PARIS, Oct. 21 -- Regasification could well become the bottleneck at the end of the LNG chain as the lack of availability of worldwide LNG production and methane carriers is being curtailed by growing competition among regasification players as well as public opposition to terminal construction.
Such problems also could increase the cost of what is "a simple process, compared to liquefaction" and "a modest part of the LNG chain�only 10% of the overall cost of about 3.9 billion euros including eight 145,000 cu m carriers," according to Alain Goy, head of LNG for Gaz de France's Transport Directorate. Goy spoke at a recent conference in Paris organized by the Association Française du Pétrole.
France's LNG projects
GDF, Goy reminded his listeners, has 40 years of LNG experience, which includes the construction of three terminals in France since 1989 (of which only two remain), the safe uploading of 7,000 methane carriers, the supply of 25% of France's natural gas in the form of LNG, and various international partnerships where it has trained operators and taken part in LNG developments abroad.
GDF's most recent regasification involvements are the Dahej regasification terminal on India's northwest coast, where an innovative process was installed using ambient hot air. Also, GDF currently is involved with the construction of a new near-offshore regasification terminal at Fos Cavaou, which has a landing stage slightly off France's Mediterranean coast.
In Europe, where construction of about a dozen methane tanker terminals are being planned to be added to the 11 existing ones, the ongoing liberalization of the natural gas market is changing matters for receiving operators.
The unbundling of the gas sales and infrastructure businesses also includes LNG terminals.
There also is a regulated regasification tariff available for the cosigner client since 2000.
In addition, there is much pressure being exercised to achieve greater market fluidity. "Therefore", explained Goy, "terminals must have spare capacity available...with no guarantee at the design stage that it will be actually used. If a terminal's full capacity is not used, there cannot be a minimum cost for a regasification contract."
Competition is also growing at the regasification stage. Areas of competition include: similar projects that would serve the same geographic area; companies reserving LNG capacity; and upstream producers eyeing the downstream receiving link. All of these factors could produce bottlenecks until LNG production and the methane carriers to transport it become increasingly available.
Goy also pointed to the mounting physical obstacles to the installation of regasification terminals.
Besides the "not in my backyard" mentality recently compounded by the public's increasing security fears and its sensitivity to possible pollution, there is the need to find sheltered harbors for importing countries given voluntary limits to eligible sites.
Goy listed the many failures in establishing regasification terminals: In 1995, the Italian public voted against the Montalto de Castro terminal siting as well as the planned Monfalcone terminal; in 1998, there was rejection of the offshore North Taiwan terminal; and in 2003, plans were withdrawn for US terminals in East Harswell, Me., and West Vallejo, Calif.
Implementation of some current projects also are far from clear, Goy noted. For example, a terminal in Long Beach, Calif., was stalled by conflicting jurisdictions; a terminal in Freeport, Tex., was held up by required design changes posed by the US Federal Energy Regulatory Commission; a terminal in Izmir, Turkey, was held up by delayed deregulation of the Turkish gas market; and a terminal in Baja California in Mexico was held up by a surfeit of projects there.
Clearing these obstacles has a cost, Goy pointed out. Projects are moved elsewhere, as from the US to Mexico, the Bahamas, or Canada, with an impact on network connections. Also, existing sites are extended with consequences on downstream networks, and sites are converted or industrial wasteland is reused.
In addition, new regasification models are being developed that are geared toward limiting their local impact. Examples include offshore terminal projects such as the gravity-based structures in the Gulf of Mexico's Port Pelican and Gulf landings.
Regarding tanker design, the regasification methane carrier now being developed for spot gas sales uses a floating umbilical that hooks to the underside of the vessel.
One disadvantage to the new carrier is that it is required to be immobilized for 130 hr during the regasification and transfer process. This compares with the 12-hr turnaround time of a conventional carrier.
According to Goy, there are two such regasification carriers now being built in South Korea, both due on stream sometime in 2005.