Everything you needed to know about LNG but were afraid to ask. - PowerPoint PPT Presentation

Everything you needed to know about LNG … but were afraid to ask. – Part II James Ashworth Lead Consultant TRI-ZEN International Pte Ltd, Singapore Glasgow Technology and Innovation Centre (TIC). , 14-17 September 2015

Chicken and egg  The Chicken and Egg live on but are fading  Disappearance is accelerating

Today we see two big drivers for change  Cost  In spite of current phenomena, Oil is on an upward long-term price trajectory  Gas is now structurally 50% cheaper  250 years’ gas availability  Cheaper to operate • Reduced Maintenance  Environment  Progressive tightening of emissions controls mitigate away from oil-based fuels  LNG ticks all the current boxes to 2050 www.tri-zen.com 3

Oceans under threat Marine population halved since 1970  Populations of marine mammals, birds, fish and reptiles have declined by 49% since 1970.  The study says some species people rely on for food are faring even worse, noting a 74% drop in the populations of tuna and mackerel.  In addition to human activity such as overfishing, the report also says climate change is having an impact. World Wildlife Fund and the Zoological Society of London www.tri-zen.com 4

Emissions Challenges SOx PM NOx 5

Driving Forces - Emissions

Future ECAs China Seaports 2020 River Ports 2025 www.tri-zen.com 7

LNG meets all current and planned emissions standards

…but you need more to go the same distance vs. diesel and HFO Energy Density (MJ/kg) 1 0,9 0,8 0,7 0,6 0,5 0,4 0,3 0,2 0,1 0 Diesel LNG CNG

IMO/IGC Tank Types Membrane Independent Type C Type A Type B Pressurised Oil Tanks Spherical (Moss) Prismatic Cylindrical Bi-lobe

Rolls-Royce Hybrid Drives Source: Rolls-Royce Source: Rolls-Royce Source: Rolls-Royce Source: Rolls-Royce www.tri-zen.com 11

Future Technology THE FUTURE “A L OAD OF SLUSH” – SUPER-COOLED LNG

Slush Gun

Slush Advantages  Lower temperatures reduce boil-off gas  Densification advantage ~13.4% (CH 4 )  More fuel carried – go further  Regas opportunity for superconducting electric propulsion and other chilled utilities  Commercial opportunity for “premium” (low temperature) bunkers?

Glasgow 2015 LNG SUPPLY CHAIN

Joining up the dots www.tri-zen.com 16

How are we doing? www.tri-zen.com 17

A trans-Atlantic divide and Asian procrastination  The North American ECA came into force in August 2012.  Since then, it has been left to private enterprise to develop LNG bunkering infrastructure.  Predictably, this has led to developments by noteworthy pioneers, projects and specific routes, some of whom are happy to share their infrastructure, but little, so far, dedicated to general shipping. The message is clear.  Accelerated LNG bunker port development is directly related to state or regional funding availability. www.tri-zen.com 18

North American developments Source: Crowley Source: Harvey Gulf www.tri-zen.com 19

Asian action  Finally, Singapore has sent out a RFP for LNG bunkering  Korea’s Busan has announced plans for LNG bunkering capability  China has ordered 200 LNG fuelled vessels – infrastructure must follow www.tri-zen.com 20

Thailand – The Kra Canal  The Malacca Strait traffic is expected to be over-saturated in 10 years  By 2025, there will be around 140,000 vessels passing through the strait, but it can only safely accommodate about 122,000 ships  The Kra-Canal would shorten shipping distances by 1,200  Construct a sea-level canal capable of accommodating vessels up to 500,000 dwt with two lane traffic and a transit speed of 7 knots  Canal depth 33m and base width of 500 Source: International Institute of Marine Surveying metres www.tri-zen.com 21

Conventional LNG Supply Chain models do not work  Large scale LNG project ~ $12 – 15bn  Gestation period ~ 10 years  Take or pay contract over 20 years (in advance)  Shipping will double today’s global LNG demand (300 mmt)

Then and now  Once, computers were so large, their buildings  Today, our smart phones have more computing were constructed around them capacity than that which accompanied the first men to the moon. 23

LNG in a Box

Port Infrastructure Options

Custody Transfer Source: Shell Glasgow 2015 26

What is Natural Gas? Component Formula Percentage Methane CH 4 70-90% Ethane C 2 H 6 Propane C 3 H 8 0-20% Butane C 4 H 10 Carbon Dioxide CO 2 0-8% Oxygen O 2 0-0.2% Nitrogen N 2 0-5% Hydrogen sulphide H 2 S 0-5% Rare gases A, He, Ne, Xe trace 27

LNG Custody Transfer calculation  E = (V LNG x D LNG x GCV LNG ) – E gas displaced ± E gas to ER , where:  V LNG = volume of LNG transferred (m 3 )  D LNG = density of LNG transferred (kg/m 3 )  GCV LNG = Gross Calorific Value of LNG transferred (MMBtu/m 3 )  E gas displaced = energy of gas displaced from the receiving tank (MMBtu)  E gas to ER = energy of gas despatched to the ER or other locations (MMBtu) 28

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Gas Chromatograph Confidential www.tri-zen.com 30

Costs of LNG supply LNG port case large medium small 343,000 m 3 204,000 m 3 52,000 m 3 Throughput/year 20,000 m 3 2 x 700 m 3 Tank size no separate tank Tank turnover/year n/a 20 40 one bunkering berth, one bunkering berth, one bunkering berth one jetty one jetty one small-scale two small-scale one tank truck, 50 m 3 bunkering verssel bunkering vessel Installations (4,000 m 3 ) (3-4,000 m 3 ) two tank trucks, 50 m 3 one tank truck, 50 m 3 one truck filling station one truck filling station one truck filling station Costs of LNG € 118/tonne € 137/tonne € 194/tonne distribution at 10 years (US$2.2/MMBtu) (US$2.6/MMBtu) (US$3.7/MMBtu) payback Source: DMA/EU 31

Glasgow 2012 CURRENT ISSUES 32 Glasgow 2015

Challenges Scope for infrastructure and systems improvement Loading arm challenge

Challenges Custody Transfer Regulatory Issues

Commercial Issues  What guarantees are there for investors?  What size should a LNG bunker barge be?  How will LNG bunkers be traded? Mass, Volume or Energy content?  Who will be responsible for the Custody Transfer? Seller or Buyer?  Who will pay for the BOG and BOG management?  Who will monitor gas quality? Existing bunker surveyors?  Will we develop standards for delivered temperature and pressure?  Does colder gas have a higher commercial value than warmer?  If excess BOG generation is reduced by lowering pumping rate, who pays for the extra bunkering time?  Which infrastructure investment model works best?

Technical Issues  All LNG design problems were solved in the 1960s  Gas grade/class/quality/measurement  Ship design optimisation (cradle to grave philosophy)  Total Energy Management  Risk Management  HAZID  HAZOP  BOG Management  Filling Operations - the last metre  Manpower Competency

IMarEST Alternative Fuels SIG www.tri-zen.com 37

10 Collyer Quay, Ocean Financial Centre 40-00, Singapore 049315 Tel: 65 6734 5550 mgmt@tri-zen.com Based in Singapore with consultants in: Bangkok Beijing Calgary Hong Kong Jakarta London Strategy Melbourne Asset optimisation Perth Sector studies Market studies Forecasting Commercial/technical studies Commercial representation New market entry Detailed business cases Project finance/management James Ashworth Mergers & Acquisitions T: +66 (0)9 5491 6888 Organisational development E: james.ashworth@tri-zen.com jamesashworth55