LNG costs falling as demand climbs, says Phillips Petroleum executive

Sam Fletcher
OGJ Online

HOUSTON, Feb. 7 -- As world demand for liquefied natural gas grows, its costs are becoming cheaper through more efficient operations that reduce costs for both plants and marine tankers, said the head of LNG business development for Phillips Petroleum Co. at a natural gas storage meeting Thursday in Houston.

Competition among builders is driving down costs for both greenfield LNG plants and vessels, said Kevin Fabry, Phillips' manager for gas and LNG ventures, at the meeting organized by Ziff Energy Group of Calgary. The more efficient operations of larger plant trains also provide cost reductions, while operational changes can produce cost savings.

"LNG shipping has been inefficient in the past, with tankers going over loaded and coming back empty," Fabry said. Finding other cargoes for the return trip could help defray those costs.

The "recovery of LNG cold" for other industrial use could further drive down costs, said Fabry. LNG is liquefied at -260° F. Fabry said the Japanese have succeeded in "capturing" that sub-zero temperature for other commercial uses such as freezing fish.

World demand for LNG has grown in recent years at an annual rate of 10% to 120 tonnes/year, or 17 bcfd. It is expected to remain strong at 8%/year through 2005, with new markets developing in China, India, and Mexico, said Fabry.

However, he said, development of new LNG terminals will be "challenged" by public misperceptions and fears that triggered a 20-day ban by the US Coast Guard of LNG imports through Boston harbor to the oldest operating US terminal in the wake of the Sept. 11 terrorist attacks in this country (OGJ Online, Oct. 16, 2001). Similar concerns also caused local opposition to the reactivation of Cove Point, Md., LNG terminal that is scheduled this year, Fabry said.

Federal officials found no safety problems and authorized resumptions of LNG imports in both cases, he said.

Shipment and use of LNG is safer than the more volatile propane or other liquefied petroleum gas. The industry needs to do a better job of communicating that to the public, Fabry acknowledged.

Meanwhile, others are looking at new alternatives for transporting natural gas and storing it near or even at power plants and other industrial sites.

Glenn Kelly, president of Intragaz Inc., is looking at lining rock caverns with steel to provide natural gas storage capacity. That technology is feasible, although "there are still challenges facing it," he said.

Paul Britton, managing director of EnerSea Transport LLC, said his firm has completed preliminary engineering and economic studies for transport and above-ground scalable storage of compressed gas at plant sites.

That gas would be chilled to sub-zero temperatures to reduce pressure-requirements for the steel cylinders in which it would be stored, but not to the lower extremes required for LNG.

Transport vessels using that technology could be used to market stranded gas reserves that otherwise would be uneconomic. The storage facilities would help meet the peak demand of facilities in areas with limited pipeline capacity and alternative storage, Britton said.

Contact Sam Fletcher at samf@ogjonline.com

Related Articles

PHMSA proposes pipeline accident notification regulations

07/02/2015 The US Pipeline and Hazardous Materials Safety Administration has proposed new federal oil and gas pipeline accident and notification regulations. ...

Quicksilver Canada gets LNG export approval

07/02/2015 Quicksilver Resources Canada Inc. has received approval from the National Energy Board of Canada to export 20 million tonnes/year of LNG from a pos...

Origin lets contract for Otway basin fields

07/02/2015 Origin Energy Ltd., Sydney, has let a $1.3 million (Aus.) contract to Wood Group Kenny for provision of a detailed engineering design for the onsho...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...

Shell makes FID on Appomattox deepwater development in Gulf of Mexico

07/01/2015 Royal Dutch Shell PLC has taken a final investment decision (FID) on the Appomattox deepwater development, authorizing construction and installatio...

Woodside-led Browse FLNG venture enters FEED phase

07/01/2015 The Woodside Petroleum Ltd.-led Browse LNG joint venture has entered the front-end engineering and design phase for a floating LNG (FLNG) developme...

Case for Keystone XL has grown stronger, TransCanada tells Kerry

06/30/2015 Canada is taking strong steps toward combating climate change, and the proposed Keystone XL pipeline crude oil pipeline remains in the US national ...

Lytle named to Canada’s National Energy Board

06/30/2015

Murray Lytle has been appointed as a full-time member of Canada’s National Energy Board for a term of 7 years, effective July 6.

White Papers

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by
Available Webcasts


OGJ's Midyear Forecast 2015

When Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST



On Demand

Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST


Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected