that, “LNG demand for electricity generation would further decrease because more and more gas-fired power plants are staying idle due to high prices of LNG compared with coal and nuclear.” In times of heavy electricity demand, Korean Power Exchange increases its purchases from state run and private generators that use more expensive fuels such as LNG and oil. - Platts

- Marine Log

NGV Transportation Vol. 22 Apr - Jun 2015

FEATURE ARTICLE

SAFETY ASPECTS OF LNG USE

IN THE MARINE SECTOR

n LNG spill on carbon and low alloy steel may give rise to the metal becoming brittle and thus may lead to structural failure. Methane does not sustain breathing such that large concentrations of this gas in air may result in asphyxiation. As a cryogenic fluid, LNG will give rise to frost burns when it comes into contact with the human skin. When a large spill of LNG is mixed with another liquid such as water, intense heat transfer will take place giving rise to rapid and large scale evaporation of LNG. This phenomenon is called a rapid phase transition (RPT). It can result in strong pressure waves resulting in damage. Experimental studies of this phenomenon show that it occurs only when the LNG contains non-negligible amounts of heavier hydrocarbons such as ethane, propane and butane. The most important hazards of LNG have to do with its flammability. In the event of an instantaneous or a continuous release of LNG at near-atmospheric pressure (cold LNG), a liquid pool is formed from which heavy evaporation takes place. In the event of direct ignition, a pool fire (figure 1) occurs. If ignition is delayed, a flammable vapor

Figure 1 LNG pool fire on water

Figure2 Event tree for the release of LNG at elevated pressure (e.g. 4 barg)

cloud will be formed which will drift in a downwind direction. Ignition of this cloud results in a flash fire. If the vapor cloud is fully or partially enclosed the combustion of the cloud may give rise to a vapor cloud

explosion (VCE). After ignition of the cloud the flame may travel back to the pool resulting in a pool fire at the source. If ignition does not occur during the release process only the cryogenic and the asphyxiation

Vol. 22 Apr - Jun 2015 NGV Transportation

FEATURE ARTICLE

Figure 3 Large LNG storage tanks

effects of LNG have to be feared. Figure 2 shows the event tree for the release of pressurized LNG (e.g. 4 bar). Release of pressurized LNG may lead to additional scenarios. In case of an instantaneous release the spilled LNG will partially vaporize (flash) and suddenly expand which can result in a blast wave. This phenomenon is called a boiling liquid expanding vapor explosion or BLEVE. If the flashing cloud is ignited a fireball will occur. A continuous release of pressurized LNG results in a flashing LNG jet. If the jet is ignited a jet fire occurs. Also flash fires are possible when the gas cloud is ignited some time after the occurrence of the leak. Pool fires may result from a direct or a delayed ignition of an LNG pool. The thermal radiation and pressure waves which occur during these scenarios may affect persons, installations and equipment . The distance over which the effects may occur will depend upon a large number of parameters such as the specific processes (storage, transfer…), the size and type of equipment

NGV Transportation Vol. 22 Apr - Jun 2015

containing the LNG (storage tanks…). Specific safety studies have been performed recently for large scale LNG bunkering and storage in harbors and for the transport of LNG along waterways. Table 1 shows the distances from the tank at which people

can be lethally injured by ignited LNG released from large tanks (figure 3). Large quantities of LNG are stored at a temperature of some -160°C in cylindrical vessels designed to withstand internal pressures of some 100 mbarg. Rupture or leakage of such vessels gives rise to the scenarios mentioned above. There are 3 types of tanks which are used for this purpose: single walled, double walled and full containment tanks. Double walled tanks are provided with a second retaining wall. The vapors which are generated between the tank wall and the second wall can escape into the environment. In a full containment tank these vapors are retained within the second containment. It is seen that the presence of a bund has a significant effect on the maximum impact distances. In case of direct ignition, the maximum impact distances relate to the heat radiation from burning LNG pools, whereas for delayed ignition they relate to the maximum extent of

Table 1 Lethal effect distances (m) for large LNG tanks

FEATURE ARTICLE

Table 2 Maximum impact distances (m) for storage of LNG (4 bar) in vacuum insulated pressure vessels

the flammable vapor cloud in downwind direction. Smaller quantities of LNG, such as present at refueling or bunkering facilities, are stored in vacuum insulated storage vessels. Such vessels are designed to withstand pressures up to 20 bars. This means that the accident scenarios of figure 1 become possible. Calculated maximum impact distances are presented in table 2 for a catastrophic rupture and a large leak of vacuum insulated pressure vessels. A large leak is defined here as having the diameter of the largest connection (4, 6, 6 and 8 inch respectively). Considering the much smaller quantities of LNG stored as compared to the atmospheric tanks, the maximum impact distances

are very large. The impact of the bund on the maximum impact distances is small as pressurized LNG stored at temperatures above -160째C will flash upon release. The largest impact distances are caused by

JAN BERGHMANS Jan Berghmans is retired professor of mechanical engineering at KU Leuven Universit y, Belgium. He specialized in the field of industrial safety. For many years he was the director of the Safety Engineering study program at the university. He founded 3 consulting companies active in the field of safety reporting and explosion safety.

flash fires and fireballs. Table 3 lists the maximum impact distances of accidents related to the loading of ships with cold LNG (-160째C) by means of flexible hoses. The diameter of the assumed leak is 10% of the hose diameter. The effect of an emergency shutdown is shown. The shutdown is assumed to be completed 120 s after the start of the release. Such a shutdown system is effective in delayed ignition scenarios (flash fires). The reduction which they can achieve is a function of the speed with which the shutdown can be realized.

jan.berghmans@kuleuven.be NTM

By Jan Berghmans

Vol. 22 Apr - Jun 2015 NGV Transportation

SPECIAL REPORT

THE ORIGINS OF

ODOR FADING IN NATURAL GAS PIPELINES

Abstract Natural gas is odorless and odorants are added to alarm the consumer in case of a gas leak. Odor fading, i.e. the removal and loss of odorant from gas, could pose a potential risk to consumers. In this paper, the results of experiments conducted to investigate possible chemical and physical mechanisms responsible for odor fading are summarized. Evidence of chemisorption, adsorption and desorption of tertiary butyl mercaptan (TBM) as an odorant on the iron oxide inside pipes were observed. It was found that by increasing pressure, rusted surface of pipes, temperature, and also by decreasing the gas flow rates, TBM removal was increased. It is reasonable to consider that the above parameters could also affect odor at the natural gas delivery point. This manuscript is the condensed version of the original paper entitled â&#x20AC;&#x153;Odor

NGV Transportation Vol. 22 Apr - Jun 2015

Fading in Natural Gas Distribution Systemsâ&#x20AC;? published in the journal of Process Safety and Environmental Protection in March 2015. Keywords: Odor fading, Natural gas, Pipeline, Mercaptan, TBM 1. Experiments A continuous gas flow laboratory apparatus consisting of a removable sample holder was used to mimic the gas pipeline continuous flow. Different types of samples were used in this study including polyethylene pipe material, stainless steel pipe material, and analytical grade iron oxides. Pure methane with 51 ppm of TBM was used to represent the odorized natural gas. In each experiment, the odorized gas was directed over the sample and the concentration of mercaptan at the inlet and outlet were measured using gas chromatography (GC).

In addition, samples were analyzed using X-Ray Photoelectron Spectroscopy (XPS) to examine the possible interactions of TBM with the pipe material. 2. Results and discussion The odor fading process is the net result of the exchange of mercaptan between the bulk of the gas and the surface of the pipe and is comprised of a series of linked steps. In the first step, the odorant comes in contact with the inner surface of pipe walls through mass transfer. In the second step, the odorant interacts with the surface through chemical reactions and/or adsorption. In the third step, some of the odorant could be desorbed from the pipe surface back to the natural gas. In the following sections the possible adsorption or chemisorption of TBM to the inner pipe wall for different pipe materials is discussed. Also, effects of

SPECIAL REPORT parameters that are involved in the transfer of TBM from natural gas to the pipe wall are investigated. 2.1 Surface analysis experiments Nano-powder iron oxide, polished steel, stainless steel, and polyethylene samples were used to check the possible reactions of TBM with pipe surfaces. As shown in Figure 1, in the XPS analysis results, three different types of iron oxides could be recognized on the rusted surface of steel pipes: yellow iron oxide (Îą-FeO(OH)), red iron oxide (ÎłFeO(OH)), and black iron oxide (FeO. Fe2O3). The XPS measurements showed no trace of sulfur on tempered stainless steel samples. After short exposure to TBM, the polished steel pipe sample showed a small trace of sulfur but it was not discernible from the background noise. Contrary to stainless steel and polished steel pipe samples, the results of experiments on all rusted steel pipe samples showed significant traces of sulfur. XPS results also showed significant sulfur peaks at the binding energies corresponding to sulfurcontaining compounds, proving the chemical interactions (chemisorption) between mercaptan and these samples. By increasing the exposure time to TBM, evidence of sulfurcontaining compound was eventually detected on the polished stainless steel sample. However, the rate of interaction of polished steel with mercaptan was significantly smaller than those of rusted steel pipe and iron oxide. Moreover, according to the XPS results, the amount of the sulfur detected on the surface of black iron oxide sample after short time (1 to 4 hours) exposure to TMB was 0.26% (atomic percent) and it did not change by prolonged exposure (about 20 hours) to TBM. The red iron oxide showed a higher value of sulfur on its surface, i.e. 0.32% for short exposure and 0.48% for long exposure experiments. Lastly, the

Figure1. The micrograph showing the surface of a steel sample (as received); various forms of iron oxide are visible in this picture.

yellow iron oxide had the highest concentration of sulfur atoms on its surface among the three different types of iron oxides. The short exposure experiment for yellow iron oxide resulted in 0.42% and the long exposure experiment showed 0.58% of sulfur. Two clear conclusions can be made from these results: 1) chemisorption of TBM by the steel pipe is mainly due to the formation of iron oxide (rust) on the pipe surface, and 2) chemi-sorption mostly occurs within the first few hours. The XPS measurements of polymer pipe also showed traces of sulfur on the sample surface. This suggests possible chemical interactions between TBM and polypropylene pipes. 2.2. TBM removal Several breakthrough tests were conducted to ascertain the amount of TBM removal from the odorized gas by the samples. Here, the breakthrough is defined as the outlet concentration of TBM over its initial concentration. In other words, breakthrough is the concentration of TBM at the reactor outlet which is not reacted with iron oxide. These runs showed breakthrough of TBM within the first 50 min

of the experiments. As the iron oxide samples became saturated with TBM, the concentration of TBM gradually increased and reached the inlet concentration. In the following sections, effects of various operating parameters on the TBM removal are discussed. 2.2.1 Effect of sample loading It is expected that the onset of breakthrough to be dependent on the amount of iron oxide. The results of sample loading experiments consistently showed that higher loads of iron oxide needed longer breakthrough times. For 0.018 g of iron oxide powder, the breakthrough time was approximately 1 min, while for the 0.1 g of the sample, the breakthrough happened after about 20 min. These results suggest that the extent to which a gas pipeline is rusted significantly affects the amount of mercaptan required for odorization and the duration of the pre-odorization of the pipeline. 2.2.2 Effect of flow rate The gas flow rate can also influence the breakthrough of mercaptan. By increasing the flow rate, the breakthrough occurred earlier. This means that at higher flow rates, the

Vol. 22 Apr - Jun 2015 NGV Transportation

SPECIAL REPORT target mercaptan concentration at the tail end of the pipe can be reached after a shorter period of time. This is consistent with the field experience where odor fading has been often associated with conditions where the gas flow rate was either very low or zero. 2.2.3Effect of pressure Increasing the pressure increases the adsorptive capacity and therefore it took longer for the exit gas concentration to reach its plateau level. It is known that under isothermal conditions, higher pressure results in greater adsorption of odorant molecules. By increasing the pressure, the partial pressure of odorant in the gas phase increases, and hence the adsorption rate will also increase. This is the likely reason for the slightly lower breakthrough rate at elevated pressures. The distribution system of natural gas usually operates at pressures below 60 psig, which is supplied via a high-pressure pipeline typically operating around 220 psig. These results highlight the importance of considering the pressure effect on the odorant loss in the gas distribution pipelines. 2.2.4 Effect of temperature Since the effective diffusivity

in gases is directly related to temperature, increasing the temperature will increase the TBM diffusivity resulting in a greater TBM removal and therefore a delay in the breakthrough time. It should be noted that increasing the temperature also increases desorption of TBM from iron oxide and decreases the net adsorption rate. This finding underscores the importance of the seasonal change in the amount of mercaptan required for odorization. For example, at the depth of around 2 meters (a typical depth for gas pipelines) the average temperature could vary from 4°C to 21°C in Ottawa, Ontario. Such a large temperature change will have a great impact on the amount of mercaptan required for the pre-odorization of new gas pipelines in the winter time compared to the mercaptan needed in the summer. 2.3. Evidence of desorption To check the possible desorption of TBM from iron oxide samples, the gas feed was changed from odorized gas to mercaptan-free pure methane. The iron oxide sample, which was initially exposed to 50 ppm TBM for about 70 minutes, was then exposed to pure methane for about 200 minutes for desorption. It was

RAMIN FARNOOD Professor Ramin Farnood is Associate Chair of Research and a Principal Investigator in the Department of Chemical Engineering & Applied Chemistry in University of Toronto. His research interests are in the areas of Bio-based materials and bioenergy, Environmental Engineering and Microstructure Characterization.

found that the sorption of TBM on the iron oxide was reversible to a great extent. The experimental data showed that during the first phase of this experiment (i.e. 70 min exposure to TBM), 5.2 mg of TBM was absorbed or adsorbed per each gram of iron oxide sample. However, during desorption process, only about 1.5 mg of TBM was removed per gram of iron oxide after 200 min. This indicates that desorption rate was considerably slower than the adsorption process. Also, from this experiment, it is not clear what fraction of TBM could be desorbed by prolonged exposure to pure methane. 3. Conclusions This study confirms that mercaptans could interact with both stainless steel and polypropylene pipe material via chemical reaction (chemi-sorption). In addition, rusted steel pipes appear to be more prone to TBM removal by chemi-sorption. Breakthrough studies showed that TBM removal is a function of the amount of iron oxide (rust) in the pipe and the operating parameters of the system including pressure, temperature, gas flow rate, and the odorant concentration. NTM

By Ramin Farnood, Mehrrad Saadatmand & Hooman Foroughi

HOOMAN FOROUGHI

E: ramin.farnood@utoronto.ca

MEHRRAD SAADATMAND Mehrrad Saadatmand, a recent graduate of University of Toronto, has an extensive research and publication record on a wide range of topics related to heavy oil, natural gas and fluid mechanics. He is currently an adjunct professor in the New York City College of Technology.

E: hooman.foroughi@utoronto.ca

E: soadatmand@gmail.com Twitter: @smssaadat

NGV Transportation Vol. 22 Apr - Jun 2015

Hooman was a postdoctoral fellow in Professor Ramin Farnood’s research group at the University of Toronto in 2012. Hooman’s research interests include mathematical modeling, simulation, and optimization of water and wastewater treatment processes and polymer recycling.

Once every three years the global gas industry comes together for the World Gas Conference.

YOU ARE INVITED TO VISIT THE EXHIBITION FOR FREE. FREE ENTRY TO THE EXHIBITION AT THE WORLD GAS CONFERENCE, PARIS.

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Network on the exhibition floor with the thousands of delegates and trade visitors who attend from more than 90 countries.

•

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Trade visitor entry dates:

Visit wgc2015.org to check out the hundreds of exhibitors, including company profiles and make direct contact to arrange a meeting with them at the exhibtion.

PARIS EXPO – 1

3 – 5 JUNE 2015

PRE-REGISTER BY 19 MAY FOR FREE ENTRY TO THE EXHIBITION: wgc2015.org/trade-visitors-registration Take the opportunity to connect with your colleagues from Europe and across the world. Make sure you tell them to register for free Exhibition entry. For group trade visitor registrations, (10 or more), contact Olimpia Lubinska olubinska@etf.com.au

SPECIAL REPORT

SOME INITIAL RESULTS OF THE PANAMA CANAL EXPANSION ON

GULF OF MEXICO LNG TRADE TO EAST ASIA Introduction The rise of liquefied natural gas (LNG) combined with increased gas supply in the U.S. (e.g., from shale gas) has made gas trade with Asia more of a prominent issue as of late [1], [2], [3]. From the U.S. perspective, given the main LNG exports locations: Cove Point, Maryland (East Coast), Sabine Pass, Freeport LNG Expansion, Lake Charles Exports ,Cameron LNG, Taxes and Louisiana (Gulf Coast), Jordan Cove, Oregon (West Coast), the question is where to export to? While the East Coast location is closer to Western Europe, the West Coast location to East Asia, the Gulf of Mexico can be a swing supplier to either of these two major consumption markets. Clearly the export decisions by Gulf Coast suppliers has significant ripple effects given the magnitude of the already approved U.S. LNG exports vis-Ă -vis other nations that are typical suppliers to these two markets such as: Russia, Australia, Qatar, Algeria and Norway. Asia is of particular importance given that it has the

NGV Transportation Vol. 22 Apr - Jun 2015

highest natural gas prices in the world and the fastest growing gas consumption in the world [5]. Indeed, the total demand for natural gas in Asia will rise from 20 to 25 percent by 2030. Chinese demand will increase to 273 Bcm in 2017 from 130 Bcm in 2011. Both Japan and China figure prominently in this elevated level of gas consumption for reasons of

policy in China and reaction to the nuclear disaster in Japan [5]. Therefore, to capture new demand trends in Asia, we incorporate Asian demand projections from 2015-2035 for our analysis [2] as indicated in [5]. The expansion of the Panama Canal is scheduled to be completed in 2016. The new lock of the Panama Canal will accommodate more than 80% of LNG tankers in current

US Henry Hub Average German Import Price cif UK NBP Japan LNG cif

Figure 1 Comparison of natural gas prices in $/MMBtu [4] Non-FTA LNG exports of 38..47 Bcf per day have been approved by the U.S. Department of Energy as of March 2015, see http://energy.gov/sites/prod/files/2015/03/f20/Summary%20of%20 LNG%20Export%20Applications.pdf

SPECIAL REPORT Scenarios

Abbreviation

Description

Scenario 1

Zero_toll

“Zero toll” : tariff = $0 /MMBtu

Scenario 2

Regular_toll

“Regular toll” : tariff = $0.35 /MMBtu

Scenario 3

Double_toll

“Double toll” : tariff is regular toll times 2=$0.70/MMBtu

Scenario 4

Threefold_toll

“Threefold toll” : tariff is regular toll times 3=$1.05/MMBtu

Scenario 5

Fivefold_toll

“Fivefold toll” : tariff is regular toll times 5=$1.75/MMBtu

Scenario 6

Inf_toll

“Infinite toll” : tariff is regular toll is high $9,999/MMBtu

Table 1 Panama Canal toll scenarios [2]

operation. The Panama Canal route plays a significant role for U.S. LNG exports to Asian markets because the route via this canal reduces the voyage by 7,000 nautical miles to Japan from the Gulf of Mexico. With shorter distances and the lower shipping costs, U.S. LNG will be very competitive in Asian markets compared to other suppliers. Although using the Panama Canal can save time (approximately 14 days to Asia

from the U.S. East Coast) and transportation costs, at the time of our study [2], the canal fee was still uncertain so an analysis was helpful. Even after notification of tariff fees, such a study provides important sensitivity insights into LNG trade to East Asia. After the completion of the Panama Canal expansion, several outcomes are possible. First, how will the Panama Canal tariffs affect the decision of LNG exporters and LNG shippers?

Figure 1 LNG export from U.S. Gulf of Mexico Bcm, 2035 [2]

Second, will more U.S. gas go to Asia given a shorter distance or go to Europe? Therefore, the aim of this study was to address these questions. Given the above discussion on the importance of natural gas markets and LNG, from [2], we present a summary of the results from this recent study

Figure 2 LNG flows from Trinidad and Tobago Bcm, [2]

Vol. 22 Apr - Jun 2015 NGV Transportation

SPECIAL REPORT

Figure 3 WGM prices for 2035 in $/MMBtu [2] Japan and S. Korea are modeled as one node in the World Gas Model used in this study.

Figure 4 Consumption in 2035, in Bcm [2]

using the World Gas Model, a large-scale game-theory based market equilibrium model of global gas markets. This study considered increased capacity of the Panama Canal for Gulf Coast LNG exports. Specifically, six scenarios were used as shown in Table 1. Note that the $0.35/ MMBtu represents the current Suez Canal tariff used as a starting point in our study before the current, more complicated tariff was announced, see [6] for more details. Figure 1 below shows the net flows from the Gulf of Mexico to either Europe or Japan (Japan/ South Korea combined node) from the World Gas Model study. This figure clearly indicates that there is a direct and important

NGV Transportation Vol. 22 Apr - Jun 2015

relationship between the hypothesized Panama Canal tariff and the resulting net flows from the Gulf of Mexico. Indeed, as compared to low hypothesized tariffs (Scenarios 1-3) in 2035, Figure 1 shows that if this rate is between $1.05 and $1.75/MMBtu, the Gulf Coast LNG exports shift from Japan to Europe, taking advantage of the prohibitive transportation costs to Japan/South Korea. Such redirecting of flows has important energy security and planning repercussions for a number of countries in Asia as well as Europe. Figure 2 shows similar patterns for Trinidad and Tobago which also takes advantage of the Panama Canal increased capacity.

Next, we examine the average regional wholesale prices of natural gas around the world by region for the year 2035. Figure 3 shows that only Europe and Japan/S.Korea are affected by the different Panama Canal toll levels. The wholesale prices in Japan/S. Korea decrease as the Panama Canal tolls decrease. This implies more supplies from the Gulf of Mexico can reach the Japan/S. Korea market. However, the European wholesale prices go in the opposite direction as a function of the counterfactual Panama Canal toll. As the Panama Canal toll increases, European wholesale prices decrease due to the reverse flows of U.S. and Trinidad & Tobago LNG from Japan/S. Korea to Europe. Given the availability of the Panama Canal route the U.S. and Trinidad & Tobago become the swing LNG exporters supplying either Japan/S. Korea or Europe depending on the Panama Canal tolls. Next, we take a closer look at consumption which is almost unaffected for all scenarios except for the Asia Pacific, Europe, and Middle East regions. The consumption in these three regions slightly changes depending on the Panama Canal toll level. The consumption in the Asia Pacific region increases for inexpensive Panama Canal tolls. This implies more supplies from the Gulf of Mexico can enter the Asia Pacific market. However, the consumption goes in the opposite direction for Europe due to the rerouting of gas exported from the Gulf of Mexico. In addition, the consumption in the Middle East changes because the Middle East supplier exports less when the Panama Canal toll is small, so more inexpensive gas is available for domestic consumption. Table 2 and Figure 5 indicate additional export and market share information related to the

SPECIAL REPORT

Country

Inf_toll

Triple_toll

Double_toll

Regular_toll

Zero_toll

Algeria

48.39

43.67

41.04

36.82

36.13

Australia

35.65

31.94

30.39

27.59

27.05

Canada East

0.76

Canada West

5.80

Indonesia

13.75

11.19

10.51

8.74

8.51

Nigeria

24.22

22.89

21.23

20.79

Qatar

53.49

48.70

46.15

41.81

41.09

Russia

10.35

10.11

9.96

9.46

9.35

Trinidad

7.22

9.33

10.73

21.81

25.09

US East Coast

2.93

3.00

3.33

US Gulf of Mexico

18.67

38.35

48.43

58.40

US West Coast

6.65

Yemen

37.05

35.27

34.50

32.03

31.66

264.94

268.91

270.74

274.11

274.62

Total Supply

Table 2 Natural gas exports to Japan/South Korea by suppliers Bcm, in 2035.

six scenarios. Table 2 indicates that the U.S. Gulf Coast becomes a dominant supplier to Japan/S. Korea when the hypothesized Panama Canal tolls are low (triple toll= $1.05/MMBtu or less) rivalaing or exceeding the market share by the other dominant suppliers (i.e., Algeria, Australia, Qatar); Figure 5 shows similar information in pie chart format. Lastly, besides the global gas study we also conducted research related to natural gas investment in the transportation sector. Compressed natural gas (CNG) is widely used as a transportation fuel in various parts of the world, especially in Asia. A continued increase in demand for natural gas for use in transportation is expected to be the significant driver for Asian gas demand, especially China. China has more than 1.5 million natural gas vehicles operating using CNG so that CNG demand in China is expected to increase more than three-fold by 2018. A main advantage of CNG is that the emissions from burning

Figure 5 Percent of imports to Japan/South Korea in 2035 (a) the Five_Toll scenario (b) Regular Toll scenarios [2].

CNG are relatively cleaner than from diesel or gasoline. According to the California Energy Commission, natural gas vehicles emit ozone-forming emissions approximately 80 percent less than those using gasoline [7]. A second goal of using CNG over gasoline or diesel is the potential savings in fuel economy [7]. Generally, CNG is produced from natural gas that can be extracted from gas or oil wells. However, natural gas can also be generated from anaerobic digestion processes.

Anaerobic digestion takes place in the absence of free oxygen. Places like landfills, wastewater treatment plants, or livestock manure lagoons are very common sites where biogas can be captured. Methane and carbon dioxide are the primary elements in biogas (methane about 40%). The CNG produced from waste not only reduces emissions but also could increase natural gas supply security. One good example of CNG transportation use is in the District of Columbia (Washington, DC). This city had

Vol. 22 Apr - Jun 2015 NGV Transportation

SPECIAL REPORT 461 CNG buses operating with a daily consumption of 1.98 million cubic feet. The reference [8] provides a study on the possibility of meeting all CNG demand in DC using renewable CNG produced from a large, local wastewater treatment plant using a stochastic, twolevel optimization model. Conclusions The results in this article, summarized from a recent study using University of Maryland’s World Gas model, describe a set of six, counterfactual Panama Canal tariffs and the resulting liquified natural gas (LNG) flows, prices, and consumption

patterns of regions around the world. The U.S. Gulf Coast is seen to become a major LNG exporter supplying both Japan/S. Korea or Europe depending on the levels of these tariffs. Additionally, the connection between wastewaterderived compressed natural gas (CNG) and transportation is discussed. References

[1] S. Moryadee, S.A. Gabriel, H.G. Avetisyan, 2014. “Investigating the Potential Effects of U.S. LNG Exports on Global Natural Gas Markets, 2(3-4),Energy Strategy Reviews, 273-288. [2] S. Moryadee, S.A. Gabriel, F. Rehulka, “The Effects of Panama Canal Tariffs on LNG Markets,” accepted, Journal of Natural Gas Science & Engineering, June 2014. [3] S. Moryadee and S.A. Gabriel, “Panama Canal Expansion: Will Panama Canal be a Game Changer for LNG Exports to Asia?,” in review,

DR. STEVEN A. GABRIEL

NTM

By Dr. Steven A. Gabriel & Dr. Seksun Moryadee

DR. SEKSUN MORYADEE

Dr. Gabriel is a Full Professor in the Department of Civil & Environmental Engineering and Mechanical Engineering as well as in the Applied Mathematics & Statistics, and Scientific Computation Program at the University of Maryland-College Park (UMCP). He has also been a Co-Director then Director of the Master of Engineering and Public Policy Program which is now absorbed into the School of Public Policy. In addition, he is a Research Professor at DIW (German Institute for Economic Research) in Berlin and an Adjunct Professor at the Norwegian University of Science and Techonology (NTNU) in Trondheim in the Department of Industrial Economics and Technology Management. He is the 2014-2015 Trottier energy Institute Senior Visiting Professor at Ecole Polytechnique in Montreal and a Humboldt Fellowship Recipient for 2015 -2016 from the German government. He has been an active participant in modeling energy, the environment, and other infrastructure issues for over 30 years using methods from operations research. Dr. Gabriel has an M.S. in Operations Research from Stanford University (1984), and an M.A. (1989) and Ph.D. (1992) in Mathematical Sciences from the Johns Hopkins University. Lastly, he has been and is very active as an editor for journals: Area Editor for Energy, Networks and Spatial Economics, 19992014; Member of Editorial Board, ASCE Journal of Energy Engineering, 2013-present; Associate Editor, Optimization and Engineering, 2013-present; Associate Editor, Energy Strategy Reviews, 2014-present; Associate Editor, Energy Economics, 20 06 -2012; Associate Editor for Energy, Operations Research, 1999-2006.

Dr. Seksun Moryadee received the B.S. degree in industrial engineering from Chulachomklao Royal Military Academy, Nakorn Nayok, Thailand, the M.S. degree in industrial engineering from University of New Haven, CT in 2010, and the Ph.D. degree in civil and environmental engineering in 2015 from University of Maryland. He is currently a postdoc in the Department of Civil and Environmental Engineering, University of Maryland, College Park, MD. His research interests include Operations Research and Optimization Modeling in Energy. His current researches involve interdependent systems modeling. smoryade@umd.edu

www.stevenagabriel.umd.edu | sgabriel@umd.edu, tel. +1.301.405.3242

NGV Transportation Vol. 22 Apr - Jun 2015

September 2014. preprint Cahiers du GERAD G-201515, http://wwwold.gerad.ca/en/publications/cahiers. php [4] BP Statistical Review 2014 [5] WEO, 2011. “World Energy Outlook” International Energy Agency. [6] http://www.pancanal.com/peajes/ [7] California Energy Commission, 2014. “Compressed Natural Gas (CNG) as a Transportation Fue.”Transportation, http://www.consumerenergycenter. org/transportation/afvs/cng.html%3E. [8] C. U-tapao, S. Moryadee, S.A. Gabriel, C. Peot and M. Ramirez, “A Stochastic, Two-Level Optimization Model for Compressed Natural Gas Infrastructure Investments in Wastewater Management, “ in review, 2015. preprint Cahiers du GERAD G-2015-16, http://wwwold.gerad.ca/ en/publications/cahiers.php

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FEATURE ARTICLE

his is not my first post on the current oil price dilemma and I have a hunch that there will be more to come in terms of even lower prices. From today’s vantage point it looks a bit like the new ruler of the kingdom has stabilized the slide but nothing could be further from the truth as this fact, important as it is, in many other ways has very little if no perceptible effect on the oil price. Some of you will quip that I write a lot on oil for an LNG guy but worry not. Crude oil is still the threshold all other fuels are judged

NGV Transportation Vol. 22 Apr - Jun 2015

CATCH 22 by so anything that happens to the black goo comes with a vengeance to LNG too. Casual observers of the scene might quickly come to the conclusion that choices for the premier oil selling club of the planet are strikingly simple and that Saudi Arabia has its options clear cut on the table. Surprisingly, this is not very far from the truth except that the choices are clear at first sight. One must intimately understand the nature of the shale revolution - what do I say, one must understand what entrepreneurial spirits have done to the oil patch.

Typical OPEC member country NOC’s are rather large bureaucracies and not really beacons of entrepreneurialism. They can’t be as this is not what they are here for. Their mission is to provide revenue for the government and jobs for the population. Saudi Arabia was blasted by its peers (some of them at least) for not wanting to prop up prices. Let’s look at the options. Going for higher prices now would mean curtailing supply so that the law of scarcity inflates prices again. That would give everyone more buck for the barrel

FEATURE ARTICLE but there would be fewer barrels so in the short run, this option will nevertheless produce pain. Budgets in oil selling countries have been planned on the assumption of a certain number of barrels sold at a certain price. Reduce one of those two factors and trouble strikes, reduce both and mayhem takes over. Most oil sellers skins are already paper thin so their tolerance for even stronger pain is extremely limited at the very best. Let’s look at the other side of the coin. Those nasty shale drillers need to be annihilated or so must be the dominant thinking pattern in a classical oil seller’s brain. Let’s keep prices very low for a while and they will go out of business as we still produce cheaper oil. And it’s exactly here where everything goes off the rail. The real threshold of an OPEC sellers costs is not the technical price of getting black goo out of the ground but rather what the

national budget needs in order to not collapse. Some shale producers have indeed called it quits and have either gone bankrupt or they shed enormous workforce. But the overall picture is still one of shale oil drillers going on with their business as if not much had happened. There are plenty of reasons for them and sunk investments, rapid deployment and startup when prices go up again and wind down of shale wells or other are just the cherry on top. The situation for oil producers is far worse as they are in a horrible bind. Let’s have a harder look at the underlying dynamics of shale. Shale has been around for more than a century (well that’s at least the time since we know it’s there and can theoretically be produced). One of the first shale oil well was spudded in Austria in 19th century and Empress Sissy was present. That’s some years in

the past by now. Conventional wisdom held that shale is there and plenty of it but that it would be too expensive to produce so we better stick with what we got from the Gulf or Russia or - you name it. That is old history now. A couple of renegade drillers defied the laws of upstream development and squeezed the cost stack to the point where shale became what it is today. Costs have tumbled almost 10 fold and even more in certain places. But who said that the journey was over? Let’s face it. This is not the“I got more oil than you” kind of game. It’s rather a “there is plenty of the stuff and I can get it out cheaper than ever before”. The game change is earth bending as for the first time in history, national Oil Producers are faced with real oil entrepreneurs. The classical International Oil Companies they had to deal with so far are pretty bureaucratic organizations. They

Vol. 22 Apr - Jun 2015 NGV Transportation

FEATURE ARTICLE do not differ strongly from their NOC brethren in that respect. No wonder they don’t know how to react. Because their simple world dictates that as the price of oil goes lower, the more of the shale producers will fall under their profitability threshold and will hence bite the bullet and go out of business. For classical oil companies that might be the case but real oil and gas entrepreneurs are made of different matter. Under pressure, they don’t buckle up and get out but rather grit their teeth and squeeze the lemon all the harder. They get real creative with cost cutting and if there is one thing to never be underestimated, it’s an entrepreneur that is fighting like hell to avoid default. For some of those guys there is no going back, no warm and fuzzy office they can spend their rest of their lives in cushioned from the cruel world. They are like cornered dogs and will fight like raging bulls. Not someone you want to square off with but that’s exactly what OPEC thinks it must do. Raising prices would ease the pain for the shale roughnecks and make them purry pussycats again. But then they will swamp the market OPEC thought it could

have alone so there is no relief in that either. Lowering prices on the other hand will squeeze shale producers into the corner but also transform them into bloodthirsty beasts that will fight like circus lions on yoghurt diet in a Roman theatre. There is no easy fix to this. Pandoras Box has been opened and what has befallen classical oil producers cannot be put back anymore. The recent price rally has brought back a lot of shale producing capacity to the market which is further proof that shale is much more reactive than anyone dared to guess before

RUDOLF HUBER

Rudolf is an entrepreneur and consultant active in the “methane based fuels and energy” industry. He is the founder of countless initiatives all with the aim to promote a methane based economy and affordable environmental protection. He is a professional business developer and negotiator who is involved in all aspects of the LNG business. He is also very actively promoting green technologies that work well with methane based technologies. Rudolf has helped secure first Regasification capacity for his former employer EconGas at the GATE terminal in 2007 and holds a Masters degree in Commercial and Taxation law from the Jean Monnet faculty in Paris. He also runs a number of blogs, among them www.lng.guru and www.lng.jetzt.

NGV Transportation Vol. 22 Apr - Jun 2015

the drop. Whatever OPEC can do to lift prices will be shaven immediately by shale producers and prolonged lower prices will kick shale producers into better shape making them a much more serious opponent. Let’s not forget that even the current mini price spike is not enough for virtually all producers to balance their budgets. Producing countries will have to come to the realization that the free lunch is over for good and that in the future they will have to resolve their budgetary problems in other ways than throwing loads of oil cash on everything. What does this mean for LNG? That’s easy. If high oil prices are toxic to OPEC (and some non OPEC folks as well) as it stirs the new flock of shale entrepreneurs in action, they will eventually come around and accept the new reality. But this means that scores of LNG projects today are unsustainable with the current pricing regime and lifting prices to the levels needed to breakeven would curb the worlds thirst for LNG. The world is coming to its senses again and oil will adapt. LNG will follow suit or suffer the consequences. NTM

By Rudolf Huber

EVENT & EXHIBITION

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Vol. 22 Apr - Jun 2015 NGV Transportation

EVENT & EXHIBITION

2ND LNG SUPPLY, TRANSPORT & STORAGE PHILIPPINES Continuous Push To Utilize Natural Gas And LNG By Fast-Tracking LNG Supply Imports And Infrastructure Development

he 2nd LNG Supply, Transport & Storage Philippines gave much insight into the current LNG infrastructure development in the country as well as future plans and opportunities and the establishment of a natural gas master-plan which is to incorporate the entire LNG value chain. The event was organized by All Events Group and supported by Silver Sponsors; Elengy Ltd, GDF Suez and GDF Suez subsidiary; Tractabel Engineering as well as conference sponsors GTT and Wartsila and sponsor Shell LNG.

The event was opened by keynote speaker Zenaida Y. Monsada, Undersecretary of the Department of Energy of the Philippines. This was followed by the first speech by Antonio M. Cailao, President and CEO of Philippine National Oil Company, who spoke on the topic ‘Meeting increasing demand with NG/LNG: PNOC Role and Goals’ which covered areas such as Philippine electricity demand, energy mix as well as past and present natural gas production and developments. He ended off explaining PNOC’s role and the goals that have been set by them for the coming year.

The next speech was then presented by James McTaggart, General Manager Asia, Middle East and North Africa of Royal Dutch Shell, who gave an overview of LNG supply and demand and benefits of gas in the Philippines. He provided the energy outlook for 2050 and reiterated how important it is for policy makers to be involved in the process of balancing the nation’s energy priorities. The conference then took a short tea break and was resumed by Francois Nguyen, Director of International Energy Policy Branch of the Alberta Department of Energy in Canada

Zenaida Y. Monsada, Undersecretary of the Department of Energy of the Philippines

Antonio M. Cailao, President and CEO of Philippines National Oil Company

James McTaggart, General Manager for Middle East, North Africa and Asia, Shell

NGV Transportation Vol. 22 Apr - Jun 2015

EVENT & EXHIBITION

Francois Nguyen, Director of International Energy Policy Branch, Alberta Department of Energy

Chairani Rachmatullah, Senior Manager for Energy Planning and Evaluation, PT PLN

Stephane Maillard, Business Development Manager, Gaztransport & Technigaz

Jose Basanio T. Aldon, Senior Advisor, Natural Gas Business, Business Development, First Gen Corporation

Jakob Stampe, Director-Regas, Hoegh LNG Asia

Bing Thomas, Country Manager, Business Development (Power Plants), Wartsila Corporation

who spoke on the opportunities for the Philippines to obtain new LNG supply from Canada. He gave an overview of Canada’s current LNG projects and the country’s current partners in these projects and pointed out why it was so that Canada possessed certain competitive advantages over other possible LNG sources for the Philippines. The next presentation was by Chairani Rachmatullah, Senior Manager Primary Energy Planning & Evaluation of PT PLN (Persero), who spoke on ‘Utilizing LNG for power generation: Indonesia case study’. She went over the current installed capacity from various sources in the Philippines. She also covered future demand, supply and generation capacity from LNG as well as going over the problems that are being encountered for the implementation of mini LNG. The next presentation was given by Stephane Maillard, Business Development Manager of GTT who spoke on the ‘Considerations of small-mid

scale LNG shipping’. An outline of GTT was given as well as the possible solutions that the company would be able to provide; from land based solutions all through to FSRUs and even LNG shipping. After the networking lunch, Jose Basanio T. Aldon, Senior Advisor on Natural Gas Business Development of First Gen Corporation spoke on ‘Integrating natural gas infrastructure to meet domestic demand in the Philippines’. He gave an overview of the country’s forecasted growth and current utilization and went over the limitations and cost competitiveness of possible LNG sources for the country. He also stressed that it was imperative that the host government and regulatory agencies need to give proper coverage and policies in order to incentivise investment in the development of the total LNG value chain. The next presentation was given by Jakob Stampe, Director of Regas of Hoegh LNG Asia on ‘FSRU evolution and advantages’.

He went on to describe Hoegh LNG and its current projects inclusive of its FSRU projects; Neptune LNG in the United States, Tianjin FSRU in China, Lampung FSRU in Indonesia and several others across the globe. Following this was a presentation by Bing Thomas of Wartsila Philippines Inc. who spoke on the topic, ‘Small scale LNG based power generation in the Philippines’. After a short overview of Wartsila’s ongoing projects, he elaborated further on Philippines power plant configuration and presented a feasibility analysis on future power plant projects in the country. It was also concluded that new power projects can be designed and operated on regasified LNG which will provide lower costs than utilizing HFO. The first day was concluded with a panel discussion which was made up of Alan Townsend, Senior Energy Specialist at the World Bank, Francois Nguyen, Director of International Energy Policy Branch of the

Vol. 22 Apr - Jun 2015 NGV Transportation

EVENT & EXHIBITION

Frank Le Baron, VP International Projects, Elengy (GDF Suez)

Akira Miyamoto, General Manager & Executive Researcher, Osaka Gas

Ron Heffron, Vice President, Mofatt & Nichol

Donny Syafruddin, Head of International Sales, PT Sumberdaya Sewatama

Tony Regan, Principal Consultant, TriZen International Pte Ltd

Lee Giok Seng, Executive Director, Asia Pacific Natural Gas Vehicles Association

Alberta Department of Energy, Jose Basanio T. Aldon, Senior Advisor – Natural Gas Business Development of First Gen Corporation and Nicholas Lefevre, General Manager at Tractabel Engineering, GDF Suez. The panel was facilitated by Tony Regan, Principal Consultant at Tri-Zen International. The second day was opened by Franck Le Baron, VP of International Projects of Elengy Ltd, subsidiary of GDF Suez, who spoke on ‘The challenges and opportunities for LNG import terminals: the experience and views from an LNG terminal owner and operator’. He outlined the role of an LNG terminal as part of the LNG value chain and also made elaborated on what were the necessary requirements for the assessment of an LNG Terminal in the developmental stages. Akira Miyamoto, General Manager and Executive Researcher of Osaka Gas then spoke on ‘The critical role of LNG in Japan’s energy mix. He described the recent trends and outlook for the global LNG

market and the impacts of low crude oil prices on the LNG market as well as the long term energy policy in Japan and the importance of LNG in this plan. Following a networking coffee break, Ron Heffron, Vice President of Mofatt & Nichol, then presented on ‘The configuration and planning of nearshore floating terminals: opportunities for the Philippines’. A thorough explanation on the configuration alternatives was covered as well as the possible terminal siting considerations that could either make or break a marine terminal project. The presentation also covered the various types of mooring and berthing system alternatives that are available on top of other planning and design considerations. The conference then adjourned for the day’s networking lunch. Presentations then resumed with Donny Syafrudin, Head of International Sales from PT Sumberdaya Sewatama, who spoke on ‘Utilizing gas resource for temporary power demand.’ Permanent and temporary

solutions for power generation were discussed in detail and PT Sumberdaya Sewatama’s various power generation units were spoken about in brief. The next talk was given by Tony Regan, Principal Consultant of TriZen International who spoke on ‘The potential of small-mid scale liquefaction in the Philippines’. On top of covering the drivers for demand of small scale LNG projects, the importance of LNG as a transportation fuel in trucking, drilling, shipping and storage was made clear. The conference was concluded by Lee Giok Seng, Executive Director of Asia Pacific Natural Gas Vehicles Association (ANGVA) who spoke on ‘LNG for transportation’. It was stressed that LNG can play a major role in the development and expansion of natural gas vehicles especially for heavy duty vehicles and how NGVs can create additional demand for LNG, which would, in turn help to expand LNG distribution and transportation, improving LNG’s economic viability.

NGV Transportation Vol. 22 Apr - Jun 2015

NTM

By Ryan Pasupathy

FEATURE ARTICLE

SINGLE COLUMN DWC

FOR OFFSHORE LNG PLANTS

Introduction During common DWC (Divided Wall Column) processing three products are employed in an offshore LNG plant of three conventional distillation columns, the DWC can replace the last two columns. If a rectifying column is connected to the prefractionator of the Petlyuk column, all four products are processed from the side-rectifier Petlyuk column as illustrated in Fig. 1. The Petlyuk column is a separate structure of the DWC, but their operating principle is identical. In this configuration most of the lighter components are separated in the rectifier, which significantly reduces the separation load of the next column. Note that the LNG feed contains over 85% of methane. For the practical implementation of the proposed column, a single

column DWC as demonstrated in Fig. 2 can be constructed. Considering the space limitation and the harsh condition of operation of the offshore LNG plant, the single column DWC is suitable to the LNG plant. Though new separation techniques were developed recently, distillation has been the most reliable process for the natural gas separation. In addition the siderectifier DWC has high distillation efficiency, because it has the same column structure as the common DWC. The energy efficiency of the DWC has been commercially proved and implemented throughout the world in chemical processing industries with over 100 columns that are operated in Europe. The extended DWC having three walled sections in the middle is known to produce four products, but the

control of product specification is more difficult than the common DWC of two sections. The difficulty explains why the extended DWC has not been commercialized, while the common DWC is being utilized in many field operations. Process Description The integration of multiple binary columns into the DWC raises the thermodynamic efficiency for less energy demand, but the column operating pressure has to be equal for all sections of the DWC in spite of the fact that the binary columns are operated at different pressures. When the pressure difference is not large, the integration can be applied to the complex distillation processes. However, the pressure limitation makes the extended DWC more difficult to implement

Vol. 22 Apr - Jun 2015 NGV Transportation

FEATURE ARTICLE than the common DWC. The former needs a single pressure from the three column pressures of the conventional system, while the latter does from two pressures. In addition to the difficulty of the selection of the column operating pressure in the extended DWC, the column operating temperature is unfavourable which results in high utility cost. The difference of condenser temperature and reboiler temperature in the DWC is very large due to the single operating pressure. The separate column pressures in the conventional distillation system are manipulated for the low-cost utilities used in the condenser and reboiler. Reduction of Utility Cost Because the gas separation process in the LNG plant handles the feed having the components of large difference of boiling points, the separation is relatively easy but cryogenic cooling and high temperature boiling are necessary. In the conventional distillation system of the LNG plant the operating pressures of the multiple columns are adjusted between 0.3 MPa and 3 MPa to make the column operating temperature close to ambient temperature. The adjustment reduces the consumption of cryogenic refrigerant and high temperature steam. However, the number of columns is limited in the offshore operation of the LNG plant, where the DWC is a good alternative for the operation due to its small column number in spite of the requirement of high-cost utility. For the reduction of the utility cost in the DWC, diabatic distillation can be applied, which has in-tray heat exchangers to disperse the high-cost heat duties of the reboiler and condenser. The duty of cryogenic cooling was partially reduced by applying two inter-coolers to the DWC. The heat transfer at the in-tray heat exchangers is driven by lower temperature difference compared

NGV Transportation Vol. 22 Apr - Jun 2015

to the adiabatic distillation. The heat transfer not only lowers the heat duty at the condenser and reboiler, but also reduces the exergy loss in the distillation process. But in practice, the installation and maintenance of the in-tray heat exchangers in every tray are difficult. Compact Design The raw natural gas from the gas well contains liquid components of oil and water, which are separated through the multiple separators having successively reduced pressures up to 20 kPa to maximize gas recovery and to stabilize the crude oil. The processed gas is compressed to high pressure to minimize the number of processing equipment in the next stage. The feed components are of wide variation of volatility, but methane is more than 86 %. The first column in the distillation system processes the most of the feed because of the large amount of methane, and therefore a specially designed distillation system can be applied in the processing. Though the onshore separation system utilizes five columns, the number of the columns is limited in the offshore operation. A three-column offshore process is conventionally utilized. The first two columns with recycle produce the mixture of methane and ethane as a typical LNG fuel. The last column produces LPG and C5+ components to be fed to hydrocarbon chemical processes. When the prefractionator of the Petlyuk column accommodates a small column on its top, the pretreatment column for the common DWC can be eliminated to make the whole distillation system a single column. In practice the proposed column becomes a side-rectifier DWC as illustrated in Fig. 2. Because the offshore operation requires the compactness of equipment due to limited space and harsh environment, the siderectifier DWC is a good candidate for the LNG plant if the column

operating pressure is properly selected. Due to the single operating pressure in the DWC unlike the conventional system of multiple column pressures, the condenser temperature is lower than that of the conventional system and its reboiler temperature is higher. Therefore, the in-tray heat exchangers are installed to reduce the consumption of high cost utilities for the condenser and reboiler. Performance Evaluation As indicated above the column pressure is set to the lowest pressure among the conventional three columns, which gives the condenser temperature much lower than the conventional system. However, its heat duty is minimized for the reduced use of high-cost refrigerant by employing in-tray heat exchangers. The amount of C5+ product was 15 % more than the conventional system, while LPG was produced 15 % less. Note that the price of C5+ product is higher than that of LPG product. The feed pressure in the DWC is much lower than the conventional system, and therefore the cooling load is about half of the conventional system due to less temperature elevation from the feed compression. In addition the compression of recycle stream from the depropanizer is not necessary giving less investment and utility costs in the DWC. Due to the improved thermodynamic efficiency of the DWC, the heating and cooling duties of the siderectifier DWC including the intray heat exchangers are 5.9 % and 5.1 % less than the conventional system, respectively. The economics between the conventional distillation system and the side-rectifier DWC are compared in terms of investment and utility costs. The investment cost includes the costs of column, trays, and heat exchangers. The utility costs of steam and refrigerant depend on temperature. The investment of the rectifier DWC is less than 43 % of the conventional

FEATURE ARTICLE Present status: # Three columns used in FLNG plant for gas fuel production # High pressure process requiring compression - Gas reservoir pressure : 8 bar (feed compression) - LNG carrier : 1 bar (product decompression) Proposed # Single column DWC for FLNG plant # Low pressure process # Diabatic operation for less utility cost Fig. 2. Single column DWC for LNG plant.

No feed compression #Additional savings 5.1 times total investment 1.8 times total utility

Fig. 1. Schematic diagram of the siderectifier Petlyuk column.

system. The large difference comes from the high pressure operation at the demethanizer in the conventional system. The pressure requires additional cost in the construction of column and heat exchangers, and the investment of the compressor used for recycling the overhead product of the added depropanizer. The utility cost of the DWC is 10 % more than that of the conventional system because of the lower cooling temperature requiring high-cost refrigerant. The significant reduction of the investment cost compensates the utility cost increase. The critical issue in the economics between the conventional system and the rectifier DWC is the column operating pressure. Employing high column pressure of 7 MPa in the conventional system requires a feed compressor which costs more than 5.1 times the total investment of other equipment in the conventional system and the electricity cost of 1.8 times the total utility cost. While the feed pressure in the conventional system is 7 MPa, the pressure of the rectifier DWC is 1 MPa. As the production of raw natural gas

Cost evaluation # Investment : 57 % less # Utility : 10 % more

from the well continues, the gas pressure drops significantly and the compression of the raw gas is required in the conventional system. When a payback time of 5 years is applied, the TAC (total annual cost) of the compressor is 2.5 times that of the conventional system. The offshore operation requires compact equipment due to the severe condition of environment. The side-rectifier DWC can be constructed in a single reboiler column by combining the rectifier and DWC like a top DWC having two condensers and one reboiler. Though there are two dividing walls, one at top and the other in the middle, the whole system is placed in a column. The system of demethanizer and a DWC has two condensers and two reboliers making a complete two column system. Compared with the system of a demethanizer and DWC, the costs of investment and utility of the rectifier DWC are 57 % less and 3 % more, respectively. The thermodynamic efficiency of the system of demethanizer and DWC is 0.9 % point higher than that of

the rectifier DWC. Low Pressure Operation The compact structure of the distillation column for offshore LNG processing is one advantage of the proposed side-rectifier DWC. The other benefit is low pressure operation. The gas pressure at the well decreases up to 20 kPa as the production proceeds, and the pressure is boosted to 7 MPa before feeding to the conventional gas plant. High pressure and low temperature operation generates gas hydrates in the transportation lines, and hydrate inhibitors are used to prevent plugging pipes due to the solid hydrates. Moreover the well gas is almost always saturated with water. However, the plugging is less likely in the low pressure operation, and no heating is necessary before entering the separation process. The low pressure operation requires less investment cost because of thin vessel wall and small gas compressor used for the feed compression. In addition, less electricity is

Vol. 22 Apr - Jun 2015 NGV Transportation

consumed resulting in low utility cost. The pressure of overhead product from the demethanizer in the conventional system has to be lowered for shipping to the LNG carrier. The product, mostly methane, is liquefied at a temperature about - 160 째C at atmospheric pressure for the transportation by the LNG carrier. Therefore, the compression in the LNG processing is not necessary. Though the transportation and storage require smaller volume during high pressure operation, the investment and electricity costs are greatly saved during low pressure operation. Improved Operability The application of the common DWC in field operation has been successful for many years, but the operation of the DWC is more difficult than the conventional distillation column. It is the main concern of the field operators considering the DWC adoption. The operation of the side-rectifier DWC in this study is expected to be similar to the DWC operation. The overhead product from the rectifier can be separately adjusted using the reflux flow of the rectifier. The gain of product mole fraction from the applied change of manipulated variables indicates that the conventional system shows the best control performance. However, the performance of the rectifier DWC is better than that of the existing pre-column DWC. In the control of C1 product specification the ratio of the change of methane mole fraction to the variation of reflux flow rate is the gain, which indicates the ease of the process operation. The larger the gain is, the easier the process manipulation is. Though the conventional system has much larger gain than the DWCs, the rectifier DWC has about three times the gain of the pre-column DWC. For LPG production the rectifier DWC shows the

NGV Transportation Vol. 22 Apr - Jun 2015

improvement by one third over the pre-column DWC. In case of C5+ production the rectifier DWC gives about twice better performance than the pre-column DWC. The difficulty of product control in the proposed DWC is alleviated by applying a sufficient margin of specification in the column design. In addition the adjustment of heat duty at the intray heat exchangers manipulates the internal vapor and liquid flows in the column, which provides more degrees of freedom in the column control. NTM

By Young Han Kim

YOUNG HAN KIM Dr Young Han Kim graduated from Dong-A University i n S o u t h Ko re a in 1976. He then completed his Masters at Korea Advanced Institute of Science and Technology in 1980. He also completed a Graduate Diploma in Engineering at the Lamar University inTexas in 1984. He is currently a Professor at the Depar tment of Chemical Engineering at Dong-A University in South Korea and has been lecturing there since 1980. yhkim@mail.donga.ac.kr

LNG FORUM SERIES

2nd SMALL LNG SHIPPING AND DISTRIBUTION FORUM

2015

16 - 18 September 2015 | Bali - Indonesia

OPENING UP AN EFFECTIVE NATURAL GAS DISTRIBUTION MARKET THROUGH SMALL SCALE LNG SHIPPING The 2nd Small Scale Shipping & Distribution Forum 2015 comes at a time when LNG supply and infrastructure developments are critical in ensuring the rapid and much needed LNG distribution and integration in Indonesia. A niche, targeted and sustainable LNG shipping market – notably Small Scale Shipping – will eventually prove to be a significant and vital transport medium when more LNG Supply and LNG Infrastructures projects come online within the next few years . Small LNG ships will increasingly provide vital functions in terms of regional integration, transportation into remote areas and inter-island crossings. LNG distribution infrastructure via Small Scale LNG vessels are fast becoming a must-have solution for players wanting to effectively deliver natural gas – notably LNG – between Indonesia’s islands. In addition, the planned land-based import terminals will ensure the growth of Indonesia’s sunrise LNG industry. This will inevitably increase the utilization and need for Small LNG vessels to be deployed in various regions across the archipelago. Indonesian cabotage rules and compliance is an important aspect for ships and vessels wanting to operate in Indonesian waters. Since the cabotage rules were applied, the development of Indonesian commercial fleet increased from 6,041 ships in 2006 to 13,224 by the end of 2013. And this number continue to increase in 2014. This will inevitably open up significant opportunities for players wanting to tap into the niche Small LNG Shipping and Distribution industry. This forum will continue to offer a one-shot platform for all serious stakeholders to highlight their positions in and distinctive solutions for Indonesia’s LNG industry while establishing relationships with key policy-makers and private sector players integral to LNG Supply, Shipping, Infrastructure development, and Distribution. Developing LNG for shipping, LNG as fuel and utilizing Small LNG Shipping as a distribution tool will change the face of Indonesia’s shipping industry.

Vol. 22 Apr - Jun 2015 NGV Transportation 35 Tel: +65 6506 0951 | Fax +65 6749 7293 | Email: info@alleventsgroup.com | Website: www.lng-world.com

NATURAL GAS TRANSPORTATION: KEY FOCUS OF

WORLD GAS CONFERENCE 2015 Jerome Ferrier, President of the International Gas Union, explains the importance of partnerships with groups like NGV Global for the advancement of the natural gas industry.

s President of the International Gas Union, I am pleased to be able to highlight this important topic at the 26th World Gas Conference, Paris 1st – 5th June 2015. Held every three years, the World Gas Conference provides an ideal platform to exchange knowledge and share solutions with cuttingedge oil and gas companies and the largest gathering of senior industry executives in the world. One of the key topics in the conference agenda for WGCPARIS2015 is the need for innovation at a global level around solutions to long-term emissions control. Natural gas has a key role to play in the transition towards a lower carbon economy and as a foundation fuel for the development of a future energy mix that balances a progressive environmental approach with the economic realities in which resources are being produced and consumed. Natural gas as a fuel for transport is a key element of this year’s conference. The use of natural gas in transportation has advanced from being a cheap option for urban transport, mainly in light-duty vehicles in developing

NGV Transportation Vol. 22 Apr - Jun 2015

countries, to a real alternative for almost every mode of transport around the world. The ever-growing availability of natural gas, thanks to the technological advances in production of unconventional resources and renewable methane, has not only reduced global gas prices but has also opened the door to its wider utilisation. The IGU welcomes Mike Gallagher, NGV Global, Canada and Diego Goldin, NGV Global, Argentina to the “Natural Gas Transportation Roundtable” on Wednesday 3rd of June in Paris. We will be most interested to hear their contributions to this important Strategic Panel, which will showcase recent developments in the natural gas transportation industry, and discuss its strengths, contributions to a sustainable future and also, most importantly, the potential challenges that must be overcome for greater growth. Participants will include representatives from the natural gas vehicle industry, original equipment manufacturers, and representatives from the strongest global markets. For the first time, the World Gas Conference will also feature a dedicated village within the exhibition devoted to natural gas for

transportation. The IGU welcomes the participation of co-hosts NGV Global and NGVA Europe, and looks forward to seeing how the village profiles the rapid growth of natural gas as a transportation fuel. The fact that this new area will include a seminar stage with a programme that is free to attend will provide additional education opportunities to complement the topics featured within the main conference agenda. Throughout the conference’s four days, the latest developments, opportunities and challenges for the NGV sector will be presented covering a diverse range of topics. I would urge all delegates and speakers to visit the Natural Gas for Transportation Village which will bring together exhibiting companies servicing this sector and showcase many exciting products and services. According to the World Energy Council, the number of cars worldwide is expected to double to 2.6 billion vehicles by 2050, leading to a further increase in carbon emissions. In 2013, transportation accounted for 23% of global CO2 emissions, with 40% of that coming from passenger cars alone. Clearly there is a pressing need to develop

Jerome Ferrier, President of the International Gas Union

less carbon intensive sources of fuel such as LNG and other non-petrol based products. Natural gas has a critically important role to play in the drive to reduce CO2 emissions in the transportation sector, essential if we are to reduce emissions and meet our environmental goals. I can see other significant benefits in the use of natural gas for vehicles. Firstly, it is much safer than many other existing or proposed alternatives. Being lighter than air, in the event of an accident natural gas dissipates into the atmosphere and is much less volatile than petrol. It also makes economic sense as a cheaper alternative to gasoline and other transportation fuels. In terms of energy security, there is also a strong argument which says that by using locally produced gas (in the USA for example), dependence on foreign imports will be cut – allowing for a more secure and safer energy supply. Complementing the natural gas transportation theme of the conference village and roundtable at WGCPARIS2015 are two other major sessions on Wednesday 3rd June. The first, chaired by Richard Lammons from Chevron, focuses on ‘The role of LNG as the alternative fuel’ exploring the evolving role of LNG as a fuel across all industries. It is important not to forget that this of course includes road, rail, marine, aviation, drilling and power generation, to cite

just a few examples. The second session that day is on ‘Natural gas vehicles: the sustainable road towards a clean planet’. Chaired by Miriam Eklo of GDF Suez, this is a particularly important session which will examine how NGVs can contribute to accelerating the establishment of sustainable transport systems and a low carbon society in the near future. Much of the work we do at the IGU focuses on providing the research and statistics that inform industry thinking and the sessions at our triennial conferences. Global market trends from the 2014 IGU LNG report, for example, indicate that the use of LNG in road transportation as a replacement fuel for diesel has proliferated most rapidly in areas with more stringent environmental standards for vehicle emissions, such as the US West Coast, Europe and China. The construction of liquefaction stations is a more recent phenomenon that has gained ground rapidly in China and the US, and looks set to increase around the globe. In both countries, LNG makes a sizeable contribution to their trucking industry. China, in particular, has rapidly built up its domestic liquefaction infrastructure to replace diesel and cut vehicle emissions. Clearly, LNG for transportation addresses many of our most pressing development challenges and sustainability concerns and deserves our full attention in Paris this June.

With more than 4,000 delegates from over 100 countries expected to attend, the scope, depth and breadth of our deliberations in Paris will make for one of the most important global gatherings in our industry for many years. France, a key global gas hub in itself, is proud not only to host WGCPARIS2015 but to prepare six months later for the UNFCCC’s critical climate summit in December. The eyes of the energy world are on France in 2015 and I am in no doubt as to the progress that this industry must make as leaders gear up their efforts to achieve a binding accord on climate control through to 2030. The role of the IGU is to advocate gas as an integral part of a sustainable global energy system, and to promote the political, technical and economic progress of the gas industry. The focus of our event will be to draw together all stakeholders in this fuel evolution, increase awareness of a rapidly evolving industry, and plan for a sustainable energy future that is safe, reliable and economically viable. I am confident that by collaborating with industry leaders such as NGV Global and their peers, we are moving ever closer to real solutions that will consolidate the essential role that gas has to play in tomorrow’s world. NTM

By Jerome Ferrier

WGPARIS2015 KEY FACTS: 26th World Gas Conference (WGCPARIS2015) Date : 1 - 5 June 2015 Venue : Porte De Versaille Exhibition Center, Paris Number of global delegates : 4000+ Countries represented : 100+ Global organisations participating : 600+ Number of expert speakers : 500+ Conference sessions covering topical issues across the value chain : 70+ Number of global exhibitors : 350+ Register as a delegate today! www.wgc2015.org

Vol. 22 Apr - Jun 2015 NGV Transportation

ANALYSIS OF NATIONAL POLICIES AND ITS IMPACTS ON

NGV GROWTH IN PAKISTAN

he greatest stories of success are those that are riddled with failure upon failure until finally having the main character emerge as the champion despite it all. Herein lies a marvellous tale about a nation that could be midway through its very own great success story. The Islamic Republic of Pakistan has more than 180 million people and ranks 6th in the world for total population. As one of the most populated countries in the world, it can be expected that some problematic issues can arise when millions of people use the road as a major form of daily transportation. With transportation often comes pollution, especially in developing nations and Pakistan was no stranger to vehicle smog. It didn’t take too long for the government to put two and two together and realise that CNG would make a brilliant solution for the country’s debilitating ambient air quality. Air pollution in Pakistan is more than just a fleeting issue – there are a reported 80,000 hospital admissions each year which are deemed to be due to

the poor air quality in the country. Not to mention that air pollution in Pakistan’s urban regions have the highest mortality rates in the country, even surpassing traffic related deaths. The CNG program in Pakistan was led by the Hydrocarbon Development Institute of Pakistan (HDIP). The HDIP was responsible for setting up the first CNG stations in Karachi in 1982. The Ministry of Petroleum and Natural Resources of Pakistan announced new rules in 1992 which made them responsible for the commercialization of CNG as a transportation fuel. The program gained support and took off in 1998 when plans were made to construct 150 CNG stations and convert 100,000 vehicles. As of 2012, the country already had 3,100167 CNG vehicles of all shapes and sizes, from 3-wheelers to large buses and heavy trucks. Malik Muhammad Asyraf wrote about this extensively in our previous issue. Unrelenting Growth The two figures below show the surge in growth of CNG

vehicles (Figure 1) and CNG stations (Figure 2) in the country over the past 10 years. This is representative of a ridiculous increase of more than 11,000% in just 13 years. The industry uses a gargantuan 325 mmscfd of natural gas. Unfortunately, this superior growth might have just seen its last few better days. Supply Issues There is a serious problem with the supply of energy in Pakistan. As the country uses CNG for a myriad of other activities - stemming from power generation to a whole host of other industrial applications, the nation has developed some extreme rationing measures of gas for the transportation sector. This rationing is carried out by implementing ‘gas holidays’ where gas supply can be cut off for up to several days per week. These issues have resulted in a government blockade to the continued development of CNG as a vehicular fuel in the country. The government is actually working on several directives to revert many from CNG powered vehicles back to running on gasoline, so as to

Total NGVs

LDVs, MDVs, HDVs

LDVs

Buses

Other

% of total vehicles in Pakistan

CNG Stations

3100167

2920167

2919500

667

180000

89.14%

3330

Table 1: Total NGV Population in Pakistan. Adapted from Khan and Yasmin, 2014. Development of Natural Gas as a Vehicular Fuel in Pakistan: Issues and Prospects. Journal of Natural Gas Science and Engineering.

NGV Transportation Vol. 22 Apr - Jun 2015

allow for CNG to be assigned to power generation and other industrial applications. The most extreme of these directives so far has been imposing of a ban on import of CNG kits and CNG cylinders by OEM companies and other after-market installers to stop conversion of CNG vehicles. In 2009, the government began carrying out gas load shedding with plans to gradually shut-off the CNG transportation sector for good. This was followed by an infrequent supply of gas at CNG stations ranging from just 2-3 days a week. In October 2010, a load plan was implemented that would see gas feeding to CNG stations restricted to 5 days a week in specific regions across the country. Peak production was reached last year according to projections and is now expected to decline henceforth. To solve this issue the government is trying to get pipeline supply of gas through TAPI or IP pipelines. Hopefully pipeline supply of gas will be able to ease the nation’s current energy deficiencies. The government is also primed to start using LNG imports for use in CNG stations in order to

Figure 1: Number of CNG Vehicles in Pakistan. Adapted from Khan and Yasmin, 2014. Development of Natural Gas as a Vehicular Fuel in Pakistan: Issues and Prospects. Journal of Natural Gas Science and Engineering.

save the troubled industry that could be facing closure from this severe gas shortage. It is hoped that by addressing the ailing CNG industry’s woes with an LNG supply, that it could save the Rs 450 billion industry from certain demise. Government Policies The pre-1998 Pakistani Government developed various

incentives that were deemed to be responsible for the widespread acceptance and development of the industry in Pakistan. The following are some of the initiatives that were set up to attract and reward investors interested in growing the CNG industry in the country: •

• • • • • • •

Figure 2: Number of CNG Stations in Pakistan. Adapted from Khan and Yasmin, 2014. Development of Natural Gas as a Vehicular Fuel in Pakistan: Issues and Prospects. Journal of Natural Gas Science and Engineering.

Exemption from import duty and GST for CNG station and vehicle conversion equipment for a period of five years Permitted import of used and reconditioned CNG compressors. Granted loans on soft terms to setup a CNG station Made a strong commitment to promote the use of CNG Carried out liberal procedures for issuance of license for setup a CNG stations. Deregulated market price for CNG consumers Introduced natural gas tariff for CNG coupled to gasoline Gas connection priority was given to CNG stations

The country uses more natural gas than it does any other type of fuel equal to 43.4% of total fuel

Vol. 22 Apr - Jun 2015 NGV Transportation

CNG Prices per Kg Gasoline / Diesel Price per Litre, Rs Figure 3: CNG Price comparison with diesel and gasoline. Adapted from Khan and Yasmin, 2014. Development of Natural Gas as a Vehicular Fuel in Pakistan: Issues and Prospects. Journal of Natural Gas Science and Engineering.

consumption in the country. Over the past 10 years the amount of oil being used for transportation has decreased by almost 20%. The deregulation of CNG prices for CNG consumers was essential in the overwhelming adaptation of CNG for transportation, which has made Pakistan the top user of CNG for vehicles in Asia. This made the compressed gas a cheaper alternative to diesel and gasoline and kept it that way throughout. The comparison of historical prices can be seen in the CNG price comparison with diesel and gasoline (Figure 3). Conclusion Pakistan is another country which had an amazing start to a flourishing NGV industry that did not manage to sustain its widespread popularity due to poor planning and governance.

NGV Transportation Vol. 22 Apr - Jun 2015

The regime under Rafiq Tarrar’s Pakistan Muslim League-N failed to project future demand across power generation and transport sectors and made no further development to power generation facilities for the next 10 years. This led to the uneventful conflict of interest between transportation and power sectors which resulted in this grave shortage in energy supply. This is a prime example of how important it is for the success of a programme to be sustained effectively and how significant a role the government has to play in ensuring this. In this case, it’s not only the numbers and growth that are important, because it certainly looks good on paper - at first glance anyway, much like the CNG situation in Dhaka, Bangladesh, of which I’ve written about before. An ideal situation was

poorly managed by successive government and now could cost more than 300,000 people their jobs and way of life. Can the nation save their glorious status as the top CNG NGV user in Asia? Or will the future be one with abandoned gas stations and a re-emergence of filthy fossil fuel vehicles billowing toxic smog into the Pakistani skies? We can only watch and wait, and hope that the new government can correct the mistakes of the old. They certainly have the potential to do so and and it’s come down to a make or break situation. I like to remain optimistic and believe that it’s not too late to save the NGV industry in Pakistan but only time will tell what the future holds and if Pakistan is truly, only midway along its great success story. NTM

By Ryan Pasupathy

NGV

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