LNG

Last week, French engineering company, GTT signed a co-operation agreement with China Offshore Engineering & Technology, in Shanghai.

This marked a significant milestone in advancing solutions for FLNG and FSRU units, the company said.

Norwegian legislators voted against LNG plant electrification and prefer to have CCS

LNG News Editor

The Norwegian parliament, the Storting, has ordered the government to consider an alternative way to cut carbon emissions at Western Europe's largest liquefied natural gas export plant at Hammerfest and to consider the use of carbon capture instead of electrification.

State-owned oil and gas company Equinor and partners were seeking approval to replace the use of gas power at the plant and to instead use electricity from the national grid to help reduce emissions.

Island debate

The Hammerfest liquefaction plant is located on Melkøya island and Equinor had already submitted a plan for development and operation of the project to the Norwegian Ministry of Petroleum and Energy.

Electrification would have entailed replacing the current gas turbine generators at the Hammerfest plant with power brought from the shore.

Equinor’s Hammerfest project changes fell under the government programme to electrify major industrial operations to support compliance with the 2015 Paris Climate Agreement and required government assent.

The responses from local residents in northern Norway were mostly negative because of concerns about power shortages and other issues.

In a vote the parliament ordered Norway's minority centre-left government to assess carbon-capture and storage (CCS) as an alternative to electrification by 2029.

Norway’s parliament had debated the issue over the previous week. The oil and gas industry is strategic for the nation and produces multiple benefits so that developments are keenly debated in public, in the press and in parliament.

Three parliamentary motions to delay or abandon the electrification project, or otherwise reduce power output through the continued use of gas at the plant were filed by opposition parties.

The parliament's Standing Committee on Energy and the Environment then recommended that all these proposals be rejected.

A fourth proposal to evaluate the possibility of deploying CCS for the Hammerfest facility to reduce emissions instead of drawing power from the electricity grid was then presented and gathered majority support in the chamber.

The Hammerfest project was contentious with locals in Northern Norway who have stood up against green measures whatever the cost to people and many also sided with the rights of Indigenous Sami reindeer herders in the region.

The Sami herders said that they were worried that the power masts needed to transport the power as well as tunnels and other infrastructure would be built on reindeer pastures.

They also argued and were supported by many members of parliament that the sight and sounds from the huge masts and cables would frighten their animals and disrupt age-old traditions.

In addition, the upgrade would have seen high activity levels in the Hammerfest region, such as the construction of a tunnel and a transformer station as well as all the laying and setting of transmission cables.

Power concerns

The local people of the region were additionally concerned that the move would lead to a shortage of power as the Hammerfest plant would consume most of what was available and would prevent the establishment of new industries and future job creation.

Equinor had noted in December 2022 that electrification would have reduced carbon-dioxide emissions from the plant by around 850,000 tonnes per year.

Hammerfest produces 4.65 million tonnes per annum of LNG from a single liquefaction Train as well as 340,000 tonnes of liquefied petroleum gas and 730,000 tonnes of condensate.

The Snøhvit field serving the Hammerfest plant lies in the central part of the gas basin in the southern Barents Sea in water depths of 310-340 metres.

Snøhvit was the first field to be developed in the Barents Sea and the gas field comprises the Snøhvit, Albatross and Askeladd structures.

The licence owners of the Snøhvit field are operator Equinor along with Norway’s state body Petoro, French major TotalEnergies, Neptune Energy of the UK and Germany’s Wintershall Dea.

LNG News Editor

There is an enormous divide in charter rates in discussions for liquefied natural gas carriers up until September 2023 compared with October to December.

“Winter is clearly still expected to be very strong and the lack of shipping to cover that period is a demonstration of the unpredictability and uncertainty when it comes to what the rates may end up being,” according to the monthly LNG shipping report for April from London shipbrokers Simpson Spence Young (SSY).

Charter aims

“There remains, however a fundamental lack of independent length and should the market turn a bullish corner on the cargo side, much may change rapidly this summer,” SSY explained.

The brokerage noted that the months March and April in LNG shipping have historically often been “very tricky patches to navigate” if you have open tonnage, but the belief in a stronger second half of the year has not completely waned.

“Notably, every single period and type of ship today is trading at a premium versus this time 12 months ago. Spot, Term, East and West, 2 stroke, Steam is all better than in March 2022,” SSY stated.

“The long-term market also showed no sign of slowing as a European utility locked in two ten-year deals at record-breaking levels before the agreement fell through. However interest around the re-opened units resumed instantly,” added the report.

The SSY report also mentioned that the start of April was marked by the first ever “IE” week.

The report explained that International Energy week has replaced its predecessor International Petroleum week as the oil tanker market, and increasingly the LNG market, descended upon London to share thoughts and socialise.

“Following a slow week owing to this and a lethargic half-term period the market picked up again with several spot fixtures across both basins,” SSY said.

The report added that free-on-board tenders were hotly competed out of Egypt and Oman with a Chinese major winning two of these in a single week.

“Despite the action, spot rates remained flat, perhaps even suffering a slight decrease on the back of spot fixtures that saw multiple ships in contention for a single cargo,” SSY said.

“The action mainly leant in the favour of the Pacific in terms of activity despite no real sign of a Chinese resurgence for LNG demand,” the broker added.
Relet owners

“Relet owners often really struggled to find a cargo that was a suitable match against their length which saw many ships sit idle until ballasting to their next commitments, particularly in the Atlantic,” the report said.

The markets was summarised by the last EGAS FOB tender in Egypt being awarded to a player with their own shipping, reflecting ample length in the market and saw lower and lower rates being shown for sub-tender shipping awards.

“April at times felt barren of cargoes and May, despite being a bit beyond the fixing window, gave similar ominous signs,” SSY stated.

“The West to East arbitrage remained firmly shut, as commodity prices continued their downward trajectory. This resulted in the market continuing to being notably ‘intra’ basin,” said the report.

The primary and most interesting action remains, as has often been the narrative, on the multi-month and term market.

The report explained that a steam requirement in the Middle East was covered on a European Owner’s steam vessel for 70-plus up to 30 days at relatively healthy levels, pointing to the certain premium that Middle East loadings frequently command and showing the older ships still have a role to play for certain trades.

“A different steam vessel was also fixed for a 12-month charter to a European energy major with delivery down the line in the late third quarter,” SSY said.
Indian major

“An Indian oil major quoted the market for around 10 months after failing to get a vessel earlier in the year for 12 months. This kind of period has been fixed away in a plentiful amount this year, both from independent and relet owners, but in this instance the levels being shown seemed to have stalled progress for the charterers as they soon reverted back to quoting on a spot basis again,” said the report.

Gaztransport and Technigaz (GTT), the French LNG storage technology company for shipping and onshore, said it received its first order from a new partner, the Chinese shipyard China Merchants Heavy Industry in Jiangsu province, for the tank designs for four LNG carriers.

GTT will design the tanks of these four vessels, which will each offer a total cargo capacity of 180,000 cubic metres and would be fitted with the Mark III Flex membrane containment system.

Delivery dates

The delivery of the vessels to an as yet unnamed European owner is scheduled between the first quarter of 2026 and the first quarter of 2027.

“We are glad to receive this first order from China Merchants Heavy Industry-Jiangsu for the design of the tanks of four new LNG carriers,” said Philippe Berterottière, Chairman and Chief Executive of GTT.

“With this fifth shipyard, China confirms its growing role in the construction of LNG carriers and opens up new opportunities in a context of strong demand,” stated Berterottière.
Simple Hu, General Manager of China Merchants Industry Holdings, said the order for large-scale LNG carriers was the first for the Haimen shipyard in Jiangsu

“We are excited to turn our vision into reality, offering state-of-the-art vessels to the growing LNGC market,” he added.

“We highly appreciate the support provided by the GTT Group, whose experience was instrumental in the preparation and development of our solution,” he said.
GTT continues to expand its relationships with Chinese companies and shipyards with technology accords for maritime and onshore LNG tanks storage tanks.

PipeChina Engineering Technology Innovation Co. signed a cooperation agreement on April 6, 2023, for the evaluation and further promotion of GTT’s membrane containment technology for onshore LNG projects in China.

PipeChina Group is currently operating seven LNG receiving terminals in China and three new LNG import projects are under construction.

As the largest operator of LNG infrastructure in China, PipeChina said it was keen to expand its cooperation with GTT.

LNG News Editor

Venture Global LNG, the operator of the Calcasieu Pass export plant in Louisiana and developer of three other plants in the US Gulf Coast state, said it had successfully raised the roof of the second LNG storage tank at the Plaquemines LNG export project in Louisiana.

Venture Global, based in Arlington, Virginia, said the roof-raising was completed ahead of schedule and came just seven weeks after the roof-raising for tank one.

Four tanks

“This represents another major milestone in the construction of Plaquemines LNG, with both roofs now raised for the tanks serving Phase One,” said Michael Sabel, Chief Executive of Venture Global.

“With Phase One deep into construction and our recent final investment decision and full notice to proceed on Phase Two, Plaquemines is well positioned to be the next new major LNG capacity to reach the global market,” Sabel explained.

This is the second tank of four in total being constructed for Plaquemines, located on the banks of the Mississippi and south of New Orleans.

When operational each tank will be capable of storing 200,000 cubic metres of LNG.

“The roof weighs 900 tons and is 294 feet in diameter. Air raising allows for better and safer access as well as a faster construction schedule, as the roof can be erected concurrently with the shell. The tank dome was raised in 71 minutes using 0.3 psi of pressure underneath the roof,” the company said.

The company’s existing export plant, the Calcasieu Pass facility in Cameron Parish in Louisiana, is located south of the city of Lake Charles and shipped its first cargo at the start of March 2022.

The Calcasieu Pass facility comprises 18 small-scale modular liquefaction Trains each with 0.626 million tonnes per annum of capacity and configured in 9 blocks for total nameplate output of 11.26 MTPA.

However, Venture Global has plans for more future output of about 60 MTPA of LNG export capacity.

The company’s three other projects, including the CP2 (Calcasieu Pass 2) venture, are each expected to have nameplate capacity of around 20 MTPA.

As well as the Plaquemines plant there is the Delta LNG project to be constructed on a 540-acre site also in Plaquemines Parish on the banks of the Mississippi.

The US Department of Energy has given final approval after permit processes lasting more than a decade of the Alaska Gasline Development Corp. LNG export project to supply Asian nations with the state’s abundant North Slope gas.

The DoE Office for Fossil Energy and Carbon Management said AGDC’s project could export natural gas to countries with which the United States does not have a free trade agreement.

Moving forward

With the export licence approval from DoE and with all the environmental permits from the Federal Energy Regulatory Commission, the LNG export joint venture can now move forward.

The Alaska LNG project includes a liquefaction facility on the Kenai Peninsula in southcentral Alaska and a proposed 807-mile (1,300 kilometres) pipeline to move gas from northern Alaska across the state.

The project was first approved by the Administration of Donald Trump and the Biden Administration has now also concluded that there were large economic and international security benefits and that opponents had “failed to show the exports were not in the public interest” of the nation.

The Federal Energy Regulatory Commission (FERC) had prepared an Environmental Impact Statement that assessed the potential environmental impacts of the proposal to develop, construct, and operate facilities that would commercialize the North Slope resources.

The Biden Administration in January 2023 had also published the final Supplemental Impact Statement (SEIS) for the Alaska LNG project.

The final SEIS generally confirmed the conclusions of the draft SEIS published in June 2022.

The AGDC had said that the Biden Administration had already confirmed that Alaska LNG could deliver environmental benefits globally and provide environmental and socioeconomic benefits for Alaskans as the world “turns away from Russian energy” supplies.

Strong LNG demand is expected to create a gap in supply starting in 2028, which new projects like Alaska LNG are competing to fill.

The Biden Administration in March 2023 also approved the ConocoPhillips $7 billion Willow oil and gas drilling project on the North Slope.

Kinder Morgan Inc. (KMI) the leading US pipeline feed-gas company for liquefied natural gas plants and a key energy infrastructure developer, increased first-quarter net income and cash flow with more natural gas from the US Gulf Coast shale-gas basins.

The company reported first-quarter net income attributable to KMI of $679 million compared with $667M in the first three months of 2022.

“Our natural gas pipeline network is composed of some 70,000 miles of interstate and intrastate pipelines that move about 40 percent of US natural gas production,” explained Steve Kean, KMI Chief Executive.

“While the US Congress debates much-needed infrastructure permitting reform, the system we operate under today makes it difficult to permit new natural gas pipelines in much of the country,” Kean stated.

“That in turn increases the value of our existing natural gas pipeline systems, which results in a favorable recontracting environment,” the CEO added.

“With a large portion of our existing natural gas pipeline network in Texas and Louisiana, we also benefit from our ability to expand to meet growing demand in the most infrastructure-friendly region of the country,” Kean said.

KMI President Kim Dang gave an overview and praised the gas gathering systems for keeping the natural gas business on track.

“The Natural Gas Pipelines business segment’s financial performance was up in the first quarter of 2023 relative to the first quarter of 2022, primarily on higher contributions from our Texas Intrastate system, from Midcontinent Express Pipeline, from El Paso Natural Gas (EPNG) and from most of our gathering system assets,” explained Dang.

“Natural gas gathering volumes were up 18 percent from the first quarter of 2022 primarily from our Haynesville and Eagle Ford systems,” Dang said.

LNG News Editor
Baker Hughes, the US liquefied natural gas equipment-maker and energy services company, reported a first-quarter rise in orders, revenues and operating income as liquefaction projects advanced to construction.

The company orders during the three months to the end of March increased 12 percent year-on-year to $7.73 billion.

Baker Hughes revenues jumped by 18 percent to $5.71Bln versus $4.83Bln in the same three months of 2022.

Quarterly operating income surged by 57 percent to $438 million compared with $279M in the prior-year quarter.

Sabah LNG order

Baker Hughes was also awarded an order to be booked in the first quarter from US firm Black & Veatch, a subcontractor to Japan’s JGC and Samsung Heavy Industries of South Korea, to deliver two LM9000-driven compressor trains for the Petronas nearshore LNG facility in Sabah, Malaysia.

The company will provide two LM9000-powered compressor trains of 1 MTPA each. The contract also includes an order for spare parts.

“We were pleased with our first-quarter results and remain optimistic on the outlook for 2023,” said Lorenzo Simonelli, Baker Hughes Chairman and Chief Executive.

“We maintained our strong order momentum and delivered solid operating results at the high end of our guidance,” Simonelli added.

Baker Hughes said the Industrial & Energy Technology (IET) division saw “another excellent quarter” commercially.

“Gas Tech Equipment secured multiple LNG awards, including an order to supply two main refrigerant compressors (MRCs) for the North Field South project, which will be executed by

Qatargas,” said the company.

“The MRCs are part of two LNG ‘mega-trains’ representing 16 MTPA of additional capacity that is estimated to further boost Qatar’s LNG production capacity to 126 MTPA by 2027,” added Baker Hughes.

IET was also awarded an order by Bechtel to supply two MRCs for Sempra Infrastructure’s Port Arthur LNG Phase 1 project in Jefferson County, Texas.

“Baker Hughes will supply gas turbines and centrifugal compressors across two LNG Trains, for a nameplate capacity of approximately 13 MTPA, as well as two electric motor driven compressors for the plant’s boosting services,” it added.

The CEO noted that while 2023 had already started off with some macro volatility he remained optimistic on the outlook for energy services and Baker Hughes.

Simonelli stated that he continued to believe that the current environment “remains unique with a spending cycle that is more durable and less sensitive to commodity price swings” relative to prior cycles.

Angola order

“Another notable characteristic of this cycle is the continued shift towards the development of natural gas and LNG. As the world increasingly recognizes the crucial role natural gas will play in the energy transition, serving as both a transition and destination fuel, the case for a multi-decade growth opportunity in gas is steadily improving,” he stated.

The company’s Oilfield Services & Equipment (OFSE) division secured its largest subsea tree order in almost five years through a contract with Azule Energy in the Agogo oilfield offshore Angola in southwest Africa.

Baker Hughes will supply subsea equipment and services, including 23 subsea trees and 11 Aptara manifolds.

“A significant portion of the equipment manufacturing will be conducted in country, utilizing Baker Hughes' local facilities and workforce, which is a key condition of many contracts in the region,” said the company.

Qatar Gas Transport Company, known as Nakilat and with a liquefied natural gas LNG fleet of 69 vessels, has posted a 3.6 percent increase in first-quarter 2023 net profits.

Nakilat reported 396 million Qatari riyals ($108M) of net profit for the period to the end of March 2023, an increase on the 382M riyals achieved in the same three months of 2022.

As a shipping and maritime company, Nakilat provides an essential transportation link in the State of Qatar’s LNG supply chain.

Its LNG fleet is one of the largest in the world and the company also owns and manages one floating storage and regasification unit and four large liquefied petroleum gas (LPG) carriers as well as the ship repair and industrial and offshore fabrication facilities at Erhama Bin Jaber Al Jalahma Shipyard in Ras Laffan Industrial City.

The company also has strategic joint ventures with Nakilat-Keppel Offshore & Marine (N-KOM) and Qatar Fabrication Company (QFAB) and offers a full range of marine support services to vessels operating in Qatari waters.

Nakilat said that profits from the joint venture companies operating in LNG transportation and the shipyard increased by 7.9 percent.

“The increase in net profit can be attributed to the company’s continued focus on operational efficiency, effective cost management and robust market demand for its LNG shipping services,” Nakilat explained.

Nakilat's Chief Executive Abdullah Al-Sulaiti said that the strong financial performance in the first quarter was a reflection of the company’s continued efforts to optimize operations and capitalize on market opportunities.

“Despite the ongoing challenges facing the global economy and market volatility owing to high interest and inflation rates, we have remained resilient and achieved stable financial results,” added Al-Sulaiti.

TotalEnergies said it expected India’s newest LNG terminal, the onshore Dhamra facility located in the East Coast Indian state of Odisha, to start full commercial operations in May.

The Dhamra terminal is owned and operated by Adani-Total Private Limited (ATPL), a 50-50 joint venture between TotalEnergies and India's Adani conglomerate.
Qatari cargo

The first cargo delivery from Qatar at the start of April launched the commissioning process ahead of the full start-up.

“With regasification capacity of 5 million metric tons of LNG per year, the Dhamra LNG terminal adds more than 10 percent to India’s regasification capacity,” explained the French company.

It also strengthens the country’s position as the world's fifth-largest LNG importer and allows it to increase the share of natural gas in its energy mix from 8 percent to 15 percent by 2030.

“India wants to develop the use of natural gas to reduce the carbon intensity of its energy mix by replacing coal, and LNG can therefore meet growing domestic demand,” said Thomas Maurisse, Senior Vice President of LNG at TotalEnergies.

“The commissioning of the Dhamra terminal reflects TotalEnergies' ambition to support India’s energy transition and supply security,” Maurisse added.
TotalEnergies is an able partner for Adani as the world’s third-largest LNG player with a market share of around 12 percent and 50 MTPA of LNG in its global portfolio.

The Paris-based company also benefits from an integrated position across the LNG value chain, including production, transportation and with access to more than 20 MTPA of regasification capacity in Europe,

The new Dhamra terminal is India’s seventh and only the second on the East Coast.

By May the Dhamra opening will raise the total capacity of the seven import facilities to around 47.7 MTPA of LNG.