By Judy Clark
Associate Editor
HOUSTON, May 7 -- A major focus of this year's Offshore Technology Conference in Houston is on developing technologies to recover and deliver stranded natural gas reserves from deepwater or remote, small-reservoir gas fields.
Worldwide there is more than 200 tcf of stranded gas that is out of the economical reach of pipelines, said Al Kaplan of Arup Energy, the offshore engineering unit of Over Arup & Partners, London. That gas is awaiting recovery via the development of such innovative facilities as:
-- Floating gas production, storage, and offloading vessels (GFPSOs) for recovering and processing natural gas, then storing and offloading it in the form of LNG or compressed natural gas (CNG).
-- Floating concrete substructures designed for offshore LNG production and storage.
-- Offshore LNG regasification facilities and subsea storage in salt domes.
-- CNG shipping vessels.
"Last year there was talk of developing 5-20 new (LNG) terminals in the US," said William Sember, vice-president of offshore development with the American Bureau of Shipping (ABS). "These are a number of locations that are becoming more developed, and the possibility is becoming very real," he said. "In the US there are two applications that have been filed: one by ChevronTexaco Corp. (OGJ. Dec. 9, 2002, p. 8) and the other by El Paso Corp. (OGJ Online, Dec. 26, 2002).
Sember was one of a panel of seven speakers at a press conference Monday, most of whom were to present technical papers Wednesday afternoon at a panel session on gas transportation and offloading showcasing offshore LNG and CNG facilities and processes.
Sember said drivers for LNG development include a continuing demand for clean-burning fuel and concerns about long-term US gas supply, both of which have increased the need to secure these reserves. "LNG infrastructure costs today are lower than they were a decade ago," he said, and safety and security concerns about locating LNG facilities in populated areas are prompting the industry to find offshore LNG terminals more attractive as an option.
"(These options) will be a fact of life 4-5 years from now," agreed Jaap de Baan of Bluewater Energy Services BV.
GFPSOs
"The concept of a GFPSO is technically and commercially feasible," said Jan Wagner, technical director for Fluor Canada, "And there are technically proven options available for production of stranded dry gas reserves." GFPSOs could be moved from one field to another to recover and process associated gas or remote gas reserves. The vessel essentially would be a floating gas production and conditioning facility, with its principal export products liquid LPG and condensate and pipeline quality residue gas.
"Transport of the residue gas remains the biggest problem facing implementation of a GFPSO," Wagner said. He said the gas could be transported or readied for transport by one of four generic methods:
-- By pipeline in the gas phase.
-- Gas volume reduction through liquefaction or compression.
-- Conversion of natural gas to another form of energy such as electric power and exporting it via subsea cable.
-- Gas-to-liquid conversion of the "methane molecule" to a liquid such as methanol.
Wagner said the pipeline and LNG options tended to show a tradeoff beginning at a distance of about 2,000 km from the market.
"CNG appears to be the best option (econimically), but we don't have a commercial application to date," Wagner said after comparing the four options. The CNG option "demonstrates the lowest overall investment for the operator," he said, but only on the assumption that CNG ships are available. "Since none of these ships has yet been built, the economics of the initial CNG projects will reflect the capital costs of the ships in some manner."
"A GFPSO project can be expected in the not-too-distant future," Wagner said.
John Dunlop of Enersea Transport LLC agreed, saying that Enersea, its strategic partners, and ABS over the past year have worked to develop and verify "the world's first" safe, practical ship design for a CNG marine transport system, which Dunlop said is now ready for commercialization.
The proposed CNG ships, with projected capacities of 525 MMscf-1 bcf, are called volume-optimized transport and storage gas handling (Votrans) vessels. Dunlop said the Votrans contain complete, "wall-to-wall" production facilities that can process both rich and lean associated gas and gas in risky areas and in deep water with a 60-100% increase in gas storage efficiency.
"LNG requires 2-3 times as much energy per unit of energy delivered (through liquefaction, boil-off, and regasification) compared with CNG and pipelines," the partners said. "But CNG ships are more costly per unit of gas transported compared with LNG ships, because the cargo density is low, so CNG transport schemes are conceived to keep the ships at sea, without entering ports," to minimize round trip cycle time.
Dunlop said the vessels would be useful for producing stranded gas reserves in locations off Newfoundland and Latin America and in the Caribbean. The flexibility of moving to a new location after a field is exhausted is a great benefit, he said.
Offshore LNG terminals
Nearshore and offshore LNG terminals comprise a marine transfer system in combination with a regasification plant and a salt dome storage cavern. Although the concept is new, all components used are already proven and have been applied in LNG terminals and offshore loading systems for a long time, De Baan said, and design work to date shows that the transfer system, regasification, and salt cavern-based storage options are fully feasible.
Offshore and nearshore LNG terminals fill a need for the supply of LNG—the fastest-growing hydrocarbon fuel—when conditions are unfavorable for onshore terminals. The most dominant advantages of LNG offshore terminals are the lower costs for construction and operation—no need for dredging—avoidance of congested shipping or mooring concerns and congested ports, and security and cost considerations.
Salt caverns can be solution-mined in less time and about one fifth the cost of constructing cryogenic tanks, resulting in lower capital expenditures and a shorter construction schedule, Bluewater said. Permitting will be quicker as well.
"There are more than 400 salt caverns in the (upper Gulf of Mexico) area," said Mike McCall, president and CEO of Conversion Gas Imports LLC. CGI is participating in a cooperative research project to define, describe, and validate a process to use a salt cavern to receive and store regasified LNG.
"The process involves receiving LNG from a ship, pumping it up to cavern injection pressures, warming it to cavern-compatible temperatures, injecting the warmed vapor directly into salt caverns for storage, and distribution to the pipeline network," CGI said.
Bluewater said it has developed a whole suite of LNG transfer-option concepts, including tandem, side-by-side, and single-point mooring system transfers to accommodate variances in water depth and environmental conditions, but all concepts share a common philosophy, the company said.
"Very few energy companies apply sufficient resources to solving 'tomorrow's' problem," De Baan said. He said he wanted to "provide the LNG industry with insight and confidence that mooring and fluid transfer technology as applied to the 'oil industry' also applies to their business."
CFPSOs studied
As governments and operators research the potential of floating LNG production facilities, they are investigating FPSO hulls made of concrete (CFPSOs) as well as hulls of steel.
"Both are viable," Kaplan said. The concrete structure would be used for liquefaction application, not as a terminal, he added. "However, (the use of concrete) requires a substantial amount of work before it comes to the fore," Kaplan said. One of the biggest challenges associated with floating concrete FPSOs for natural gas production and storage, Kaplan said, is designing the loading systems.
In addition, "Design codes are not established yet, tankage cost and safety issues need to be addressed, and financial institutions must be satisfied."
However, concrete substructures also offer advantages for the support of cryogenic facilities that are not found on steel structures. The deck area is sufficiently large to allow topside facilities to be configured with some modularization and preassembly, using vendor-supplied skids, and they can be built using locally procured materials and labor.
A concrete structure would be about 200 m wide by 300 m long with tanks in the bottom and processing and offloading facilities on top. Kaplan said. One safety advantage would be the 1 m thick walls that would protect against vessel impact and dropped objects. Superior cryogenic performance would be a plus for concrete as well, as would the superior stability and low motion in extreme environmental conditions due to the structure's wide beam.
A 9 million tonne/year LNG production CFPSO is being developed to support a two-train LNG facility for use at a stranded gas location off West Africa. It is expected to be completed within 43 months of engineering, procurement, installation, and commissioning contract signing, Kaplan said.
New regulatory issues
Important regulatory changes now affect offshore LNG and CNG facilities classification, siting, construction, operation, and maintenance, Sember said.
For example, the Maritime Transportation Security Act of 2002, which President George W. Bush signed last November, amended the Deepwater Port Act of 1974 to include natural gas, fundamentally altering the regulatory process for offshore LNG terminals.
In addition, the US Coast Guard will now share with the US Maritime Administration, rather than the Federal Energy Regulatory Commission, the primary responsibility for regulating these offshore facilities—with other federal agencies and the involved states playing subsidiary roles.
ABA has a liaison with the regulatory agencies and has proposed combining current regulations with classification society guidance to develop appropriate design, construction, and operational requirements for offshore LNG terminals. Such a process, Sember said, may be helpful in expediting regulatory approvals.
