Differing market quality specs challenge LNG producers.docx

Differing market quality specs challenge LNG producers.docx

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DifferingmarketqualityspecschallengeLNGproducers

DifferingmarketqualityspecschallengeLNGproducers

DifferingmarketqualityspecschallengeLNGproducersTheemergenceofamorefluidLNGmarketandgrowingdemandforleanLNG（lowcalorificvalue）,especiallyintheUSandUK,areforcingLNGproducerstoaddressnewgasqualityissues.

ThisarticlereviewsthegasspecificationconstraintsinimportingcountriesandcomparesthemtocountriesthatproduceLNG.ThishighlightsthediscrepancybetweengasqualityinAsia,UK,andUS,aswellasthemismatchbetweencurrentlyproducedLNGandnewlean-gasmarkets.

ThisarticlealsopresentsacasestudythatprovidesabasisforglobaleconomicoptimizationalongtheentireLNGchain,includingshippingcosts.

Background

Inthepast,mostliquefactionplantsweredesignedtoserveclearlyidentifiedmarketsinlong-termsupplycontracts.ThesecontractsalsospecifiedtheparticularLNGqualityparametersthattheplanthadtomeet.

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TheemergenceofamorefluidLNGmarketandmoreLNGprojects,particularlyintheAtlanticBasin,meansthatLNGproducersnowreroutemorecargoesandenvisionmultipledestinationsforLNGfromasingleplant.

Inaddition,thereawakeningoftheNorthAmericanLNGmarket,alongwiththeemergenceofnewmarketssuchastheUK,isimposingnewconstraintsonthequalityofgasfordistributioninthoseregions.

SomelargeLNGproducersareclearlytargetingthesemarkets,whichmeansthattheywillsoonstarttounloadsignificantquantitiesofLNGproducedfromrichgasintoreceivingterminalsconnectedtolow-calorific-valuegaspipelinenetworks.

ProducersnowfacethedilemmaofwhethertoproduceanewleanLNGinadditiontorichLNGintendedforAsianmarkets,whichimpliesadditionalinvestment,ortoproduceLNGofonlyonequality.

TheterminaloperatormustdeterminewhethertoinvestinnitrogeninjectionorLPGextractionunitstobeabletoreceiveLNGcargoesfrommanydifferentsuppliers.Thesolutiondependsontheparticularsituationofeachcompany.

Gasspecifications,importingcountries

Ingeneral,qualityspecificationsforLNGunloadedatimportterminalsreflecttheconstraintsthatthenaturalgastransportanddistributionnetworksimposefurtherdownstream.

Thesespecificationsvaryagreatdealindifferentcountries,andindifferentnetworksincountrieswherethereareseveraldifferentcompaniesoperatingdistributionnetworks.Officialregulationsorthedistributionnetworkoperatorssetthesespecifications.

Theseregulationsandthevaluestheyspecify:

∙Ensurethatthedistributedgasisnoncorrosiveandnontoxic.ThissetstheupperlimitsforH2S,totalsulfur,CO2,andHg.

∙Guardagainstformationofliquidsorhydratesinthenetworksviamaximumvaluesforwaterandhydrocarbondewpoints.

∙Allowinterchangeabilityofthedistributedgasesvialimitsontherangeforparametersaffectingcombustionsuchasthecontentofinertgases,calorificvalue,WobbeIndex,sootindex,incompletecombustionfactor,yellowtipindex,etc.

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Tables1and2showthevaluesusuallyencounteredforthefirsttwocategoriesofspecifications.AllLNGcargoeseasilycomplywiththesespecificationsbecausetheliquefactionprocessitselfrequiresstringentpurificationofthefeedgas.

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Thisarticlefocusesonthethirdgroupofparametersrelatedtogascombustionandinterchangeability.TherearemajordiscrepanciesbetweenthecharacteristicsofsomeLNGcurrentlyproducedandthespecificationsforcertainnaturalgasnetworks,particularlyintheUSandUK.

Themostcommonparameterisgrosscalorificvalue,alsoknownasthehighheatingvalue.AllnetworksspecifyaminimumandmaximumforGCV.

TheWobbeIndex,whichistheGCVdividedbythesquarerootoftherelativedensity,isamorereliableindicatorofthecombustionpropertiesofagivengas.Thisindexisfrequentlyusedasaparameter,particularlyintheUK,forwhichtheupperlimitconstitutesamajorconstraintontheimportofrichgases.

Otherlimitsformaingascomponentsareaminimumamountofmethane,andmaximumamountsofethane,propane,butane,pentanesandheavier,andinertgases,particularlynitrogen,oxygen,andcarbondioxide.

ForGCV,existingnaturalgasnetworksconsistofthreemajorgroups:

∙Asia（Japan,Korea,Taiwan）,wherethedistributedgasisrich,withaGCVgreaterthan43millionJoules/cum（1,090btu/scf）.

∙UKandUS,wheredistributedgasislean,withaGCVusuallylessthan42millionJoules/cum（1,065btu/scf）.

∙ContinentalEurope,wheretheacceptableGCVrangeisquitewide—about39-46millionJoules/cum（990-1,160btu/scf）.

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Figs.1and2showseveralexamplesofcurrentGCVandWobbeIndexspecificationsforpipelinenetworks.ThereisadiscrepancybetweentheacceptableGCVrangesforAsiaandtheUS.ThisisalsotruefortheWobbeIndexinJapanandtheUK.ThisisthemainchallengeforLNGproducerswishingtoselltotheAsian,US,andUKmarketsatthesametime.

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Conversely,becausecontinentalEuropeancountrieshaveawiderangeofspecifications,LNGqualityisnotanissuethere.

Pasttrends,futuredevelopments

Ingeneral,countriesthatoriginallyinstalledgastransportnetworkstodistributeindigenousgasadoptedspecificationscorrespondingtothecharacteristicsofthatlocalgas.OnlylaterdidtheyhavetohandleimportedgasviapipelineorasLNG.

ButaneandpropaneareoftenextractedfromproducedgasandthenmarketedasLPG,forexample,intheUS,Mexico,andIndia.Insomecases,ethaneisalsoremovedforuseaspetrochemicalfeedstock（especiallytheUSGulfCoast）.

Inothercases,thelocalgasisnaturallylean,orhighinnitrogenorCO2,andfullremovaloftheseimpuritiesistoocostly.Manycountrieswiththissituationhavedomesticappliancesdesignedforleangas.

Japan,Korea,andTaiwanbasedtheirnaturalgasinfrastructureonimportedLNGfromthebeginning.TheysetspecificationsatthetopoftheGCVrangetomatchthegascharacteristicsfromtraditionalsuppliersintheMiddleEastandSoutheastAsia.Inthiscase,injectingLPGattheimportterminalcanadjustforanyqualitydifferencesintheLNG.

IncontinentalEurope,twodistinctdistributionnetworksweredeveloped,oneforleangasfromthelargeGroningenfieldintheNetherlandsandtheotherforhigh-GCVgasproducedlocallyorimportedfromAlgeria,Russia,orNorway.

Becausetherewasawiderangeofgasqualityfromdifferentsources,EuropeancountriesquicklyadoptedbroadspecificationrangesforGCVandWobbeIndextoallowthecross-bordertradethatwasnecessaryforimportingcountries.Thisalsomeantthatthestandardsapplicabletodomesticapplianceshadtobeadapted.

Europestillhasalean-gasnetwork,butitsgeographicalcoveragehasbeenconsiderablyreduced（Netherlands,Belgium,northernFrance）.ThisnetworkdoesnothandleimportedLNG.

Inmanycountries,thespecificationsforGCVandWobbeIndexarethereforemainlyforensuringthesafetyofdomesticgasappliances.Anysignificantchangeingasqualitywouldforcedomesticcustomerstoinstallnewburnersorbuynewappliances.

Environmentalconcernscanalsoleadtolimitsonthecalorificvalue.InCalifornia,theCaliforniaAirResourcesBoardforCompressedNaturalGashassetmaximumlevelsforC2H6（6%）andC3+（3%）,whichlimitstheGCVtoabout43millionJoules/cum.

Therewillbenorapidchangesingasspecifications,therefore,eventhoughtherearemanyregulatorymovesoccurring,inEuropeandtheUSparticularly,toharmonizeandbroadentheacceptablevalueranges,especiallytheWobbeIndex.

Forthegasnetworksthatdonotserveresidentialcustomersbutonlyindustrialusersandpowerplants,therefore,therecouldberapidchangesinnetworkspecifications.Acombined-cyclepowerplant,forexample,canadjusttoburndifferentqualitygasesiftheWobbeIndexdoesnotvarymorethan5%.

TheC3+contentspecifiedfortheMexicannetworkwasuntilrecentlyalowvalue;itwasimpossibletoimportanyLNGfromtheAtlanticBasin.Thisspecificationisnowcomplementedwithamaximumvalueforthehydrocarbondewpoint,setat–7°C.atnetworkoperatingpressure,whicheffectivelypreventstheformationofliquids.Thischange,however,isnotrelatedtothesafetyofgascombustioninresidentialappliances.

Existingliquefactionplants

Therearecurrently17liquefactionplantsoperatingworldwide.Onlytwoofthemhavelightfeedgas:

Conoco-Phillips,Kenai,Ala.,andAtlanticLNGCo.,TrinidadandTobago.Theothersfeedgaswithafairlyhighethane,butane,andpropanecontent,butonlyeightofthemareequippedwithNGLstrippingunits.

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Table3showstheproductiondetailsfromtheseplants.

ThefirstplanttoextractLPGandethanetomarketthemseparatelyfromLNGwasSonatrach'sSkikda,Algeria,plantcommissionedin1972.Theproducedethanefeedsaneighboringpetrochemicalsplant.Sincethen,nootherplanthasbeenequippedwithanethaneextractionunit.

Sinceitwascommissionedin1977,theAbuDhabiGasLiquefactionCo.Ltd.（Adgas）plant,DasIsland,hasremovedandexportedLPGinparallelwithLNG.Therichnessoftheplant'sfeedgas,whichmainlyconsistsofassociatedgas,madethisabsolutelynecessary.

ItwasalsotherichnessoftheassociatedgasusedasfeedgastoNigeriaLNGLtd.'sBonnyIslandplantthatledtheoperatortoaddLPGrecoveryandexportfacilities,startingwiththethirdtrain.

TheLPGextractionfacilitiesattheNorthWestShelfAustraliaLNGPty.Ltd