Tuesday, December 28, 2010

OGPSS - The trade in LNG

Just before the Christmas break the United Kingdom was going through some concerns over natural gas supply. Stored gas levels were falling and the National Grid posted a “Gas Balancing Alert” for only the second time since they were instituted. But there is no more urgent talk of such a problem – what happened?

Well the answer is that rescue, in the form of Liquefied Natural Gas (LNG) tankers came trundling over the horizon. Just this week the UK opened an expansion of the terminal at the Island of Grains that can now accommodate larger tankers, at the rate of 5 a week. LNG from the tankers to this terminal can now supply up to 20% of the national need for gas. But that is a little late for the past crisis (due to scheduling problems the first tanker won’t dock until next week) so where did the LNG come from, and where did it go ashore?

LNG tankers arriving at the Island of Grains and at the LNG terminals at Dragon and South Hook fed additional supplies into the grid.
Flows of LNG were at a total 100 million cu m/d Tuesday after South Hook ramped up 10 million cu m/d to 55 million cu m/d, Dragon was at 15 million cu m/d and Isle of Grain contributed 30 million cu m/d to the system. That is a total increase of 25 million cu m/d on levels Monday.

LNG is also going to be backed up by fresh deliveries in the next week, with UK port data showing three fresh LNG cargoes expected to berth at South Hook from Qatar in the next week, including the Umm Al Amad expected sometime Tuesday, the Mozah on December 23 and the Aamira on Boxing Day.
(The UK used 468 million cu.m. on Monday Dec 20th).

There is a growing global trade in LNG, and while most of this is committed to long-term contracts there is sufficient flexibility in the system so that when, unexpectedly, a nation may run short or a strike close a port, a tanker may be diverted. The South Hook terminal is 67.5% owned by Qatar Petroleum, and is part of a supply net that takes LNG from the Qatargas 2 train, and sends it to the Welsh terminal where it is re-gasified and fed into the National Grid. Dragon, which is also at Milford Haven, is a smaller terminal, and came on line in August 2009. The term “train” is used to describe a single processing line that produces LNG within an overall plant. Thus, for example, when BP expands its facility in Indonesia, the new plant will be called Train 2, to distinguish it from the existing line, which is train 1.

LNG tanker at the Dragon terminal

Once natural gas is produced from a well it must first be processed, and the non-gas liquids (NGLs) as well as water, carbon dioxide, and other contaminants removed so that a dry commercial gas can be sent on. Where the customer is not easily served by a pipeline (such as the case with gas from Qatar being supplied to the UK), the only viable option is to send the gas by ship. Given, however, that gas in its natural state is of low density, it is most practical to cool the gas down to the point where it liquefies. By lowering the temperature to -260 degF the gas turns into a liquid, and occupies 1/610th of the volume. This makes it much easier to store and transport, though it requires that the liquid be kept at that low temperature for the duration of the voyage.

Because the process involves three steps, liquefying the gas, transporting it in special tankers, and then feeding it through a re-gasification plant into a distribution network, the investment in each requires some assurance of a pre-existing market and agreement between the parties before the investments are made. Thus, for example, NTPC in India is now negotiating with Qatar on the supply of LNG in the future as insurance that, when a pipeline is laid from the re-gasification plant at Kochi to power plants at Kayamkulum, that a supply will be available for it. As with the Welsh plant, this can, to a degree, be assured by having Qatar as one of the partners in the project.

The parties likely agree, when making such a deal, to a fixed-price over a considerable time frame. South Korea, for example, is paying roughly $10 per kcf, somewhat above the current rate, but it will have that price for 20-years. Such an agreement may, however, make it difficult for the buyer to initially find customers in the years when that is a high price, as CNOOC found.

Qatar is the largest producer of LNG, having just announced a capacity for delivering 77 million tonnes of the liquid a year, which it currently delivers to 23 countries. This trade has grown from nothing to its current level in 14 years, with production centered around the port of Ras Laffan. (A tonne of LNG converts into 1,460 cu m of NG, or 51,600 cu. ft).

There are seven separate plants (trains) at Ras Laffan with the last having come on stream last February.
Ras Laffan 3 Train 7 is the fourth 7.8 million tons per year LNG plant brought online by Qatar Petroleum and ExxonMobil joint ventures within the past 12 months. It matches the capacity of Ras Laffan 3 Train 6, one of the largest operating LNG production facilities in the world, inaugurated in October 2009. These mega facilities have sufficient scale to competitively reach markets around the globe. Qatar's giant North Field, which is estimated to contain in excess of 900 trillion cubic feet of natural gas, will supply both trains.
Once the gas is liquefied it is transferred to one of a fleet of ships. The earlier ones had the characteristic spheres on board, as shown above, and, for example, Train 1 at Qatar uses a fleet of 10 of these to carry LNG to Japan, with a round trip taking a month. The more recent fleet is 80% larger and more efficient, this 32-vessel fleet carries LNG from Qatar trains 2, 3 and 4.

While there has been a growing market for LNG around the world, and re-gasification plants, such as those in Wales, are being developed in many countries (note the 23 countries that are customers to Qatar) the availability of LNG, with new facilities being planned in countries such as Australia likely means that there will be a continued relatively cheap supply available for a number of years. The consequences to the profitability of domestic production, such as shale gas in the USA, may become more questionable as a result.


  1. Just for clarification -- NGL conventionally means Natural Gas Liquids, i.e. hydrocarbon components which can be extracted from natural gas by manipulating pressure & temperature.

    We should not ignore the potential impact of human creativity on the demand for gas.

    US gas currently costs about 1/3 as much as oil on a Btu basis. Even South Korea's high LNG contract price is about 2/3 the cost of oil on a Btu basis. There is potentially a big prize in improved economic efficiency there, i.e. a lot of money to be made by finding ways to substitute gas for oil.

    Compressed Natural Gas (CNG) as a vehicle fuel is one obvious avenue, although there are a lot of associated issues with that. Gas-To-Liquids (GTL) could be a more economically feasible approach -- it is already technically feasible. Qatar (and others) have been working on GTL plants.

  2. Dịch vụ kế toán ACB chuyên cung cấp dich vu ke toan trọn gói uy tín chuyên nghiêp giá rẻ nhất tại HCM và các tỉnh lân cận với chi phí bỏ ra chỉ từ 500.000-1.500.000đ.
    Tri ân khách hàng, ACB giảm giá lên đến 50% giá trị hợp đồng khi doanh nghiệp trở thành đối tác của chúng tôi.
    Liên hệ: Dịch vụ kế toán , Dich vu ke toan .
    Lầu 4, Tòa nhà Long Mã, 602 Cộng Hòa,P.13,Q.Tân Bình,HCM.
    Hotline: (08) 62 97 97 97 - 0966 660 888.


  3. شركة تنظيف منازل بالدمام
    شركة تنظيف شقق بالدمام شركة تنظيف شقق بالدمام
    شركة مكافحة حشرات بالخبر شركة مكافحة حشرات بالخبر
    شركة رش مبيدات بالدمام شركة رش مبيدات بالدمام
    شركة تنظيف بالخبر شركة تنظيف بالخبر
    افضل شركة نقل عفش بالاحساء افضل شركة نقل عفش بالاحساء
    شركة كشف تسربات المياه بالاحساء شركة كشف تسربات المياه بالحساء

  4. Fastest Cars In The World We can measure automotive excellence in several ways, but top speed which a automobile can achieve is the one everyone secretly cares about the most

  5. "This photo is perfect except for background which is...". Well, let's say "bad". Have you ever thought like that? Probably, you even made an attempt or two to edit the picture with the ruined Photo Background Editor, to no avail. Surely, not all of us are designers or at least IT savvy. So, here is a way for the rest of humanity to change the back scene of any photograph – the Photo Scissors online tool.

  6. Nearbest10 is a participant in the Amazon Services LLC Associates Program which is an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com. Amazon, the Amazon logo, AmazonSupply, and the AmazonSupply logo are trademarks of Amazon.com, Inc. or its affiliate.

  7. Gypsum designer providing innovative building solutions to meet the demands of customers for sustainable performance solutions. Gypsum designer Inc. is a key resource for architects, contractors, and design professionals.

  8. Photo Retouching is one of the most impressive services in photo editing. It helps to bring a positive vibe and look on the photos. Most of the end-level users are in great needs of Photo Retouching Services. But you need to be careful while selecting the best one.
    Chat conversation end
    Type a message...


  9. Logo is the the symbol or representation of an Organization or company that identify that organization. Logo designing is to create that symbol..Logo Desging Adobe illustrator or photoshop is a powerful tool for logo designing. A suitable logo represents the activities, motive, aim of that organization in a visual way simply.

  10. Clipping path service is one kind of image editing Process where we select a important portion of an image and cut the unimportant part Clipping path We can delete the background or change background color to make it more attractive.

  11. We are providing background removal service for your business.
    Are you professional photographers, photography agencies, eCommerce retailers? If so Orbit Graphics is the right co-partner for your eCommerce product photo editing solutions including background removal service.

  12. Cisco VPN Specialists must have the expertise of SSL VPN to analyze and troubleshoot issues. They don the role of subject matter experts when it comes to multiple networks and Endpoint related systems.

  13. network operations center monitoring software

    NOC management has five essential elements known as tools which are a vital element toward improvement.

  14. Amazing, exceptionally useful post I cherished it and wish to see more posts like that structure this blog. as of late I composed an article about photography on the off chance that anybody is keen on photography you can peruse it by clicking here.