LNG trade is expected to increase signi-ficantly over the next 20 years from the present level of approximately 150 million tons per annum (MMTA) to more than 200 MMTA. The growth is due to the increasing world demand for clean burning fuels, an imperative to monetize gas that cannot be utilized locally, and LNG projects becoming increasingly feasible as costs decline.
LNG has been produced for over 60 years and has developed into a worldwide trade, primarily involving national and international oil companies and trading companies. The basic process cools natural gas through compression to minus 160° C, reducing its volume to 1/600th of the original. The reduction makes it economical to transport by ship. Due to the significant capital costs of an LNG plant, there must be very large deposits of easily extractable natural gas to supply feedstock, and for most projects, output has had to be committed in long-term sales contracts. Today's new LNG facilities require certified gas reserves in excess of 5 tcf to be considered for third-party non-recourse financing and long-term gas sales contracts.
Liquefaction of natural gas
There are 20 export liquefaction plants in operation or under construction worldwide. Each plant has several process units called "trains" that are independent liquefaction units. Approximately 78 LNG trains are in operation or under construction at existing plants. There are 15 new plants under discussion, but only Snøhvit (Norway), Damietta (Egypt), and Sakhalin (Russia) are under construction. The others are awaiting finalization of sales and purchase agreements. The liquefaction portion of an LNG value chain typically costs $800 million-$1 billion per train, including allocated tankage.
The cooling process can be achieved by one of several proprietary methods. Of the 78 LNG trains now in operation or under construction, 57 use the Air Products and Chemicals (APCI) mixed refrigerant with propane precooling process. Of the remaining trains, six use Black & Veatch (Prico), two Linde, seven ConocoPhillips Cascade process, and six use the Teal process.
The first long distance shipment of LNG took place in 1959 from the US Gulf to the UK in a converted freighter named Methane Pioneer. The first purpose-built LNG ships were the Methane Process and Methane Princess, built in the UK, classed by Lloyd's Register, and commissioned in 1964 for British Gas to deliver LNG from Arzew in Algeria to its re-gas plant at Canvey Island, UK.
As LNG became a popular industrial fuel, the fleet expanded to match import capacity. Because of the high relative price of the LNG chain, the ships required long-term contracts to secure financing. This requrment continues to be a major feature of the industry today.
Unexpectedly, demand for internationally traded LNG flattened in the mid 1980s, leaving some owners who had built ships on spec with vessels that had no employment upon delivery from the yards. The decline can be attributed to the success of pipeline projects in Europe and government interference in pricing policy in the US. The principal market for LNG became Japan, a country with no domestic supplies of petroleum products for energy generation. Some of these ships found employment five years or so later, some were scrapped, and some were converted. Today, the world fleet stands at 194 ships with 23.4 MMcm of capacity, including existing and new ships. Ships range in size from 55,000 cu m to approximately 140,000 cu m, with the most common being in the 125,000 to 138,000 cu m size.
As the fleet grew in size, containment systems polarized around three main systems in two generic types. In the independent system, the cargo tanks are supported within the cargo hold. They consist of manufactured aluminum spheres supported at the equator and with polyurethane foam insulation adhering to the tank. The main type is the spherical type designed by Moss, and a second type is the self-supporting prismatic designed by IHI.
With the membrane system, the tank follows the structure of the hold. The two main types are Gaz Transport, with a thin extruded invar membrane supported by plywood boxes filled with perlite for insulation, and Technigaz, with a stainless steel formed membrane supported by polyurethane foam insulation.
All containment systems have both a primary and secondary containment barrier. All are designed on the principle of leak before failure and will contain any leaking product for 15 days. The International Maritime Organization code for the carriage of liquefied gases in bulk specifies the design criterion for the ships. Normally, four tanks are designed in each ship, but there are ships with five tanks. It is likely that for the larger ships now on the drawing boards, a five-tank design will be adopted. For some green field projects, economies of scale are sought with much larger ships of up to 250,000 cu m.
The fleet began to grow again in the '90s as demand for shipments of LNG increased globally. Ships were expensive at this time at up to $350 million per vessel. In the late '90s, Daewoo Heavy Industries invested in an LNG ship factory concentrating on the Gaz Transport system. Ship prices have fallen to around $160 million each due to shipbuilders' increased competition and productivity.
Steam propulsion has been used by most LNG ships because the boil-off gas can be burned as fuel. As shipbuilders attempt to squeeze more capacity within the same hull dimensions, alternative propulsion systems are being proposed. Dual fuel diesels powering electric main propulsion motors are seen as one of a number of reliable and more economic alternatives to steam. The first ship with such equipment is now under construction.
Regasification of LNG
The regasification terminals primarily involve a simple heat exchanger, where the LNG is warmed from minus 160° C to plus 10° C. The regasification can be achieved in two ways – seawater exchange, called open rack vaporizers, and warm water baths, called submerged combustion vaporizers, that heat the water using natural gas. These methods are used at more than 95% of the existing regasification terminals. Other systems, such as combined heat and power are also used, especially if the facility can be integrated with a power plant, where significant synergy exists. The facility could also be integrated efficiently with any industrial facility.
There are over 40 LNG regasification terminals in operation, with expansions of several under way. There are an additional 50 in various stages of discussion, with over 40 for the North American market alone. Only a fraction of the proposed 40 terminals for the North American market are likely to come to fruition due to projected demand. The cost for a typical LNG terminal with a nominal send-out capacity of 1 bcf/d (7.5 MMTA) is $250-500 million. The primary drivers of cost are the number and type of LNG tanks and the necessity for a breakwater. Permitting and the "NIMBY" (not in my backyard) problem, especially in the US, are the reason many terminals under discussion will not be built.