Differing market quality specs challenge LNG producers.docx

1、Differing market quality specs challenge LNG producersDiffering market quality specs challenge LNG producersDiffering market quality specs challenge LNG producersThe emergence of a more fluid LNG market and growing demand for lean LNG (low calorific value), especially in the US and UK, are forcing L

2、NG producers to address new gas quality issues.This article reviews the gas specification constraints in importing countries and compares them to countries that produce LNG. This highlights the discrepancy between gas quality in Asia, UK, and US, as well as the mismatch between currently produced LN

3、G and new lean-gas markets.This article also presents a case study that provides a basis for global economic optimization along the entire LNG chain, including shipping costs.BackgroundIn the past, most liquefaction plants were designed to serve clearly identified markets in long-term supply contrac

4、ts. These contracts also specified the particular LNG quality parameters that the plant had to meet.Click here to enlarge imageThe emergence of a more fluid LNG market and more LNG projects, particularly in the Atlantic Basin, means that LNG producers now reroute more cargoes and envision multiple d

5、estinations for LNG from a single plant.In addition, the reawakening of the North American LNG market, along with the emergence of new markets such as the UK, is imposing new constraints on the quality of gas for distribution in those regions.Some large LNG producers are clearly targeting these mark

6、ets, which means that they will soon start to unload significant quantities of LNG produced from rich gas into receiving terminals connected to low-calorific-value gas pipeline networks.Producers now face the dilemma of whether to produce a new lean LNG in addition to rich LNG intended for Asian mar

7、kets, which implies additional investment, or to produce LNG of only one quality.The terminal operator must determine whether to invest in nitrogen injection or LPG extraction units to be able to receive LNG cargoes from many different suppliers. The solution depends on the particular situation of e

8、ach company.Gas specifications, importing countriesIn general, quality specifications for LNG unloaded at import terminals reflect the constraints that the natural gas transport and distribution networks impose further downstream.These specifications vary a great deal in different countries, and in

9、different networks in countries where there are several different companies operating distribution networks. Official regulations or the distribution network operators set these specifications.These regulations and the values they specify: Ensure that the distributed gas is noncorrosive and nontoxic

10、. This sets the upper limits for H2S, total sulfur, CO2, and Hg. Guard against formation of liquids or hydrates in the networks via maximum values for water and hydrocarbon dew points. Allow interchangeability of the distributed gases via limits on the range for parameters affecting combustion such

11、as the content of inert gases, calorific value, Wobbe Index, soot index, incomplete combustion factor, yellow tip index, etc.Click here to enlarge imageTables 1 and 2 show the values usually encountered for the first two categories of specifications. All LNG cargoes easily comply with these specific

12、ations because the liquefaction process itself requires stringent purification of the feed gas.Click here to enlarge imageThis article focuses on the third group of parameters related to gas combustion and interchangeability. There are major discrepancies between the characteristics of some LNG curr

13、ently produced and the specifications for certain natural gas networks, particularly in the US and UK.The most common parameter is gross calorific value, also known as the high heating value. All networks specify a minimum and maximum for GCV.The Wobbe Index, which is the GCV divided by the square r

14、oot of the relative density, is a more reliable indicator of the combustion properties of a given gas. This index is frequently used as a parameter, particularly in the UK, for which the upper limit constitutes a major constraint on the import of rich gases.Other limits for main gas components are a

15、 minimum amount of methane, and maximum amounts of ethane, propane, butane, pentanes and heavier, and inert gases, particularly nitrogen, oxygen, and carbon dioxide.For GCV, existing natural gas networks consist of three major groups: Asia (Japan, Korea, Taiwan), where the distributed gas is rich, w

16、ith a GCV greater than 43 million Joules/cu m (1,090 btu/scf). UK and US, where distributed gas is lean, with a GCV usually less than 42 million Joules/cu m (1,065 btu/scf). Continental Europe, where the acceptable GCV range is quite wideabout 39-46 million Joules/cu m (990-1,160 btu/scf).Click here

17、 to enlarge imageFigs. 1 and 2 show several examples of current GCV and Wobbe Index specifications for pipeline networks. There is a discrepancy between the acceptable GCV ranges for Asia and the US. This is also true for the Wobbe Index in Japan and the UK. This is the main challenge for LNG produc

18、ers wishing to sell to the Asian, US, and UK markets at the same time.Click here to enlarge imageConversely, because continental European countries have a wide range of specifications, LNG quality is not an issue there.Past trends, future developmentsIn general, countries that originally installed g

19、as transport networks to distribute indigenous gas adopted specifications corresponding to the characteristics of that local gas. Only later did they have to handle imported gas via pipeline or as LNG.Butane and propane are often extracted from produced gas and then marketed as LPG, for example, in

20、the US, Mexico, and India. In some cases, ethane is also removed for use as petrochemical feedstock (especially the US Gulf Coast).In other cases, the local gas is naturally lean, or high in nitrogen or CO2, and full removal of these impurities is too costly. Many countries with this situation have

21、domestic appliances designed for lean gas.Japan, Korea, and Taiwan based their natural gas infrastructure on imported LNG from the beginning. They set specifications at the top of the GCV range to match the gas characteristics from traditional suppliers in the Middle East and Southeast Asia. In this

22、 case, injecting LPG at the import terminal can adjust for any quality differences in the LNG.In continental Europe, two distinct distribution networks were developed, one for lean gas from the large Groningen field in the Netherlands and the other for high-GCV gas produced locally or imported from

23、Algeria, Russia, or Norway.Because there was a wide range of gas quality from different sources, European countries quickly adopted broad specification ranges for GCV and Wobbe Index to allow the cross-border trade that was necessary for importing countries. This also meant that the standards applic

24、able to domestic appliances had to be adapted.Europe still has a lean-gas network, but its geographical coverage has been considerably reduced (Netherlands, Belgium, northern France). This network does not handle imported LNG.In many countries, the specifications for GCV and Wobbe Index are therefor

25、e mainly for ensuring the safety of domestic gas appliances. Any significant change in gas quality would force domestic customers to install new burners or buy new appliances.Environmental concerns can also lead to limits on the calorific value. In California, the California Air Resources Board for

26、Compressed Natural Gas has set maximum levels for C2H6 (6%) and C3+ (3%), which limits the GCV to about 43 million Joules/cu m.There will be no rapid changes in gas specifications, therefore, even though there are many regulatory moves occurring, in Europe and the US particularly, to harmonize and b

27、roaden the acceptable value ranges, especially the Wobbe Index.For the gas networks that do not serve residential customers but only industrial users and power plants, therefore, there could be rapid changes in network specifications. A combined-cycle power plant, for example, can adjust to burn dif

28、ferent quality gases if the Wobbe Index does not vary more than 5%.The C3+ content specified for the Mexican network was until recently a low value; it was impossible to import any LNG from the Atlantic Basin. This specification is now complemented with a maximum value for the hydrocarbon dewpoint,

29、set at 7 C. at network operating pressure, which effectively prevents the formation of liquids. This change, however, is not related to the safety of gas combustion in residential appliances.Existing liquefaction plantsThere are currently 17 liquefaction plants operating worldwide. Only two of them

30、have light feed gas: Conoco- Phillips, Kenai, Ala., and Atlantic LNG Co., Trinidad and Tobago. The others feed gas with a fairly high ethane, butane, and propane content, but only eight of them are equipped with NGL stripping units.Click here to enlarge imageTable 3 shows the production details from

31、 these plants.The first plant to extract LPG and ethane to market them separately from LNG was Sonatrachs Skikda, Algeria, plant commissioned in 1972. The produced ethane feeds a neighboring petrochemicals plant. Since then, no other plant has been equipped with an ethane extraction unit.Since it wa

32、s commissioned in 1977, the Abu Dhabi Gas Liquefaction Co. Ltd. (Adgas) plant, Das Island, has removed and exported LPG in parallel with LNG. The richness of the plants feed gas, which mainly consists of associated gas, made this absolutely necessary.It was also the richness of the associated gas used as feed gas to Nigeria LNG Ltd.s Bonny Island plant that led the operator to add LPG recovery and export facilities, starting with the third train.The LPG extraction facilities at the North West Shelf Australia LNG Pty. Ltd