LNG

By David Gardner, a partner at the specialist energy and shipping law firm Curtis Davis Garrard, and Joe McGladdery, an associate at Curtis David Garrard

The LNG industry is experiencing a period of dramatic growth. According to the US Energy Information Agency, the volume of LNG traded grew from 2996.31 billion cubic feet (bcf) in 1993 to 6453.64 bcf in 2004 .

In addition the pattern of LNG trading has altered.   Traditionally there has been a “chain” of long-term contracts linking for each project the gas producing, transportation and liquefaction infrastructure in each exporting country, with the purpose-built LNG tankers dedicated to that project, and the storage and regasification import terminal in the receiving country.

Dave Reif, Vice President, Global Hydrocarbon Business Development Emerson Process Management, and Mark Kennedy Director, Global Marine & LNG Emerson Process Management

Recognition of digital technology as an important means of improving process functionality is growing throughout industry. In today’s supply constrained LNG market where plant availability goals are 24/7-365, each hour of unplanned down time means unrecoverable lost revenue, and the potential for delivery penalties.

Afonso Reise Sousa and William Clark highlight what lenders look for in a bankable project

One of the characteristics that sets the LNG industry apart from other large-scale infrastructure groups is the sheer scale of capital required.

To get gas from reservoir to burner tip via LNG would, in the present market, require at least $5 to $10 billion in dedicated infrastructure. For some mega-scale projects presently being planned or under construction, the upstream and liquefaction costs alone have reached $20 billion.

David Wood and Saeid Mokhatab
David Wood & Associates, Lincoln, UK

Michael J. Economides
University of Houston

While natural gas, with some 23.5% of all world energy demand in 2005, is still slightly behind coal as the world’s third largest source of primary energy (oil still dominates), it is poised to move up because of significantly emerging new trade. 

Roger Read, a senior analyst in the Global Oil and Gas Service at brokerage house Natexis Bleichroeder, offers the LNG market his outlook for US natural gas prices over the next two years

The US natural gas market will be walking something of a tightrope during during 2007 and 2008.

We anticipate an increase in LNG imports over the course of the next two years – especially in 2008 – to end the decline we have witnessed over the last two years.

Michiel Mak, Senior Vice President LNG, Shell North America, in San Antonio, Texas

Any discussion of global supply trends must include the dynamics of the emerging LNG spot market. The spot market now accounts for 10 percent of LNG sales and while growing will remain the junior partner of the long-term market.

Of possibly greater significance is the development of diversion capability within long-term supply contracts. It enables suppliers and receivers to divert volumes at times of lower demand to a third party elsewhere.

Following are extracts from a study assessing the life-span of LNG carriers using the “Banshu Maru” commissioned in 1983

Behind the current new-building boom in the LNG carrier industry, it must not be forgotten that there exists a large fleet of older ships, many now reaching 20 years of age or more.

These have been well-maintained with appropriate management and budgets, resulting in an incomparable safety record.

Charles Hughes, ExxonMobil Development, and Renaud Le Devehat, FMC Technologies present one challenge faced in locating a terminal 15km offshore Italy

The majority of conventional LNG terminals are located in sheltered harbours or utilize a breakwater as protection from wave conditions that can cause berthed LNG carriers to undergo dynamic motions during cargo transfer.

At such locations, standard hydraulic controls are sufficient for safe manifold connection and disconnection of the loading arms. Arm motions after connection are also easily accommodated by standard swivel joints because movements are slow and not repeated constantly during cargo transfer.

A round-up of latest events, company and industry news

The UK Department for Trade and Industry is establishing standards for flow measurement as LNG imports to Britain are set to rise. Asaad Kenbar, of Scotland-based TUV NEL, explains the latest developments.

With the decline of natural gas from the North Sea, the UK is no longer self-sufficient in production and is reverting to being a net importer. The proportion of liquefied natural gas to pipeline gas is expected to grow in the years ahead.

Natural Gas is the largest element of the UK’s primary energy supply, and gas-fired power plants are the main method of power generation.