NGV Transportation Magazine

NGV Transportation

VOL. 30 | APR - JUN 2017 | USD 30

NGV

TRANSPORTATION MAGAZINE

SPECIAL REPORTS:

HYDROGEN PRODUCTION WITH EXCESS BOG GENERATED ON LNG VESSELS FEATURES:

A MUST HAVE FLOATING TOYS WILL EUROPE BECOME A QUASI-MARKET-MAKER FOR LNG?

EVENT CALENDAR

DATES

CITY

EVENT

13 – 14 FEB 2017

MANILA, PHILIPPINES

DECENTRALISED ENERGY & CO-GENERATION FORUM

13 – 15 MAR 2017

JAKARTA, INDONESIA

FSRU & SMALL LNG SHIPPING FORUM

13 – 15 MAR 2017

JAKARTA, INDONESIA

CNG-NGV INDONESIA FORUM

13 – 15 MAR 2017

JAKARTA, INDONESIA

BIOGAS INDONESIA FORUM

APR 2017

PORT OF SPAIN, TRINIDAD

CNG-NGV CARRIBEAN FORUM

18 – 19 APR 2017

TEHRAN, IRAN

IRAN METHANOL TRADE SUMMIT

18 – 19 MAY 2017

KUALA LUMPUR, MALAYSIA

BIOGAS ASIA PACIFIC FORUM

15 – 16 JUN 2017

YANGON, MYANMAR

LNG SUPPLY, TRANSPORT, STORAGE INDOCHINA

06 – 07 JUL 2017

NAIROBI, KENYA

BIOGAS AFRICA FORUM

11 – 12 JUL 2017

JOHANNESBURG, SOUTH AFRICA

CNG-NGV AFRICA FORUM

24 – 25 JUL 2017

HO CHI MINH, VIETNAM

CNG-NGV VIETNAM FORUM

03 – 04 AUG 2017

MANILA, PHILIPPINES

BIOGAS AND WASTE TO ENERGY PHILIPPINES FORUM

13 – 15 SEP 2017

BALI, INDONESIA

LNG TRANSPORT, STORAGE, HANDLING INDONESIA

17 – 18 OCT 2017

BANGKOK, THAILAND

BIOGAS AND WASTE TO ENERGY THAILAND FORUM

10 – 12 OCT 2017

KUALA LUMPUR, MALAYSIA

ASIA PACIFIC ROUNDTABLE ON SUSTAINABLE CONSUMPTION & PRODUCTION

25 – 27 OCT 2017

MANILA PHILIPPINES

LNG SUPPLY, TRANSPORT, STORAGE PHILIPPINES

25 – 27 OCT 2017

KUALA LUMPUR, MALAYSIA

WORLD METHANOL FORUM

22 – 23 NOV 2017

SINGAPORE

HYDROGEN ENERGY STORAGE FORUM

06 – 08 DEC 2017

JAKARTA, INDONESIA

GAS TO POWER

CLEAN ENERGY | SUSTAINABLE ENERGY

NATURAL GAS | LNG | CNG

METHANOL

For more information, please visit: www.alleventsgroup.com | www.cngngv.com | www.icesn.com www.lng-world.com | www.naturalgasglobal.com

ORGANIZED BY:

NGV TRANSPORTATION MAGAZINE

IN CONJUNCTION WITH:

LNG FORUM SERIES

ICESN

EDITOR’S TWO CENTS

Greetings all!

Looking at the natural gas market, we can see that it is anything but quiet. Oversupplied LNG solutions are constantly under discussion and countries across the globe are looking at how they can best make use of the current situation.

Gas plants and terminals are slowly coming to life and many more deals are being made to construct more. With all the big players involved in their own new projects and the smaller players getting involved as well, we can’t help but grin with delight at the steady progress that the industry has continued to make despite all that has happened over the past couple of years.

LNG as a marine fuel is still on everyone’s minds and the problems that have been created by the new regulations are being discussed and analyzed from every angle. The LNG market has proven to be extremely dynamic in its approach to new challenges and difficulties and it looks like it will only evolve further. They say the proof is in the pudding and the metaphorical LNG pudding in this sense is in the news. Nothing seems to be stopping governments and energy giants from their LNG plays and LNG’s role in their energy makeup. Countries from every part of the globe are getting in the game and those who have been in it already, are only doubling down on their investments.

Opportunities are abundant and we hope we can make this ever more apparent to you.

In this issue, there is an interesting article on some research on producing hydrogen from the wasted BOG on LNG vessels. There is also another on some insight into the FLNG market and where it is going and why Priyank Srivastava believes that they are an essential bridging tool for the oversupplied market and nations that are looking to hop on the LNG bandwagon. There’s also the LNG Guru; Rudolf Huber’s view on LNG in Europe and just how important the continent is in the whole LNG game and its future.

We look to continue to provide value where we can and bring the insight from researchers and thought leaders who live and breathe natural gas. Do write in to us your feedback or opportunities for contribution or partnership. We’re always looking to do our best and like the LNG market, hope to continuously evolve and do better for all of you, however we can.

NGV

TRANSPORTATION MAGAZINE 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

samuel.tan@naturalgasglobal.com

Marketing Manager Chloe Lee

chloe@naturalgasglobal.com

Graphic Designer Puspo Aurum puspo@olifen.co.id

Follow us on our social media platforms to receive the latest natural gas news from around the world! www.facebook.com/NGVTMag www.linkedin.com/company/ NGV-Transportation @NGVTmag

Our Address: Natural Gas Global 52 Foch Road, #02-02 Singapore 209274 PT Olifen Global Indonesia 20th Floor, Wisma KEIAI Jl. Jend. Surdirman Kav 3-4 Central Jakarta - Indonesia

Ryan Pasupathy Editor

All rights reserved. No portion of this publication covered by the copyright herein may be reproduced in any form or means – graphic, electronic, mechanical, photocopying, recording, taping, etc – without the written consent of the publisher. Opinions expressed by contributors and advertisers are not necessarily those of the publisher and editor.

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Vol.30 Apr - May 2017 NGV Transportation

CONTENT

03 NEWS AROUND THE WORLD

EDITOR’S TWO CENTS ANALYSIS OF NATIONAL POLICIES AND ITS IMPACT ON NGV GROWTH IN SWITZERLAND

01 39

10

FEATURES: WILL EUROPE BECOME A QUASIMARKET-MAKER FOR LNG?

22

SPECIAL REPORTS: HYDROGEN PRODUCTION WITH EXCESS BOG GENERATED ON LNG VESSELS

25

31 NGV Transportation Vol.30 Apr - May 2017

FEATURE:

A MUST HAVE FLOATING TOY

EVENT& EXHIBITION: UNDERSTANDING LNG BUNKERING & STORAGE IN ASIA: TANK STORAGE ASIA AND SIBCON 2016 EVENT REPORT 2

NEWS AROUND THE WORLD

Japan

Philippines April 2017: Phinma Energy Not Giving Up on LNG Project in Pangasinan Phinma Energy Corp. has said that they are not going to abandon its plan to build a receiving terminal for LNG in Sual, Pengasinan with a gas fired power plant attachment. Senior VP at Phinma Energy, Raymundo A. Reyes, Jr. has said that the possibility is still under study. He has said that because the project is extremely capital intensive, that it is very risky under the current market conditions.

The current decision being made is on a 300 MW gas fired power plant with an import terminal capacity of 400,000 mtpa.

- Business World Online

Trinidad & Tobago April 2017: BP Launches TROC Project

June 2017: Sumitomo Group to Build LNG Plant in Japan Sumitomo group members are making plans to construct an LNG receiving terminal and gas fire power plant in Ehime Prefecture in a move to distance themselves from coal powered plants in the country. The project will cost around $541 million to $632 million, with work expected to begin in mid-2017. The companies have operated coal-fired plants over the years but are now switching to LNG. Sumitomo Joint Electric Power, financed by a number of Sumitomo group members, will operate the plant with a new company to be formed

by Tokyo Gas and Shikoku Electric Power.

- Hellenic Shipping News

Mozambique April 2017: Exxon’s Mozambique LNG Acquisition Demonstrates Strategic Advantage BP Trinidad & Tobago announced the start-up of their Trinidad Onshore Compression Project (TROC). According to BP the full startup of the project will take place over the coming few months. The company released a statement saying that, “When fully on stream, the onshore compression facility will have the potential to deliver approximately 200 million standard cubic feet of gas per day. The facility is expected to improve production capacity by increasing production from low pressure wells in bpTT’s existing acreage in the Columbus Basin using an additional inlet compressor at the Point Fortin Atlantic LNG plant.”

ExxonMobil announced an agreement to acquire a 25% stake in Eni’s offshore Mozambique natural gas project. The price on this acquisition was set at $2.8 billion. The Deepwater block holds an estimated 85 tcf of natural gas. The acquisition demonstrates both Exxon’s natural gas strategy and their advantage in the LNG space.

- Pakistan Observer

- The Guardian Trinidad & Tobago

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Vol.30 Apr - May 2017 NGV Transportation

NEWS AROUND THE WORLD

Malaysia

April 2017: Petronas Plans to Expand China LNG Business

May 2017: Petronas says second floating LNG facility to be operational by 2020

Petronas announced that its next FLNG facility will be operational by 2020. Their first facility PFLNG 1 in east Malaysia just loaded its first cargo in April 2017. The second one, PFLNG 2 is currently under construction and will enable liquefaction, production and offloading of natural gas in the Rotan field, 240 km off to coast of Sabah. It is set to have a processing capacity of 1.5 million mtpa.

Petronas Acting Vice President, LNG Assets, Adnan Zainal Abidin said that, “We are in discussions with a number of third parties who are interested to have our floaters at their locations.” Adnan said the costs of PFLNG 2 will be less than PFLNG 1, though he declined to disclose the exact cost of the development.

Petronas is set to expand its LNG business in China extending its reach further down south while looking to increase the volume of supply to its current offtakers. Ahmad Adly, Petronas VP of LNG marketing and trading said that they have set up a liaison office in Beijing to facilitate LNG business growth in the country.

He said, “Petronas has a strong relationship with China in the LNG trade and the prospect for further growth is strong.

As an integrated LNG solution provider, the company is in the best position to deliver reliable and innovative long-term LNG solutions to meet China’s clean energy demand,” - Asian Oil & Gas Digital

- Reuters

Singapore April 2017: Singapore Launches First LNG Truck Loading Facility

Singapore has launched the nation’s first LNG truck loading facility according to Singapore’s Maritime & Port Authority (MPA).

Jointly launched by SLNG, it is felt that the facility is an important step in developing the LNG trucking business in tbe country which will also assist in facilitating truck to ship LNG bunkering. The statement

by MPA said that the facility allows small volumes of LNG to be transported across the country. CEO of MPA, Andrew Tan, said that, “As the leading bunkering hub in the world, Singapore needs to ensure that we cater to the future energy needs of the global shipping industry by providing cleaner, alternative sources of fuel,” - Hellenic Shipping News

NGV Transportation Vol.30 Apr - May 2017

4

NEWS AROUND THE WORLD

Pakistan April 2017: Pakistan Active in LNG Market

Pakistan LNG demand is forecast to exceed 10 million mtpa within the next 5 years.

WoodMackenzie has reported that Pakistan has made some significant strides as an up and coming LNG buyer. Pakistan LNG limited recently closed two tenders for LNG supply in January. The first,

called for 60 cargoes to be delivered over 5 years while the second called for 180 cargoes to be delivered over 15 years. Both tenders specified deliveries beginning in July 2017.

- Maritime Executive

Australia

Myanmar

April 2017: Can We Expect a Natural Gas Price Spike in Australia?

April 2017: Myanmar Also Active in LNG Market

The Australian government has said that it is considering taking drastic measures for its natural gas market to avert, what they’ve been calling a ‘crisis’ for supply in the country. Australia’s federal resources minister told Matt Canavan that the government is looking at various policies to reduce exports of natural gas. The minister feels that this can be accomplished via natural gas swaps will be a way to ensure that local businesses get enough supply and keep the price from spiking.

Oilprice explained how the proposed swaps scheme would work: “Australia currently exports LNG via several operating terminals — with a number of new developments ramping up. Those sellers have export contracts, committing them to deliver volumes of natgas to buyers worldwide.

But the government’s proposed swaps plan would tweak things. By procuring deliveries from other global suppliers to meet Australian producers’ commitments abroad — allowing Aussie gas to stay at home for domestic use.”

Late last year, some 100 companies submitted expressions of interest to supply Myanmar with LNG supply and import infrastructure.

The Ministry of Electricity and Energy is expected to launch a Request for Proposal this month, with the expectation to implement the LNG project by 2020. The government is looking to implement the LNG project by 2020 to meet the country’s rapidly rising power demand.

Myanmar is currently stifled due to a supply deal with Thailand and China which is preventing it from being able to make use of its own gas itself.

- Oilprice.com

- Maritime Executive

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Vol.30 Apr - May 2017 NGV Transportation

NEWS AROUND THE WORLD

India April 2017: New Hope for LNG Pipeline

Indian Chief Minister Pinarayi Vijayan’s most recent statement on the proposal of laying a gas pipeline in the Kochi-Kayamkulam segment has given fresh hopes on the revival of LNG-based power generation at NTPC, Kayamkulam. The promise to find a new solution to the pipeline issue could be the foretelling of a new era in natural gas deployment in the southern parts of Kerala.

Though the project to take natural gas to Kayamkulam from Puthuvype in Kochi through an undersea pipeline had received environmental clearance several years ago, certain fishermen’s organisations had raised objections on the ground that it would affect fishing resources. The previous governments had failed to resolve the issue, thereby

NGV Transportation Vol.30 Apr - May 2017

stalling the prospects of NTPC, Kayamkulam, where power generation using naphtha had become unviable owing to the high cost of the feedstock.

Petronet LNG limited, which set up the 5 million mtpa terminal at Puthuvype, pointed out that undersea pipelines had been laid in various parts of the world similarly and the fishing sector would have little reason to worry. The natural gas industry has been seeking governmental intervention to remove the fears and to give the pipeline project a new lease of life which has been dormant until now.

- The Hindu

6

NEWS AROUND THE WORLD

Sri Lanka May 2017: India and Japan Enter Joint Venture to Set Up LNG Import Terminal in Sri Lanka

India and Japan will partner up to set up a $250 million LNG import terminal in Sri Lanka.

Petronet proposed the idea to Sri Lanka last year to set up a 2 million mtpa LNG import facility on the coast of Sri Lanka to facilitate its LNG impor needs.

Japan however, expressed their interest in being a part of this project.

Petronet Managing Director and CEO Prabhat Singh said, “An agreement has been reached between the governments of India, Sri Lanka and Japan to set

up the LNG terminal as a 50:50 joint venture by Petronet and a Japanese company.” Japan has not yet identified which company would be joining Petronet in the venture.

- Hindustan Times

Indonesia May 2017: BP to Supply LNG to Indonesia

May 2017: Eni Starts Gas Production Early in Indonesia

BP has signed an agreement with Indonesian stateowned power utility, PLN to supply 16 LNG cargoes annually from Tangguh project from 2020 to 2035.

SKK Migas said that the supply will be directed to various locations so that PLN can use it to fire up its numerous gas power plants across the country.

SKK Migas has said that they expect $5 billion in revenue from LNG sales throughout the period of the contract.

The early start of production from a natural gas project off the coast of Indonesia will assist to improve the country’s financial footing, a statement from Eni has said. Eni has started production at its Jangkrik natural gas development in the deep waters off the coast of Indonesia ahead of schedule. Production from 10 wells will support local energy needs and help establish the country’s position as an exporter of liquefied natural gas.

- Marine Link

- United Press International

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Vol.30 Apr - May 2017 NGV Transportation

NEWS AROUND THE WORLD

Russia

China

June 2017: Worlds First LNG Ice Carrier Christened

May 2017: New Agreement Encourages China to Buy American LNG

The world’s first icebreaking LNG carrier, 299 meters long and 50 meters wide, can carry 173,600 cubic meters of LNG was named Christophe de Margerie in St. Petersburg, Russia. The icebreaking Arc-7 ice class carrier, capable of sailing through 2.1-meter-thick ice, is made of special steel plate, three times thicker than typical plates. DSME received an order for 15 icebreaking LNG carriers from companies in Russia, Japan and Canada for roughly $14.8 billion at $320 million per ship. The remaining 14 carriers are being constructed at the Okpo shipyard in Geoje, South Gyeongsang Province and are expected to be delivered by the first half of 2020.

The US and China have reached a deal that will allow Chinese state-owned gas companies to enter into purchase agreements with American LNG exporters.

The US Department of Commerce said in a joint statement, ““Companies from China may proceed at any time to negotiate all types of contractual arrangement with U.S. LNG exporters, including long-term contracts, subject to the commercial considerations of the parties.” In return, China has agreed to allow its LNG importers to enter into longterm contracts with American suppliers.

- The Maritime Executive

- Maritime Logistics Professional

Jamaica November 2016: Egypt Delays Third LNG Terminal Until Electricity Needs Determined A proposal is being finalized for the Jamaica Urban Transit Company (JUTC) to manage a pilot that will determine the feasibility of transforming Jamaica’s publicly owned bus service to an LNG fuel platform. The JUTC will also undertake a second pilot project in one of its depots for a study on combining diesel with CNG. The projected fuel savings are about 25% and also expected to greatly improve the amount of unhealthy emissions from buses.

- Jamaica Observer

NGV Transportation Vol.30 Apr - May 2017

8

NEWS AROUND THE WORLD

Equatorial Guinea June 2017: EG Reveals Offtaker Shortlist for Fortuna FLNG

and Gunvor, are very aggressive about getting into the market of LNG because there seems to be lots of interest in supplying LNG to Africa,” he added.

3 companies, Shell, Vitol and Gunvor have been shortlisted to contract offtake from the 2.2 mpta Fortuna FLNG export plant in Equatorial Guinea, the country’s oil minister, Gabriel Obiang Lima, announced in June.

“Of the three companies, one of them already works in Equatorial Guinea – this is Shell,” Lima said during a press conference at the Africa Oil & Power event in Cape Town, South Africa.

“The other two, both Vitol

Iran

Qatar

June 2017: Iran and South Korea to Develop Mini-LNG Containers

June 2017: Qatar’s Crisis Speeds the Rise of Asia’s Spot LNG Trade

Iran and South Korea have entered an agreement to cooperate and develop miniLNG ISO containers in the next 4 years. Due to their compact size and special design these ISO containers will be able to used easily in many places where larger tanks will not fit. A South Korean consortium, managed

by Oceanus will cooperate with KITECH, DongHwa Entec, Sung-IL Encare, Gs E&C, KoGas Tech and KGS, while Iran’s consortium will be headed by NIGC.

Qatar’s isolation by other Arab nations has dealt a strong blow to Japanese utilities in talks reviewing long-term gas contracts with the top LNG exporter possibly speeding up a shift to a more openly traded global market for LNG. If Japan gets its way during the next periodic contract review, the world’s biggest buyer of LNG would have to import more short-notice supplies from producers such as the US, another step away from rigid deals that run for decades towards a more active spot market.

At stake for Qatar are 7.2 million tonnes of LNG each year, sold in contracts that expire in 2021. The $2.8 billion a year in gas mostly goes to Japan’s JERA, that is the world’s single biggest LNG buyer.

“Since the crisis emerged, the Japanese are sure not to renew all contracts and they will push very hard to get more flexible terms,” said an advisor on LNG contracts, speaking on condition of anonymity due to the sensitivity of ongoing negotiations

- Interfax Global Energy

- Reuters

- Hellenic Shipping News

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Vol.30 Apr - May 2017 NGV Transportation

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FEATURE ARTICLE

A MUST HAVE FLOATING TOY As the LNG production from the US, Australia and Russia creates more supply than traditional buyers can absorb, new markets are emerging worldwide to take up some of the surplus supply. Most of these emerging markets are backing on Hybrid ships, called FSRU, which offer a cheaper, quicker solution in meeting the burgeoning gas demand by importing LNG. This article highlights how the FSRUs are gaining wider acceptance and how it will soothe the LNG exporters globally.

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Vol.30 Apr - May 2017 NGV Transportation

FEATURE ARTICLE

Source: GIIGNL, EIA, BP Statistical Review 2016 and Protiviti Calculation Note: Percentage on the column represent Floating regasification share of total

Appetite for floating LNG terminals is booming As the growth in traditional markets is somewhat stagnated, LNG producers and traders are actively chasing emerging markets — those with intermittent or changing weather pattern demand.

A wave of new buyers has also come up to take the portion of ‘homeless LNG’ at a competitive rate, all thanks to lower LNG prices and increased spot trading in the recent years. The growth in LNG demand is shifting to new emerging markets. Of this growth, most of the recent entrants have opted for or will utilize Floating Storage and Regasification Unit (FSRU) as a solution FSRUs have emerged as the most popular option as countries can start importing on short notice and rapidly expand capacity by leasing another floating unit.

Building a permanent land-based LNG import terminal can be expensive

NGV Transportation Vol.30 Apr - May 2017

and time-consuming and can get delayed due to regulatory obstacles. The FSRU can cost around $300 million to build, or $80 million to convert to an LNG tanker and run as much as six times faster within a 12 month period. So, for many prospective LNG buyers, FSRUs present a cheap, fasttracked and competitive solution. Growing deployment of FSRUs is benefitting emerging importers without the need for expensive onshore import terminals.

Countries such as Ghana, Senegal, Ivory Coast and Namibia are opting for FSRUs as their limited fuel demand does not justify land-based terminals, while others like Egypt see FSRUs as a shortto-medium-term solution until domestic gas production recovers. On the other hand, the UAE has preferred FSRUs over land-based terminals as they are more suited to the summer peak demand of individual Emirates. In case

12

of Turkey and Lithuania, LNG imports from FSRU is part of a strategy to reduce its reliance on Russian gas. For Asian countries such as China and India, the move towards FSRUs is largely driven by the need to diversify the energy mix. The geographical profile of certain South East Asian countries such as Indonesia and the Philippines highlights the future growth opportunities for small scale FSRUs. FSRUs offer a relatively – quick and inexpensive means of procuring gas when compared with other gas procurement options such as onshore regasification or pipeline supply.

There were 23 FSRUs in operation worldwide at the start of the 2017. Three more FSRU projects are likely to be brought online by the end of 2017, making the total of 26 operational FSRUs. Höegh will deliver two vessels, one to the port of Tema in Ghana and the second to Concepción Bay in

FEATURE ARTICLE

Source: GIIGNL, Wood Mackenzie, EIA, Interfax Energy, LNG World Shipping and news articles

Chile. BW will deliver an FSRU to Port Kasim in Pakistan this year. The majority of new markets in recent years have been FSRU markets. The number of FSRU vessels is expected to reach 40 by the end of this decade, potentially allowing new markets to open up and making LNG a truly global commodity. With the US, Australia and Russia all adding significant liquefaction capacity, LNG glut is further expected to accelerate the deployment of FSRU around the globe. Suppliers are also becoming more willing to offer lower levels of oil indexation in contracts which is attracting emerging buyers.

FSRU imports have almost doubled in the past two years and now account for as much as 14% of the 265 mt of LNG supplied annually.

Regional & Country trends Asia – Is the giant sleeping?

Asia is the largest regional market for LNG, accounting for more than half of global LNG imports in 2016. Japan,

South Korea and Taiwan are well established LNG markets, while China and India are emerging as major LNG importers. In East Asia, currently, China has 11 LNG regasification terminals with a combined capacity of 41 mtpa.

Furthermore, it is building another six terminals and expanding three existing ones.

China National Offshore Oil Corporation has received the first cargo of LNG by using an FSRU in 2013. China is planning to order four more such floating units by the end of 2019, however, it is unclear how many will come online.

Hong Kong is also exploring the possibility of mooring an FSRU. South and Southeast Asian countries are showing a strong appetite for LNG imports, counterbalancing the region’s weaker demand in Japan and South Korea. Emerging markets such as Pakistan and Indonesia demonstrate great potential for LNG-import growth. Now, several other countries – Bangladesh, Myanmar and the Philippines

13

are also planning to import their first cargoes with the help of floating terminal.

India has four LNG terminals – at Hazira, Dahej, Kochi and Dabhol, with 25 mtpa of combined regasification capacity. India is looking to expand its LNG import capacity and has ambitious plans for both landbased and floating terminals.

Hiranandani Energy has started constructing on a jetty for a 4 mtpa FSRU at the port of Jaigarh in the Indian state of Maharashtra. The vessel’s capacity is expected to be expanded to 8 mtpa in the future. Shell is involved in another FSRU project in Kakinada in the Indian state of Andhra Pradesh. Pakistan brought its first FSRU online at Port Qasim in March 2015, having regasification capacity of 4.5 mtpa. The second vessel, owned by the BW Group, is scheduled to arrive at Karachi

by June this year. The country plans to moor another two FSRUs at the port before the end of 2018 to meet its soaring gas demand. Bangladesh is

Vol.30 Apr - May 2017 NGV Transportation

FEATURE ARTICLE Status

Location

Region

Operational Operational Operational Operational Operational

Egypt Egypt Jordan Kuwait Dubai, UAE

Middle East Middle East Middle East Middle East Middle East

Operational Operational Operational Operational Operational Operational Operational On Charter

Operational Operational

Owner

BW Gas Höegh LNG Golar LNG Golar LNG Excelerate Energy Dubai, UAE Middle East Golar LNG Abu Dhabi, Middle East Excelerate UAE Energy Israel Middle East Excelerate Energy Ghana Africa Golar LNG Ghana Africa Höegh LNG Brazil Latin Excelerate America Energy Brazil Latin Golar LNG America Brazil Latin Golar LNG America Puerto Rico Latin Excelerate America Energy Chile Latin Höegh LNG America Argentina Latin Excelerate America Energy Argentina Latin Excelerate America Energy

Operational

Colombia

Operational

Italy

Latin America Europe

Operational Operational Operational

Lithuania Turkey Indonesia

Europe Europe Asia

Operational

Indonesia

Asia

Operational

China

Asia

Operational

Pakistan

Asia

Pakistan

Asia

Vessel Name Singapore Gallant Eskimo Igloo Explorer

Install Date 2015 2015 2015 2014 2016

Freeze Excelerate

2010 2016

Excellence

2012

Tundra Experience

2017 2017 2009

Spirit

2009

Winter

2013

Expedient

2017

Challenger

2017

Exemplar

2011

Express

2008

Höegh LNG Grace

2016

OLT Offshore Höegh LNG GDF Suez Höegh LNG

2013

FSRU Toscana Independence Neptune PNG FSRU Lampung Golar LNG Nusantara Regas Satu Höegh LNG GDF Suez Cape Ann Excelerate Exquisite Energy BW Group Integrity

2014 2016 2014 2012 2013 2015 2017

Global Fleet of FSRUs in Operation

also committed to secure sufficient quantities of LNG to prevent gas shortages by 2018. The country is expected to start importing LNG by 2018 using an FSRU supplied by Excelerate Energy.

South Asian countries are prioritizing its LNG imports as the international gas pipeline projects are not expected to materialize soon.

NGV Transportation Vol.30 Apr - May 2017

In South East Asia, Indonesia opened its first regasification terminal in 2012 in West Java. In 2016, Indonesia commissioned a floating regasification unit (FRU) and a floating storage unit (FSU) to ship LNG from Bontang to Bali using a smallscale vessel. Malaysia started LNG imports in 2013, using two LNG carriers as FSUs,

14

moored next to jetty-based regasification units at the Melaka offshore terminal.

Momentum for a new wave of import is expected to start from the Philippines and Myanmar. Philippines National Oil Company is in advance discussion with foreign partners to construct LNG facilities, including a 200 MW power plant and FSRU by 2020. Myanmar is also set to launch a tender for a 3-4 mtpa floating LNG terminal by June 2017.

The Middle East & Africa – New LNG demand center Arab Governments are considering LNG, not as an option, but as a need. The Arab countries are benefitted from close proximity of Qatar – worlds’ largest LNG exporter and pouring supply from the US and Australia. In 2009, Kuwait became the first Gulf country to import LNG by chartering an FSRU as the domestic production has not kept pace with the rise in gas consumption. Bahrain is set to become an LNG importer using an FSRU, with the LNG to be regasified onshore by 2018. The facility will initially import 3.25 mtpa but the capacity can be doubled if needed. Similarly, after Dubai and Abu Dhabi, Sharjah is also planning to import LNG by mooring an FSRU. Sharjah National Oil Co. (SNOC) and Germany’s Uniper has recently signed a MoU to form a company, responsible for importing the LNG for the Emirates. Jordan started importing LNG using an FSRU Eskimo from Golar since 2015 as around 82% of Kingdom’s power generation relies on LNG. Saudi Arabia announced energy-pricing reforms in early 2016 and could consider

FEATURE ARTICLE

Credits: Excelerate Energy

importing LNG in the future to reduce its dependence on oil for power generation.

Likewise, several African countries are looking to start importing LNG in the coming years. The list includes Ghana, Ivory Coast, South Africa, Benin, Namibia, Senegal and Kenya. Although, Egypt joined the LNG-buyers’ club by using an FSRU in 2015 by leasing two FSRU units at Ain Sokhna due to major gas shortage amid falling output and rising energy consumption.

However, Egypt’s prospects for becoming a net LNG exporter again are more promising as the country will develop the giant Zohr gas field after 2020.

Some African nations are blessed with massive

gas reserves, but the full potential production may take a long time to bring those gas fields online. Meanwhile, a combination of FSRU and LNG looks like a quick and stopgap solution to feed the power plants and industries. Ghana will be the first sub-Saharan country to import LNG. An FSRU is currently moored outside the Port of Tema and the country expects imports to begin in Q2-2017. Ghana’s second FSRU will be installed at Takoradi in the west. South Africa and Ivory Coast are also planning to moor their first FSRUs by 2019. South Africa is moving ahead with installing two FSRUs – one each at the ports of Richards Bay and Coega – and may add a third unit at a later stage. The FSRU

15

at Richards Bay will cater for a proposed 2 GW power plant, and the one at Coega will serve a planned 1 GW plant. Ivory Coast have similar plans to install an FSRU by 2018 to supply gas to the country’s power sector.

Likewise, UK giant BP is considering options to import LNG into Mozambique to feed gas-fired power plants and helps in downstream industrialization. Despite its strong offshore gas reserve base, the domestic market still has to wait until 2023 when Anadarko’s 12 mtpa onshore LNG plant is expected to come on-stream. The Kenyan government is in talks with two FSRU companies that would be able to fund and install an LNG import vessel

Vol.30 Apr - May 2017 NGV Transportation

FEATURE ARTICLE at Mombasa. Kenya previously tendered for an LNG terminal at the city’s port but subsequently cancelled the project. However, low prices and a developing spot LNG market have put LNG back on the agenda.

Although not all of the proposed projects will materialize, even a handful of successful projects could prompt incremental demand for LNG from buyers in the region.

“The Middle East & Africa has an LNG import capacity of 50 mtpa, almost 81% of which is in the form of FSRUs” Europe’s alternative to Russian Gasman Incremental LNG supply and FSRU In Europe, Italy and Lithuania are using FSRUs for importing LNG. Italy may float a tender for leasing a second FSRU in the near future. Turkey commissioned its first FSRU at Aliaga, north of the port

city of Izmir in December last year. Turkey’s interest in FSRUs follows several years of gas shortages during mid-winter peak demand periods. European countries are looking for new options to reduce the dependency on Russian gas, thanks to the incremental LNG supply from the US and Australia. New development in the region include Poland, Greece and Ireland. Polish state-owned grid operator Gaz-System is planning for a floating LNG import terminal to be moored at Gdansk bay after 2020, as a probable alternative to build new pipelines to step up Norwegian gas imports.

In Greece, the port is being developed as the north Aegean’s gas hub where it is planned to locate an FSRU. On the same line, Ireland may consider installing an FSRU for importing LNG if the UK decides to raise transit tariffs for piped gas post-Brexit.

Don’t forget Latin America Brazil first began importing LNG in 2009, using two FSRUs – Excelerate Experience and Golar Spirit.

A third FSRU came online in 2013 with Golar Winter. With increasing gas demand in the country, Brazil is likely to float a tender for three more FSRUs by 2018, however, it would be interesting to see how many actually come online from the proposed list. Argentina is also seeking to charter a large FSRU near Bahía Blanca and is looking to secure its first LNG cargoes by 2018.

The Colombian FSRU project entered its start-up phase when Höegh Grace arrived in Cartagena early November 2016. Other countries are also due to launch FSRUbased imports including Chile, Puerto Rico and Uruguay.

Höegh LNG is set to provide an FSRU for Penco Lirquén, which will be Chile’s third regasification facility. The

Credits: Excelerate Energy

NGV Transportation Vol.30 Apr - May 2017

16

FEATURE ARTICLE

Credits: Excelerate Energy

project is expected to cost around $650 million, and the US is likely to supply the cargoes.

Emerging buyers soothes the LNG exporters Around 100 mtpa of additional LNG liquefaction capacity is expected to come online between 2017 and 2020.

Demand and supply on the

LNG market won’t be aligning anytime soon.

However, decline in LNG imports from traditional buyers – Japan and South Korea is partially offset by increasing LNG imports elsewhere in the world, giving the LNG sellers some relief. The second tier – smaller markets are responding to domestic needs, but the amount of LNG they import will be dictated

Priyank Srivastava

Priyank Srivastava, is working as a Consultant in Oil & Gas Practice at Protiviti Middle East, a global consulting firm that helps companies solve problems in finance, technology, operations, governance, risk and internal audit. His role’s contribute in the planning and executing of business process and performance improvement reviews for oil & gas companies within the GCC region.

by price and infrastructure capacity. Low LNG Prices and quick infrastructure offered by floating LNG terminals, making sense for the new entrants.

These FSRUs have played a phenomenal role in aligning the LNG demand-supply, albeit to an extent. FSRUs will be a key component of making the coming glut manageable as the LNG market matures.

There are a number of challenges on the horizon for the FSRU industry, however looking ahead, demand is continuing to increase – many FSRU projects are currently being considered over landbased LNG import terminals.

LNG glut, low LNG prices, increasing spot market liquidity and new emerging buyers support and confirm the continued growth of the FSRU segment in the future.

NTM

17

By Priyank Srivastava

Vol.30 Apr - May 2017 NGV Transportation

Alevo Group with $1.4M for Kenyan energy storage study ——Supporting the“Largest Off grid Solar & Energy Storage Congress in Africa”

Background :The Largest Off Gird Solar & Energy Storage Congress in Africa Africa Solar + Energy Storage Congress & Expo 2017 is the largest congress focusing on energy storage market in Africa region. The event will take place in Nairobi, Kenya, on June 27-28, 2017. As one of the emerging markets, energy storage market in Africa, especially Kenya, Tanzania, Nigeria, South Africa, Uganda, Rwanda has attracted more and more concerns.

Featured News: ALEVO Analytics will exhibit in the event ALEVO GROUP with Obama's "Power Africa" Plan Alevo have received a grant of $1.4M for Kenyan energy storage study where Alevo Analytics will provide the analytics for the Kenyan Energy Storage Study.

The study is funded by U.S. Gov. USTDA and grant application started during Obama administration, grant award ceremony was hosted by U.S. Embassy Nairobi Kenya, on 27th April 2017 with grantee Xago Africa and prime contractor Alevo Analytics.

This is a first of a kind Energy Storage + Renewables Study for Africa and will be an indicator for the rest of Africa.

If you want more information about the event, please contact us : + 86 21 3105 1580 alice@leaderxtet.com

WILL EUROPE BECOME A QUASI-MARKETMAKER FOR LNG?

FEATURE ARTICLE

W

hen it comes to LNG, Europe is an old territory.

The very first commercial cargo transported over water was in fact brought to Canvey Island in the UK which makes Europe the pioneer LNG market. Those with more recent expertise in LNG will have experienced Europe as some sort of oddball, a bit dusty and sleepy and in no way exciting.

This is about to change as vast new volumes will find no other way to go to in the very immediate future. Europe will become some sort of “Final Destination” or “End of the Line” for many cargos. This will give Europe a bellwether position as it will be able to do things no one else can.

There will be innovation on the trading side like we have never even dared to dream in the stiff Asian markets.

Oh, if you like it or not. LNG from the US and even Qatar will have to joust with pipeline gas in Europe as surplus LNG can only and must only be dumped into Europe as the world’s only performing sink market. This means that it’s going to get ugly with Russia which - right now expands into Europe as much as it can.

For Russia, it’s a fight for survival and it simply has no means to reroute gas somewhere else. The only thing they can do is not producing it which will, in turn, wreak havoc on the national budget. And for LNG producers, the investments are sunk and it makes simply no sense to switch off the trains.

Even the much vaunted US flexi-trains.

Back to LNG and let’s take a closer look at the expressions “End of the line” and “Final

Destination”.

Historically, LNG always was a pretty simple and inflexible business: It’s conceived as the simulation of a floating pipeline where liquefaction, regasification and the vessels in between are supposed to work like clockwork in order to ensure optimal operations. This carefully orchestrated dance of liquefaction, tanks, cargos on water, tanks again and finally, regasification was called a “milk run”. This is like a finely tuned milk supply chain where any disruptions can easily spoil the milk.

Modern, more flexible business models require a “Final Destination”, willing and able to absorb LNG any time – a so-called “Sink Market”. It works like the level drain on a kitchen sink. In LNG this would be a market that always accepts whatever volume is delivered to it. By doing so, it allows the LNG market to purge spillover LNG from vessels and tanks so they are ready for the next turn of the wheel. The “Sink market” is some sort of calculable Worst Case Scenario for the LNG trader, allowing him to reliably evaluate his trading options knowing that potentially putting LNG up for salvage is the worst possible thing that might happen to him – but no worse.

A significant proportion of the LNG produced over the last 10 years has shed those shackles and has hence become portfolio LNG. This means that contrary to classical business models this LNG was produced free from destination constraints.

This means also that each single cargo is intentionally produced to go to the place with the highest price.

21

However, when any such cargo would not find a vanilla buyer, it must evacuate in extremis into a market that is willing and capable of taking it at scrap value as this super cold fuel boils away at a rapid clip. This would be a buyer in a “Sink Market”. Europe is the only such market and hence the “Final Destination” – the “End of the line”.

Why this?

Most of today’s LNG receiving terminals were built to serve a narrowly defined customer. Very little inbuilt flexibility for dealing with extraordinary situations usually exists in them.

Very few terminals have the capability to sink a cargo (or many) on short notice. For doing so, the terminal must be capable of liberating enough tank space quasi-instantly in order to take the cargo. This means that it needs sufficient installed regasification capacity to bring big volumes of gas into the grid very fast.

To make things even more difficult, the grid must also be strong enough to sustain large volumes of gas entering into it without collapsing technically while doing so. This means that it needs to be very large and interconnected to other pipelines in order to siphon off the additional gas very quickly.

It helps if there is ample underground storage capacity in order to help to alleviate grid pressure.

Only a handful of terminals in North Western Europe, bringing about 80 bcm of regasification capacity to the market, respond to all the criteria above.

Those terminals are able to sink LNG almost at will,

Vol.30 Apr - May 2017 NGV Transportation

FEATURE ARTICLE

limited only by its regasification vaporizer capacity and their capabilities to turn over ships.

This also means that any free LNG cargo that does not find a vanilla destination worldwide only has those terminals as a destination of last resort. And in times of oversupply, there will be plenty of those cargos without a home. They will all come to Europe as they have nowhere else to go.

With an LNG wave lurking on the horizon, Europe and its LNG traders have the opportunity to be the first quasi Market Maker for LNG. This opens up totally new possibilities for the entire marketplace. What does this mean?

If the strict financial markets definition of a Market Maker is transferred to LNG, we would get an LNG trader capable of buying and selling without notice, willing and capable of buffering LNG and who offers a range of services to other LNG players, enabling them to go

into deals that would otherwise not be possible. This, of course, shall be done for the profit of all those involved and without the market maker, those profits would not have been possible.

However, the market liquidity required to perform those tasks reliably does not exist yet in LNG which is also the reason why there is no real Market Maker yet. This is going to change as the LNG glut will hit the deep storage capacity and the LNG terminal capacities in North Western Europe.

Many new LNG consumers serve tiny markets with a lot of seasonal demand. Their terminals are small too and their end customers may have very erratic consumption profiles. They cannot sustain year-long stable inflow of LNG as their facilities and/or markets cannot modulate the volumes in order to adapt sendout to market needs. They will have to buy flexibility services and the Market Maker is going

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.

to provide them.

Europe’s deep, integrated markets plus its large scale LNG terminals will provide and sell such services for a price.

Europe hence becomes the de facto Market Maker for global LNG and will spawn the first real LNG price index. A number of Asian players have attempted this for many years now – without ever getting there. This is a huge economic opportunity for Europe, as there are many of those inflexible terminals and players at the Atlantic Rim alone.

Let’s round off the situation of Europe in this LNG market development with one more remark: The international LNG market and its enormous overcapacity put Europe into a very special position over the coming years. Still, all this LNG is not economically vital for the continent. In other words: If LNG does not come, Europe can always revert to pipeline gas and balance out any potential lack of LNG this way. On the other side, US terminals will have to switch off if they cannot sink their volumes on the European market. Three years ago, things looked very different indeed.

US Producers depend for their survival on European terminals, not the other way round.

The new LNG situation creates a quandary between geopolitics and economic issues, between regulated diversification and a free EU energy market for the European Commission!

NTM

NGV Transportation Vol.30 Apr - May 2017

22

By Rudolf Huber

23

Vol.30 Apr - May 2017 NGV Transportation

SPECIAL REPORT

Register your participation on the largest gas conference and exhibition in South-East Europe 60 speakers, 45 exhibitors and 600 prominent gas experts and executives, representatives of 230 gas and energy companies and organisations from 20 countries PROGRAM:

REGISTRATION:

Croatian Gas Centre Ltd. Heinzelova 9/II 10000 Zagreb, Croatia phone: +385 (0)1 6189 590 e-mail: opatija@hsup.hr

HIGHLIGHTS FROM THE EXTENSIVE CONFERENCE PROGRAM: Invited Presentations and a Panel Discussion: "Energy Strategies and the Future of Gas in the Energy Industry” • Hydrogen and Low-Carbon Energy Strategy • Challenges of Energy Strategy between Low-Carbon Strategy and Energy Prices for the Competitive Economy • Some Elements for Croatia s New Energy Strategy; Place and Role of Natural Gas • The Importance of Natural Gas in the Energy Mix of Low-Carbon Strategy

Development of the Croatian Gas Infrastructure (Gas Pipelines, Compressor Stations, Gas Storage, Chromatographs and LNG Ships) • Updates on Project of Constructing a Compressor Station on the Transmission System of Plinacro Ltd • Application of Gas Chromatographs for the Gas Quality Monitoring and Determination of Gas Energy on the Gas Transmission SystemTrends and Challenges in Building of Lique�ed Natural Gas (LNG) Ships

Introductory Talks and a Panel Discussion: "Supplying Gas in a Fully Liberalized Gas Market and a Consolidation of Gas Suppliers” • Panel discussion with participation of the state secretary of the Ministry of Environment and Energy of Republic of Croatia NGV Transportation Vol.30 Apr - May 2017

24

HYDROGEN PRODUCTION WITH EXCESS BOG GENERATED ON LNG VESSELS

Abstract This work is an extended summary of a recent publication by Ignacio Arias et al., aiming at hydrogen generation of onboard LNG vessel. At present, LNG ships with no reliquefaction plant consume the BOG (Boil Off Gas) generated in the engines, and the excess is burned in the GCU (Gas Combustion Unit) without any energy use. The need to improve the gas management system, therefore, is evident.

This paper proposes hydrogen production through a steam reforming plant, using the excess BOG as raw material and thus avoiding it being burned in the GCU. To test the feasibility of integrating the plant, an actual study of the gas management process on an LNG vessel with 4SDF (4 Stroke Dual Fuel) propulsion and with no reliquefaction plant was conducted, along with a thermodynamic simulation of the reforming plant.

With the proposed gas management system, the vessel disposes of different fuels, including H2, a clean fuel with zero ozone-depleting emissions.

25

Vol.30 Apr - May 2017 NGV Transportation

SPECIAL REPORT Introduction Developments in stringent maritime transport anti-pollution regulations have led this sector to be in the midst of a period of adaptation and change. The shipping industry is considered as one of the major contributors to global warming and air pollution. As consequence, the IMO (International Maritime Organization) developed Annex VI of the International MARPOL Convention for the Prevention of Pollution from Ships. The main restrictions apply to emissions of NOX (Tier Limits) and SOX (Global and ECA Limits), compelling companies to apply new market strategies in order to cut costs incurred from the need to use better quality fuels. Among such strategies, those most widely used are: an increased speed outside of ECA zones and a decrease inside; the avoiding of areas with restrictions, in spite of the longer distances; and the shortening of stays at port.

Ports are one of the main focal points with regard to contamination issues due to their close proximity to urban areas. Because of this, and so that vessels comply with the current

GCU

regulations, different options are being looked into, such as: Cold Ironing, the use of clean and more efficient fuels such as hydrogen, or higher quality fuels and with a lower percentage of sulphur.

The high demand for NG (Natural Gas) worldwide is leading to significant increase in the number of LNG (Liquefied Natural Gas) vessels. The technology adopted by LNG vessel propulsion systems is not only closely linked to developments in the strict antipollution regulations, but also to the versatility of such systems, as they can consume different fuels depending on the BOG (Boil Off Gas) management systems they comprise. For this reason, hydrogen generation on board these vessels could be a very appealing option, since NG is the most widely used raw material used for the extraction of hydrogen and its zero emissions makes its consumption possible in any area without any restrictions.

LNG vessel with DFDE propulsion, as a model for generating H2

Gas Heater DFDE

DFDE

G

Low-Duty 1

G

G

G DFDE

Low-Duty 2

DFDE Forcing Vaporizer

Mist Separator

Fig.1 Gas management system in a DF (4S) engine system

NGV Transportation Vol.30 Apr - May 2017

26

Vent. Mast.

Since early 2003, the number of newly built LNG vessels with a with dual fuel diesel electric engine (DFDE) propulsion system has increased considerably, reaching 159 units.

This demonstrates that the propulsion system preference on LNG vessels steers towards the use of DF engines, which can consume both gas as well as liquid fuels.

DF engines are designed to use methane gas as fuel, thus it essential to separate the other NG components through a system called an Oil Mist Separator to ensure correct combustion and hence avoid Knocking. Upon leaving the gas separator, BOG pressure is increased in pitch and variable speed compressors, termed Low-Duty. An exchanger (BOG / Glycol) in installed out of the Low-duty compressors to stabilise the temperature prior to its consumption in the engines or, should there be any excess, burned in the GCU without any energy recovery, for the sole purpose of stabilising the pressure in the cargo tanks, as shown in Fig.1.

The BOG produced is treated according to the current operational state of the vessel, this being namely when the vessel is at port/anchored or sailing.

When the vessel is at port or anchored, the propulsion system is out of service, and so only one power generator is required to provide power for on board services and auxiliary elements. In this situation, the BOG generated is used to feed the generator in operation, and the excess is burned in the GCU. On the contrary, when navigating, the propulsion plant is in operation and so BOG consumption is greater, but always dependent on the demands/requirements of the vessel, with any of the following situations being possible: - Forcing Vaporiser: Should

SPECIAL REPORT more BOG be required than the amount generated naturally, BOG is forced in an LNG/Steam exchanger to perform the phase change and meet the demands of the propulsion plant.

- GCU: When propulsion plant demand is not great and the naturally generated BOG exceeds the amount consumed there is an excess of BOG, which is burned in the GCU to maintain the pressure inside the tanks, without any energy exploitation.

To follow is a case study, performed through the collection of data onboard, of an actual BOG management plant on an LNG ship with a DF 4S propulsion system.

Characteristics of the model LNG vessel under study A 173400 m3 vessel propelled by four DFDE 4S engines is taken as a case study. The study of the gas management system revealed that BOG generation throughout the crossing was not constant, For this reason, data was collected through the vessel management and control system during the different operational states throughout the crossing, thereby minimising, as far as possible, any errors that could occur in the study.

The BOG produced daily on the vessel is used to fuel the DF engines and, should there be any excess, is burned in the GCU. Situations may arise in which propulsion plant consumption exceeds the BOG produced naturally, hence the use of the Forcing system to supply the required surplus. This process is illustrated in Fig.2, where both the naturally generated BOG as well as that consumed in the DF engines and that burned in the GCU is shown. The average naturally generated BOG is of 183 m3â „day, thats consumed by

BOG [m3]

BOG generated BOG consumed in engines BOG burned at the GCU

300

200

100

0

5

10

15

20

25

30

Days

Fig. 2 Relation of the BOG generated and that consumed in the propulsion plant and GCU in ballast conditions.

the propulsion plant is of 170 m3/ day, and the excess sent to the GCU is of 30 m3â „day.

A standard practice that increases the BOG generated on these vessels is the spraying of LNG onto the cargo itself in order to cool it, through a phase change process, absorbing heat and so considerably increasing the temperature of the excess BOG at times, which has to be burned in the GCU. In conclusion to the BOG management system study, low energy efficiency is witnessed due to the amount of m3/day of LNG burned in the GCU without any energy exploitation, along with the emissions that result. The strict antipollution regulations imposed by the IMO have led to the need for a new approach to gas management systems onboard LNG vessels in order to provide greater flexibility, better performance and to reduce ozone-depleting emissions.

Obtaining hydrogen from the excess BOG can be considered an interesting option, as a clean fuel would be available on board to use in ECA areas and ports, with the only exhaust discharge being water vapour.

27

Hydrogen generation on the model LNG vessel Currently, the most widely employed method for generating H2 is natural gas steam reforming, reaching 50% of global H2 production. A system is proposed in order to exploit the excess BOG, which obtains hydrogen through steam reforming, given that this is a high-yield mature technology and guarantees production at low cost when compared with other methods.

Fig. 3 illustrates the reforming system layout on the model vessel, divided into three stages that must be performed in order to complete the H2 production process, and using the BOG as the raw material. The BOG that feeds the reformer is obtained from the excess generated on board once the pressure in the Low-Duty compressors has been increased and remains unconsumed in the power generation engines.

This section analyses the efficiency of the hydrogen production plant via steam reforming in order to exploit the excess BOG generated on LNG vessels. The analysis of the system was performed by

Vol.30 Apr - May 2017 NGV Transportation

Flue Gas

H2O

HX 2

HX 1

HX

HX 3

LTS

HTS

H2O 200°C

350°C

REFORMING S H2O

Reforming

HX 4

CH4

H2

CO2 RENOVAL

HIFT Waste gas

Air

Waste gas

T=900°C

PSA Module

Low-duty

BOG

DFDE GCU

SPECIAL REPORT

Air

Flue Gas

Fig.3 Steam reforming process using the BOG from the model vessel burned in the GCU without energy recovery.

varying key parameters such as the temperature of the reforming BOG, of the fuel, combustion air and tail gases, using EES Software (Engineering Equation Solver), which offers the advantage of including fluid properties and optimisation tools.

Table 1 lists the parameters assumed for the simulation of the model plant. It is to be taken into account that the results obtained in the study are referred in kg/s of reforming BOG. The study of the plant in the operational situation of maximum performance is achieved with the recirculation of reforming tail gases towards the combustion chamber, and the exploitation of the process waste heat in order to preheat the BOG, water, air and fuel. The results obtained are listed in Table 2, in which the hydrogen generated in conditions of maximum efficiency, the mass flow of each current, and the power consumed by the plant are demonstrated. An important fact to mention is that 0.37 kg/s of H2 are generated for every kg/s of BOG.

NGV Transportation Vol.30 Apr - May 2017

Conclusions To obtain improved performance, management of the BOG generated on board LNG vessels needs to be improved because of the current energy wastage.

This requires new systems that use the excess BOG produced on board which is burned in the GCU, without any energy exploitation. This paper proposes an alternative to current systems; hydrogen generation from the excess BOG through reforming.

The following conclusions were reached from the analysis: - An LNG vessel without a reliquefaction plant generates an excess BOG of 30 m3/day in ballast, which is burned in the GCU without any energy recovery and produces air pollution.

- Hydrogen is considered as a clean fuel due to its zero ozone-depleting emissions and can be consumed inside areas with strict anti-pollution restrictions such as ECAs and ports.

- The hydrogen production

28

system with greatest performance and market maturity is steam reforming, reaching 50% of the global production of hydrogen.

This system is also of high efficiency, low cost and, when integrated with a PSA module, can obtain hydrogen currents with a purity of over 95%.

- In terms of results, a plant efficiency of 64% and a H2 production of 0.37kg/s per kg/s of available BOG is obtained.

The installing of a reforming plant is energetically viable and offers greater versatility to the vessel thanks to the availability of different fuels, as well as the improvement in BOG management. H2 storage onboard and the adapting of the system to consume the H2 generated is of utmost importance, and so will be the future lines of research of the authors, with the aim of attempting to complete the entire processes of the system.

SPECIAL REPORT Table 1

Table 2

Main parameters and assumptions for the analysis of reforming plant.

System

Parameters

Value

Efficiency, mass flow and power pumps and compressors

Reforming

Mass Flow rate BOG

1 kg/s

Parameters

Value

BOG temperature

-135 ºC

BOG compressor

205.10 (kW)

BOG pressure

1bar

Water pump

5.09 (kW)

H2O temperature

25 ºC

Air compressor

960.60 (kW)

H2O pressure

1bar

Ƞ plant

64.04%

Reforming temperature

900 ºC

Ƞ thermal

74.49%

Reforming pressure

15/30 bar

BOG

1 (kg/s)

Shift 1temperature

350 ºC

Water

2.96 (kg/s)

Shift 21temperature

200 ºC

BOG comb

0.41 (kg/s)

Minimum temperature difference in the HX_reforming

50ºC

Air

11.41 (kg/s)

Waste gas

2.69 (kg/s)

Combustion air pressure

2bar

Flue gas

14.52 (kg/s)

Combustion air temperature

25ºC

H2

0.372 (kg/s)

Waste gas temperature

20ºC

Combustion

Others

Combustion efficiency

99%

Compressor isentropic efficiency

80%

Minimum temperature difference in the regenerator

5ºC

Pumps isentropic efficiency

90%

Pressure drop within the pipes and 2% equipment(Δp) Hydrogen purity in PSA module

99%

NTM

By Ignacio Fernandez, Javier Gomez, Luis Lopez-Gonzales, Manuel Gomez

IGNACIO FERNANDEZ JAVIER GOMEZ Ignacio Arias Fernández is marine engineer and a member of the research group Energy Engineering at the university.

His research focuses on the optimisation of energy systems, energy conversion and LNG. ignacio.arias@udc.es

Javier Romero Gómez holds a PhD in Marine Engineering and is a Professor in the Department of Energy and Marine Propulsion at the University of A Coruña, Spain. He belongs to the Energy Engineering Research Group at the university. His research is concentrated on optimising energy, energy conversion, LNG reliquefaction, refrigeration and air-conditioning systems. j.romero.gomez@udc.es

LUIS LOPEZ-GONZALES

thermodynamics management.

MANUEL GOMEZ

Luis M. López-Gonzalez is University Professor and is the Head of the Applied Thermodynamics, Energy and Construction Research Group (TENECO) at the University of La Rioja. He has authored over 500 engineering projects and his research focuses on energy resource exploitation, renewable energy, applied and energy conversion and

Manuel Romero Gómez holds a PhD in Marine Engineering and is a Professor in the Department of Energy and Marine Propulsion at the University of A Coruña, Spain, and a member of the research group Energy Engineering at the university. His research focuses on the optimisation of energy systems, energy conversion, waste heat recovery and LNG. m.omero.gomez@udc.es

29

Vol.30 Apr - May 2017 NGV Transportation

Pre-Conference Workshops: 19 June 2017 Main Conference: 20-21 June 2017 Post-Conference Workshop: 22 June 2017 Venue: Equarius Hotel, Resorts World Sentosa, Singapore

Actualising FSRU Projects and Uncovering New Market Opportunities in Asia Featuring FSRU operators, owners and technical experts including: Laura Saguin Division Chief, Natural Gas Management Division Philippine Department of Energy

U Soe Myint Director General (R) Energy Planning Department Ministry of Electricity and Energy, Myanmar

Ajay Kumar Chairman and Managing Director Fox Petroleum Limited

Abul Mansur Chairman Petrobangla

Kazuya Sasaki General Manager Mitsui OSK Lines

Parth Jindal Managing Director Höegh LNG Asia Pte.Ltd

and many more speakers ...

Join Industry Experts at FSRU Asia Summit 2017 to: ■ Uncover new opportunities in emerging and frontier FSRU markets such as Bangladesh, Thailand, the Philippines and Pakistan and forecast for the industry in 2017 and beyond ■ Take part in an interactive roundtable discussion on FSRU containment systems, regasification skids and offloading systems and how they impact the efficiency of FSRUs ■ Find out ways to improve FSRU vessel efficiency and increasing send-out and storage capacity

■ Meet government officials, project and vessel owners to discuss the growth of FSRUs in Southeast Asia and South Asia ■ Learn from actual casestudies of recently completed FSRU projects, including Bumi Amarda’s Malta FSRU, which achieved first LNG in January 2017 ■ Plus, engage in an intimate networking session with key decision makers in the LNG supply chain

Sponsors:

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Register today by visiting www.fsrusummit.com

EVENT & EXHIBITION

UNDERSTANDING LNG BUNKERING & STORAGE IN ASIA:

TANK STORAGE ASIA AND SIBCON 2016 EVENT REPORT

In the past few years LNG storage and bunkering have slowly been catching the eyes of companies all over Asia. The industry is extremely excited about the prospects of storing everyone’s favourite gas and it was certainly a focus at the conferences last year.

Tank Storage Asia 2016 Moe Merican, Lead Consultant from Tri-Zen spoke on Asia’s oil and gas storage market outlook and investment prospects. He pointed out that 2016 was a year of many firsts for the LNG industry - It was the year of the first US LNG and US methane shipments. The year also showed major new demand coming from Asia, most of this (about 70%) coming from China and India and an overall growing gas demand (about 25%) globally.

The current production status quo is about to be upset as the US and Australia overtake Qatar as largest producers of LNG. He noted that this comes collectively as a planet that is experiencing a shift in primary demand away from coal and oil towards gas. He went on to talk about the European market and pointed out the Euopean

nations that have primarily relied on pipeline gas are being changed by LNG supplies. He feels that LNG offers these countries energy security and the ability to not rely on other nations for continued supplies of pipeline gas as more and more LNG producing nations look for buyers. He feels that gas storage will produce much more investment opportunities than oil storage and that this move towards gas storage is entering a new phase that is trader driven and will show substantial growth in the coming years.

There was an interesting presentation by Ignatius Hwang, partner at Squire Patton Boggs, Singapore who spoke on mitigating development risks for tank storage. He stressed that it was of absolute importance for companies to understand these risks before entering the

31

business to protect themselves and increase the success of any tank storage venture.

He broke down the risks into: legal and regulatory risks, labour and land Risks, financial risks, tax risks, political risks, construction risks, operations risk and site risks. He said that mitigation from these risks can be done primarily through the development of contracts between parties involved and that these contracts are very country dependent in the way they need to be drafted. Another important thing that he noted was that corruption in many parts of Asia was rampant and that there was the possibility of non-honouring of sovereign agreements and possible breach of government contracts and thus projects needed to be properly insured. He recommended that companies

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EVENT & EXHIBITION

seek specialist multi-lateral insurers as well as supportive organisations that support infrastructure development projects.

The biggest risk mentioned however was that of site risk.

He said that it is absolutely imperative that logistics and infrastructure projects undero stringent pre-feasibility studies that look into soil conditions, heritage locations, environmental contamination possibilities and native presence.

All of these issues have proven to be huge headaches in other countries where these aspects were not properly investigated prior to beginning construction and have left projects stalled or forced complete shutdown.

Antonio Della Pelle, Managing Director at Enerdata spoke on Primary Demand over the coming 25 years. He mentioned that there are more than 900 LNG terminals that will be completed by 2025 to

NGV Transportation Vol.30 Apr - May 2017

supplement the global energy need. Electricity demand is also increasing and though it currently predominantly coal generated, gas and renewables are set to grow much faster by by 2030. LNG is also likely to become a major transportation fuel due to MARPOL’s recent adjustment to their emission standards and the development of ECAs. He mentioned that this will create changes in the LNG spot market as LNG storage projects require extremely long term commitments of about 20 – 30 years. The current oversupplied situation will require much more storage options and this means many more facilities are required even on top of already planned storage terminals. The exact number of facilities that do come about highly depends on country government and policy support.

Rudi Stalmans, Managing Director of Ener8 Limited

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then spoke of the challenges of safety practices in the supply chain. He also repeated what Ignatius had mentioned, that risks assessments are often overlooked and should be regarded more seriously. Core aspects of the risk assessment in his view were, transportation and logistics, function and liability of infrastructure and identifying the resultant impact of a breach of safety event.

He strongly believes that safety begins at the management level and this should flow down from the top.

There should be trained staff and standardized operating procedures for equipment. This will help reduce the largest factor behind all accidents in storage projects which is human error. By having a set sample of rules and operating procedures, trained staff will be operating systematically to avoid any potential mistakes through a checklist ensuring

EVENT & EXHIBITION

that operational errors are kept to a bare minimum. He also says that this should be accompanied by an emergency response plan to ensure that in the event of any mishap, staff are also trained on how to react thereby reducing further damage and losses.

SIBCON 2016 SIBCON 2016 speakers were bound by Chatham House Rules. This principle forbids us to implicitly mention the names of any of the speakers or the companies that they were from.

The event was very insightful to say the least and covered mainly the issue of LNG as a marine fuel and why it will be the major fuel of seaborne vessels in the coming years.

Much of the discussion surrounding LNG was centered on the development of ECAs. We talked about this in detail in our previous issue. One of the talks covered this exclusively and went over the reason for

the development of ECAs and MARPOL’s desire to initiate new regulations. To summarize, ECA’s are being developed in specific areas around terminals and ports to reduce air pollution.

Within these areas ships are meant to abide to emission regulations on Sulphur and NOx. As such ship-owners will need to find a solution to reduce their emissions when travelling within these areas.

One of the topics discussed was entitled fuel for thought – a medium outlook for marine fuels. The panel weighed out the various options currently available but all came to the conclusion that there is no real one solution. The consensus was that there will be many fuels still even in light of the new regulatory requirements

by MARPOL but there will be various solutions for companies to adhere to them. It was agreed though that LNG was a very interesting solution that many

33

fleets have turned to.

Many of the topics were related to the shipping industry and another discussion was titled - Ship owner conversations responding to trade and environment challenges. This panel did mention that other than LNG, low Sulphur fuel and scrubbing were another two very interesting options for meeting with the new regulations. There was also discussion on a more realistic implementation of the regulations as the panel felt that the shipping world is not currently ready to be faced with such stringent rules on their emissions. It was recommended that perhaps the standards should be staggered incrementally. In the end these new regulations will have someone pay for the changes and it will either be the refiners, charterers or ship-owners but will most likely be a combination of all the stakeholders as the new regulations effect the entire

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EVENT & EXHIBITION

industry and not just a single person in the chain. It was also noted that these changes meant that there is huge potential arising in South East Asia for development of the industry.

Another one of the topics was - Managing uncertainty leading up to global Sulphur cap implementation. Once again it was reiterated that it is unlikely that there is sufficient fuel available for 100% compliance by the time the final regulations are enacted in 2020. Because of this fact, 2020 should be the start and things should be queued for a staggered implementation towards 2025 and the industry is already late on getting environmental controls underway, so meeting the 2020 target is simply unachievable. It was also noted that to make this full change a

NGV Transportation Vol.30 Apr - May 2017

reality, enforcement would need to be strict and harsh. The panel agreed that the penalty cost needs to be much more than the cost of compliance to force the change to take place.

LNG supply to vessels was one of the other topics covered.

The critical issues facing LNG supply were discussed and it was said that at the moment, there is not a continuous ready supply for vessels. Significant investment would be required to establish networks that would allow LNG supply to be available to all vessels that need it. It was also mentioned that currently liquefaction development exceeds vessel construction or conversion time. LNG transfer from vessels was also discussed.

It was stressed that LNG integration is important now and a long-term commitment

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is needed. ‘LNG is not just for trying’. Collaboration on a global scale is needed to develop bunkering infrastructure and pricing is the key for its success.

There was a very interesting discussion that talked about how demand is expected to have sustained increase over the coming years especially in Asia. It was also mentioned that Singapore is expected to capture the majority of the Asian market for LNG bunkering and be able to handle up to 5 mtpa by 2030.

One key question was posed to the delegates to think about - How can we grow marine demand while driving down infrastructure costs? Solving this question would pave the way for an uninhibited marine LNG future.

NTM

By Ryan Pasupathy

SPECIAL REPORT

35

Vol.30 Apr - May 2017 NGV Transportation

ANALYSIS OF NATIONAL POLICIES AND ITS POTENTIAL IMPACT ON

NGV GROWTH IN SWITZERLAND

O

ver the past few years, we’ve looked into a lot of examples of countries and their successes and failures of policy implementation and it’s results on NGV growth. In this section of our analysis of national policies, we look at an interesting study conducted in Switzerland that looked at the various types of policies that affect market growth and how these factors would affect the market in Switzerland and compare it to what actually happened.

Ambitious Targets The Swiss government kicked

off their NGV program in 2004 and they basically had no natural gas refueling infrastructure in place at all and they had less than 1000 NGVs operating in the country at the time. Gas stakeholders however had mentioned that there was interest to move from simply providing gas to households to establishing a thriving NGV industry that would capture significant market share of the transportation industry.

The Swiss government also felt strongly about this move and felt that it would help them reach their already set ambitious goals to reduce air

39

pollution and traffic related CO2 emissions.

The government then set out even more ambitious goals for their proposed NGV plans by announcing that they wanted to have 30,000 NGVs by 2010 and 300,000 by 2020 which would represent almost 10% of the total Swiss vehicle fleet. This would be achieved by putting in about 30 million Euros for market introduction and development.

The Swiss study by Janssen et al. analyzed the various stakeholders in the industry and their relationships which are expressed in the model below. Based on

Vol.30 Apr - May 2017 NGV Transportation

Figure 1: Evolution of Number of NGVs from 2000 (IEA)

the relationships between stakeholders, the study then looked at factors that could influence the growth and development of the industry.

The model included parameters like cost of NGVs, types of NGVs offered, construction of filling facilities, filling facility costs, CNG sales ratios, policy implementation and numerous others.

The resulting model developed from this produced a vehicles numbers simulation that could be achieved under the various market assumptions. The resultant simulations showed that there were numerous favorable outcomes but also some under which the market would die out after failure for any realistic policy measures to be implemented.

The models revealed that under all successful simulations that market penetration was about 20% – 40% per year until 10,000 cars was reached and then a similar growth rate up to about 50,000 cars. The simulations showed that at 50,000 cars, the market would then begin to shift from an exponential growth pattern to a more linear one.

Janssen et al. in their study

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came to their final findings that, “Our simulations suggest that the goal of 30,000 cars till 2010 and 300,000 cars till 2020, communicated by the Swiss gas distributors, is rather ambitious and can be reached under very favorable circumstances only.”

How did things turn out though in the end?

The European Alternative Fuels Observatory reported the number of natural gas vehicles in Switzerland hit 19,780 vehicles in 2009 and that the Swiss wouldn’t have been too far off from their 30,000-vehicle target for 2010. Looking at Fig. 1 though something terrible happened which dashed any hopes of achieving the governments ambitious targets once and for all.

A Bioethanol Induced Mishap The NGV industry in Switzerland was predominantly powered by bioethanol and not conventional CNG. Until 2008, the entire NGV industry was being supplied by bioethanol which was produced in Switzerland. The Government then changed its policies and stopped bioethanol production in the country only allowing

40

AlcoSuisse (a Profit Center of the Swiss Alcohol Board) to import and sell ethanol. The Government then stopped all its activities related to the trade of bioethanol and opened the market to the private industry in 2010. Since then, the whole volume of bioethanol is imported from Norway, The Netherlands, and Germany. The privatization of bioethanol must have caused a significant price hike in the cost of bio-CNG (processing bioethanol is extremely costly) and it is likely that this made many people stop using it.

Privatizing the industry would have required the provision of generous tax breaks and subsidies to preserve the industry and make biofuels competitive with fossil fuels.

It’s hard to say why they did not provide this much-needed market assistance for the industry or if there were other factors responsible, but based on the data above, it can only be seen that the support post privatization was not provided.

7 years down the road though, the industry looks to have become lackluster, experiencing a year on year decline in numbers and their 2020 targets are nowhere in sight. There are only about 8600 NGVs remaining in Switzerland with only 126 CNG filling stations as of 2017. Even if the cost of bioCNG can be lowered or the government decides to put in new tax breaks and subsidies, the Swiss look like they are not very fond of NGVs anymore and are perhaps waiting for electric fuel cells or hydrogenbased vehicles as their next step towards a cleaner transportation industry.

NTM

By Ryan Pasupathy

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