DOE LNG FORUM 14

Slide1: 

Kristi A. R. Darby Center for Energy Studies Louisiana State University LNG Facts – A Primer Presentation before US Department of Energy, Office of Fossil Energy, LNG Forums March 10, 2006

Slide2: 

What is Natural Gas? Background on LNG Why LNG? LNG Importers and Facilities Overview

Slide3: 

What is Natural Gas?

Slide4: 

The Natural Gas Industry Natural Gas Wells Gas Processing Plant Natural Gas Company Main Line Sales Production Transmission Distribution Consumers Source: Energy Information Administration, Department of Energy Underground Storage

Slide5: 

Residential Commercial Industrial - Furnace/Heat - Boiler/Steam Feedstock Power Generation Power Generation Natural Gas Natural gas important for all consumers Natural Gas Usage

Slide6: 

Natural Gas Stream Ethylene Propylene Butylene Xylene Toulene Natural gas is the basic building block of many household goods Components of Natural Gas Methane Ethane Propane Butane Paints Dry Cleaning Detergents Tires Toys Textiles Cosmetics Pharmaceuticals

Slide7: 

Background on LNG

Slide8: 

LNG History 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 19th century - British chemist and physicist Michael Faraday experimented with liquefying different types of gases 1873 - German engineer Karl van Linde built the first practical compressor refrigerator machine 1912 - First LNG plant built in West Virginia 1941- First commercial liquefication plant is built in Cleveland, Ohio January 1959 - The world's first LNG tanker, the Methane Pioneer carries LNG from Lake Charles, LA, to Canvey Island, UK 1969 - LNG exported from Kenai plant, AK to Japan 1981 – Lake Charles, LA import facility is built 1971 – Everett, MA import facility is built 1964 - British Gas Council imports from Algeria, making the UK the world's first LNG importer and Algeria the first exporter 1974 – Cove Point, MD import facility is built 1978 – Elba Island, GA import facility is built

Slide9: 

Properties of LNG Liquefied natural gas (LNG) is natural gas that has been turned into a liquid by cooling it to a temperature of -256°F at atmospheric pressure It consists of primarily methane (typically, at least 90 percent) LNG is odorless, colorless, non-corrosive and non-toxic Liquefying natural gas reduces its volume by a factor of approximately 610 LNG’s flammability range limits are 5 to 15 percent in air

Slide10: 

Total World Reserves of 6,079 Tcf Source: Energy Information Administration, Department of Energy Natural Gas Reserves by Country (2004) Considerable reserves around the world – just not in the areas where the gas is needed

Slide11: 

  Source: Cheniere LNG Industry Profile, http://www.cheniere.com/LNGIndustryProfile.htm. Cost out of Plant Total Investment: $2.2 to $3.6 billion $2.50 – $3.50 / MMBtu Gas Producer $0.5 to $1.0 billion $0.50 - $1.00 / MMBtu 23% of total cost Liquefaction $0.8 to $1.0 billion $0.80 - $1.00 / MMBtu 28% of total cost Shipping* $0.6 to $1.2 billion $0.65 - $1.60 / MMBtu 35% of total cost Receiving Terminal $300-$400 million $0.40 - $0.50 / MMBtu 14% of total cost Note: *depends upon the distance shipped Economic Sharing in the LNG Chain Regasification terminals are one small portion of the development of an overall LNG project

Slide12: 

  Source: Energy Information Administration; Federal Energy Regulatory Commission; Center for Energy Economics, BEG, UT-Austin; and Statoil.com. to fuel almost 2.5 percent of Massachusetts’s residential customers for 1 year (over 31,000 customers) to fuel 75 percent of Massachusetts's industrial plants for 1 month OR OR Assumptions: One 1 LNG tanker carries approximately 125,000 to 138,000 cubic meters of LNG, which will provide about 2.6 to 2.8 bcf of natural gas Average monthly power usage of 13.1 bcf; - Average monthly industrial usage of 3.98 MMcf to fuel over 20 percent of Massachusetts's natural gas fueled electric power plants for 1 month LNG Schematic: Production to End-User

Slide13: 

Gas Pipeline Boiloff Compressors Tank 1 Tank 2 Tank 3 Natural Gas LNG – Tanks to Vaporizers LNG – Ship to Tanks As LNG boils off, the gas is withdrawn from the tanks and compressed. As gas is required, pumps inside the tanks transfer LNG to the plant vaporizers. The plant vaporizers warm the LNG until it vaporizes. Receiving Terminal – LNG Gas Flow

Slide14: 

Types of Offshore LNG Receiving Terminals   source: elpaso.com Gravity Based Structure source: shell-usgp.com Onboard Vessel Regasification System (with submerged buoy) Floating Storage and Regasification Unit Source: lngsolutions.bhpbilliton.com

Slide15: 

Why LNG?

Slide16: 

Daily Henry Hub Prices (1998-Present) Source: Intercontinental Exchange Average through 2000: $2.89 (standard deviation: 1.46) average for period since 2000-2001 heating season: $5.55 (standard deviation: 2.44) Prices have changed dramatically since winter 2000-01 when markets for gas became exceptionally tight

Slide17: 

Natural Gas Productive Capacity and Utilization Source: EnergySeer.com Producers are at the limits of production capabilities Note: This is an approximation.

Slide18: 

U.S. Natural Gas Production and Monthly Rig Count (1997-Present) Source: Energy Information Administration, Department of Energy; and Baker-Hughes Inc. Despite increased drilling efforts, production is falling; The US is seeing decreasing drilling productivity 158 percent increase in rigs (Apr-99 to Jul-01) 3 percent increase in production (Aug-99 to Dec-01) 72 percent increase in rigs (Jan-03 to Nov-05) 3 percent decrease in production (Sep-04 to Nov-05)

Slide19: 

Source: Independent Petroleum Association of America Resource Estimates – Restricted Areas Estimated Percentage Restricted ANWR = 3.5 TCF ANS = 35 TCF Producers are drilling over the same areas despite several new areas being technically available

Slide20: 

US Natural Gas Market Status Pipeline Imports Pipeline Exports Limited Domestic Production In addition, the U.S. has limitations on importing natural gas from other parts of North America and it can’t be shipped in it’s natural form.

Slide21: 

LNG Worldwide Statistics

Slide22: 

LNG Worldwide Tanker Fleet (1965-2005) As of 2003, 151 LNG tankers were in operation worldwide Source: Energy Information Administration, Department of Energy 55 ships are currently under construction. The addition of new ships will raise total fleet capacity 44 percent from 17.4 million cubic meters, to 25.1 million cubic meters in 2006.

Slide23: 

LNG Importers and Facilities

Slide24: 

U. S. 3% Turkey 22% Greece 23% Puerto Rico 100% Central and South America 1% Mexico 0.02% Belgium 22% France 21% Spain 63% Portugal 18% Italy 9% Source: Energy Information Administration, Department of Energy Japan 92 % Taiwan 86% S. Korea 100 % World Importers of LNG: Imports as Percent of Total Natural Gas Consumption (2003)

Slide25: 

Lake Charles Elba Island Cove Point Everett Marine Terminal – Import (4) Storage (with liquefaction) (57) Storage (without liquefaction) (39) Stranded Utility (3) Vehicular Fuel (2) Nitrogen rejection unit or special processing (5) Source: Energy Information Administration, Department of Energy. A number of small LNG facilities throughout the US are used for peak shaving or to meet the needs of areas isolated from storage and/or pipeline infrastructure US LNG Facilities

Slide26: 

Current US LNG Import Terminals Source: Energy Information Administration, Department of Energy Elba Island, Georgia 7.3 Bcf Storage Capacity Regasification Capacity: Peak: 1.2 Bcf per day Baseload: 1 Bcf per day Cove Point, Maryland 7.8 Bcf Storage Capacity Regasification Capacity: Peak: 1 Bcf per day Baseload: 750 MMcf per day Everett, Massachusetts 3.5 Bcf Storage Capacity Regasification Capacity: Peak: 885 MMcf per day Baseload: 710 MMcf per day Lake Charles, Louisiana 6.3 Bcf Storage Capacity Regasification Capacity: Peak: 1.2 Bcf per day Baseload: 1 Bcf per day Gulf Gateway Energy Bridge No Storage Capacity Regasification Capacity: Peak & Baseload: 500 MMcf per day

Slide27: 

kdarby@lsu.edu www.enrg.lsu.edu Thank You