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Guest Post: LNG - The Holy Grail Of Gas Investments

Tyler Durden's picture




 

Submitted by James Stafford of OilPrice.com,

Liquefied natural gas (LNG) technology—from LNG seaborne tankers and LNG trains to floating LNG facilities have quickly gone from concept to commercialization, opening up new possibilities in new frontiers and rendering the remote—well, much less remote.

Analysts say FLNG terminals will become a major growth market within the next couple of years, as they offer more flexibility than stationary terminals.
 
Liquefaction of natural gas is the process of super-cooling natural gas to minus 260 degrees Fahrenheit (minus 162 degrees Celsius) at which point it becomes much safer and easier to transport. After its been shipped to its destination, regasification plants at importing or receiving terminals return the fuel to a gaseous state.

A lot of money is being dumped into LNG technology right now. It’s a major bet on the LNG market, but here’s why it’s solid:

•    LNG demand is set to double over the next decade to 408 million tons a year
•    Major markets for LNG are opening up and some of them can’t be reached by overland pipelines
•    The Asian market is particularly hot for LNG and they are paying top dollar
•    Prices and rising global demand make it worth shipping LNG by seaborne tankers
•    The US may become a major LNG exporter, and customers are already lining up
•    Russia is now in the global LNG market and it’s determined to become a major player in this field
•    Britain's natural gas imports from outside the North Sea will surpass domestic production by 2015 and add more than $11 billion to import costs as domestic supplies dwindle and Norway struggles to fill the gap (Qatar is only sending it leftovers right now—the bulk goes to higher paying Asian customers)


As natural gas gains favor over oil and coal because it’s cheaper and cleaner, non-OECD countries are expected to account for 80% of natural gas demand growth by 2035. The largest share of global gas demand comes from the power sector.

China is set to double its LNG imports to 25-30 MTPA by 2015 as Beijing views gas as the foundation of its energy future over the next decade. Australia and Qatar will be the biggest suppliers on the current scene.

India is also set to double its regasification capacity by the end of 2015, as gas supplants liquid fuel demand. By 2015, LNG imports to India are expected to reach 17-20 MT (up from 9 MT in 2011).

Global Liquefaction capacity is set to increase by 4.4% by 2015 and another 7.5% by 2020, when it is expected to reach 470 MTPA. Australia will be the biggest contributor to this number, adding 80 MTPA of LNG supply by 2020. The US could have the capacity to add 70 MTPA to supplies.

The real game-changer will be if the US moves to export its LNG with its 70 MTPA capacity. In the meantime, companies in Canada are winning permits to export LNG. A Shell-led consortium in February became the latest permit holder for an LNG export facility in British Columbia. Shell joins the permit-holding ranks that already include Apache Corp., which has an interest in Kitimat along with Chevron, where the first LNG shipment is scheduled for 2015. The third license went to privately-owned BC LNG Export Cooperative.


The Future is Floating

Floating LNG production, storage and offloading concepts are revolutionary because they have the ability to station a vessel directly over distant fields, removing the need for offshore pipelines and adding the advantage of mobility—these floating facilities can be moved to a new location once existing fields are depleted.  

Floating liquefaction technology can bring additional LNG supply by accessing stranded gas reserves that were previously thought to be too remote, small or otherwise challenging for conventional land-based LNG development. More specifically, the advantages include:

•    fast-track regasification for new LNG importers
•    lower upfront capital investment compared to onshore facilities
•    rising expense of onshore projects improves the cost differential in favor of FLNG
•    mobility/relocation to new fields
•    overcoming restrictions due to limited land availability

There are 10 existing Floating Storage and Regasification projects, and an additional 8 under construction, and at least 30 other potential projects on the drawing board.

There are both small- and large-scale floating LNG projects. Small-scale floating LNG projects target 1-3 trillion cubic feet stranded gas reserves, while large-scale floating LNG projects are primarily focused on avoiding long distance submerged pipelines to shore and enhancing the prospects of fields for which traditional LNG development would be difficult.

Shell, Mobil and Statoil are all developing large-scale FLNG projects in Australia, Nigeria and Namibia.

Shell’s most prized LNG project is its Prelude Floating Liquefied Natural Gas (FLNG) Project in Australia, which is moored some 200 kilometers out to sea and will produce gas from offshore fields and liquefy it onboard. The LNG, LPG and condensate produced will be stored in tanks in the hull of the facility. LNG and LPG carriers will moor alongside to offload the products. This vessel will be six times bigger than the biggest aircraft carrier and will cost between $10.8 and $12.6 billion to build—but it also means that Shell won’t have to pay rising prices in Australia’s onshore LNG plants. The facility will produce about 3.6 million metric tons of LNG and 1.3 million tons of gas condensate a year.

The Ichthy’s Floating Production Storage and Offloading Facility (FPSO) venture in Australia, led by Inpex Corp. (1605), will cost an estimated $34 billion and have a capacity of 8.4 million tons annually—of both liquefied petroleum gas and condensate.

Petronas has its own plans to build its first FLNG project, which is set to start in 2015 in Malaysia. The facility will have a 1.2 million ton per annum capacity and will operate at the Kanowit gas field, 180 kilometers offshore Bintulu.

ConocoPhillips (COP) also plans to build an FLNG facility off Australia, and smaller companies like GDF Suez (GSZ) and PTT Exploration & Production Pcl (PTTEP) also plan floating LNG projects.

BHP and Exxon Mobil Corp. (XOM) are also considering FLNG for their offshore Western Australia Scarborough field because it would eliminate the costs of building pipelines and jetties.

Russia’s Gazprom also plans to build an FLNG vessel to store and export LNG from Israel’s Tamar gas field, about 90 kilometers off the Israeli coast on the eastern Mediterranean. Tamar has estimated reserves of 9.7 trillion cubic feet of natural gas. According to a deal still being worked out with Israel, Gazprom would export roughly one-third of Tamar’s reserves over a 20-year period, starting in 2017.

Onshore LNG Plants: Second Thoughts?

While there is already some hesitancy about building new onshore LNG plants in Australia and some indications of second thoughts due to the advantages of floating facilities, Italy’s Eni and Anadarko (Texas) are planning an onshore LNG plant in Mozambique, in the Cabo Delgado province. The plant would have an eventual capacity of about 50 million tons a year. The plant would be the second largest in the world outside of Qatar. So far, though, Mozambique seems to have a limited capacity for the plant which is hindering plans for exports to begin in 2018.

Increasingly, though floating LNG is being bandied about as a better answer to tapping into Mozambique’s massive offshore natural gas potential. In 2012, a total of 100 trillion cubic feet of natural gas was discovered in the country’s north. New LNG technology, like FLNG facilities, combined with Mozambique’s proximity to gas-hungry Asia, could propel the country into the major leagues.

Indeed, there are rumors afoot that BP might be having second thoughts about building its own $40 billion Browse gas project onshore in Western Australia. The project is a joint venture with Woodside Petroleum as well as BHP Billiton Ltd, Shell, Mitsubishi and Mitsui. This summer should see a decision on this.

LNG Transport: Seaborne Full Speed Ahead

Demand for seaborne LNG is expected to increase this year by 5.6%, as some 15 million metric tons a year of liquefaction capacity is set to come on line by 2014—enough to fill 20 average vessels, or 80% of the vessels ordered for 2013. Demand growth for oil-product tankers will exceed fleet growth between 2013 and 2015 (expanding 4.8%), with supply growth expanding 1.8%.

Then there’s this: the cost to book an LNG tanker more than doubled from 2010 to 2011.
As of today, we count a total of 373 LNG vessels in operation, with orders for over 60 having been placed. Contracts are also being placed by new market entrants like Awilco, Dynagas, Thenamaris, Cardiff Marine and Alpha Tankers.

Shell is the clear leader in the global LNG market because it has its own fleet of vessels so doesn’t incur the same processing and shipping costs, and when its FLNG project in Australia goes on line we expect much better things. Shell is also gearing up for LNG exports from its North American terminal in Kitimat (British Columbia). Shell is also toying with an LNG terminal in India (the country’s first ever), which would handle LNG imports coming from Australia.

But here’s a smaller company that is looking strong: Golar LNG (GNLG). The company had a stellar year in 2011, up 188% year-on-year. The company is one of the largest independent owners and operators of LNG carriers and has 8 LNG-specific vessels. Its focus in 2011 on LNG instead of crude was a winning bet.

Golar’s 4th quarter 2012 results were also impressive, with an increase in net income of $22.83 million compared to $17.18 million in 2011. Comprehensive net income was $32.89 million, up from $26.80 million in the previous year. Revenue for the quarter was $111.84 million--up from $80.62 million in 2011. Last year also saw Golar complete a third follow-on equity offering with a net proceed of $130 million.

Also … Keep an Eye on LNG Technology Companies

Floating LNG has required the development of some very specific technological components that are key to its performance. Specifically, more stringent environmental concerns require specific tandem offloading systems and dedicated LNG tankers. There are also ongoing technological developments that deal with onboard LNG storage to avoid sloshing.

 

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Fri, 03/08/2013 - 15:47 | 3313037 francis_sawyer
francis_sawyer's picture

Watch out for Trojan Rabbits along the way...

Fri, 03/08/2013 - 16:09 | 3313064 kaiserhoff
kaiserhoff's picture

$17 world price versus $3-4 in North America.  Hell yes.  Arbitrage we be, but be careful.

The real advantage of FLNG is keeping it away from regular ports and population centers.

When, not if, one of these suckers blows, it will make an oil spill look like a walk in the park.

Swiss Reinsurance anyone?  How about AIG?  Who is stupid enough to underwrite this?

Fri, 03/08/2013 - 16:14 | 3313102 I think I need ...
I think I need to buy a gun's picture

well someone on CNN told me in 2008 that WE HAD to bail out AIG because they insured the the oil platforms and airplanes

Fri, 03/08/2013 - 16:31 | 3313150 NotApplicable
NotApplicable's picture

"Shell is also toying with an LNG terminal in India (the country’s first ever), which would handle LNG imports coming from Australia."

So... Enron was merely ahead of its time?

Fri, 03/08/2013 - 16:55 | 3313225 DoChenRollingBearing
DoChenRollingBearing's picture

I wonder if any of these large cap LNG projects would be suitable for energy MLP-type corporate structures?  It would seem so...

 http://tinyurl.com/a2lumw6

Fri, 03/08/2013 - 21:34 | 3313944 constantine
constantine's picture

Golar has an LNG tanker MLP with ticker GMLP. I think the assets are 4 tankers or something with the possibility of buying 2 more from the parent, which has ticker GLNG. Also the Cheniere Energy MLP, CQP, I think is largely Sabine Pass assets. Massively in the red now though as it builds out the Louisiana liquifaction terminal but there's enough big money backing it (blackrock) that my guess is it will be viable... In the meantime a subordinated distribution structure gives it a current yield of 7 percent the last time that I check... So yeah, it looks as though there may be some sweet MLPs in the future if others are like minded. Of course there's always the possibility of another market meltdown to destroy these and everything else in its path.

Fri, 03/08/2013 - 16:44 | 3313188 Quantum Nucleonics
Quantum Nucleonics's picture

World prices are more like $13 - 14, and with the amort. infrastructure costs, costs to convert gas to liquid to back again, plus transport costs, the profit margin isn't as great as it seems.

Fri, 03/08/2013 - 19:56 | 3313747 kaiserhoff
kaiserhoff's picture

Everything happens at the margin.  Japan was paying 17 recently.

Desperation.  It's the new normal.

Fri, 03/08/2013 - 16:48 | 3313202 Kayman
Kayman's picture

Who is stupid enough to underwrite this?  I hope that is a rhetorical question. Who is underwriting the economy ? Same answer.

Fri, 03/08/2013 - 17:42 | 3313336 Taint Boil
Taint Boil's picture

 

 

What if you parked a liquid oxygen tanker next to LNG tanker and blew that sucker up … don’t know how to do the math on that one but it’s got to be a big boom. 

I’ll be damn I found it – Google is good. 

Link 

1 LNG gallon = 82,644 Btu

42 gal in a barrel [oil] = 3,471,048 Btu = 0.00087595015577438 Kilo ton TNT 

A million barrels = 875 Kilo Ton TNT ???? Is that a big explosion?

The Ivy King was 500 kiloton nuclear bomb..... math must be off.

 

 

I checked with Freddie to go over the math and all he said was "Hope And Change". Anyone else want to check it out.

Fri, 03/08/2013 - 19:38 | 3313708 kaiserhoff
kaiserhoff's picture

Taint, in spite of what your friends say about you, you do good work.

Could be a really bad day.  I actually like the concept, but handling this stuff in all weather, under extreme pressure and temperature conditions... I'd like to know what the oil guys say.  It looks to me like pushing the envelope.  The closest analogy I can come up with is the space shuttle, and those suckers didn't always make it back.

Sat, 03/09/2013 - 02:51 | 3314352 dunce
dunce's picture

I have worked in industrial plants with large tanks of liquid oxygen and other liquified gases and can tell you that it is inherently super dangerous and there is often no putting the fire out, just picking up the bodies and pieces, and these places were tiny compared to these floating super bombs. I am not saying they should not be built, just not close to population centers. You have to plan on them eventually going boom.

Sat, 03/09/2013 - 03:15 | 3314364 Cast Iron Skillet
Cast Iron Skillet's picture

yep, super bombs. Can hardly wait for the first news report of an LNG tanker accident. I just hope it isn't anywhere near where I live.

What's the plan if one of them sinks or something? Does the LNG just sort of stay liquified down there under the ocean forever?

Sat, 03/09/2013 - 05:55 | 3314454 Go Tribe
Go Tribe's picture

Easy fishing afterwards, though.

Sat, 03/09/2013 - 16:08 | 3315439 Mr. Magniloquent
Mr. Magniloquent's picture

Should one sink, it's unlikely that any of the pressurized vessels would remain intact. Shouldy any filled and intact vessels survive the sinking, it would not remain intact for long as they are primarily designed to resist internal pressure. Between reaching crush depth and the lack of sufficient cooling to maintain liquid state, the vessel would probably rupture and the LNG would decompose into various chains and disperse. I doubt that dispersion would even be visible with the human eye.

Fri, 03/08/2013 - 20:52 | 3313856 Stuck on Zero
Stuck on Zero's picture

Hey Kaiserhoff, if one of these things spill, unlike oil, there's no mess to clean up. 

 

Sat, 03/09/2013 - 08:57 | 3314293 Taint Boil
Taint Boil's picture

 

 

 

I guess I wasn’t that far off - wow

The catastrophic threat of LNG lies in the combination of the staggering energy content of the unit quantities transported and the extremely treacherous way in which LNG acts upon spillage. Physicist Amory Lovins and other scientists compute that the described supertanker contains the energy equivalent of a one megaton H-bomb (that’s a big one). 

Link

 

Fri, 03/08/2013 - 16:32 | 3313153 PersonalRespons...
PersonalResponsibility's picture

I think they are more concerned about how to "avoid sloshing".

I bet I could solve that in seconds... Here goes; shove some non-corrosive, to LNG, metal mesh in the tanks... gold maybe, okay stainless steel or aluminum.  Where's my $1,000,000 reward?!?

Sat, 03/09/2013 - 00:29 | 3314234 Unique Snowflake
Unique Snowflake's picture

Methane biatches. Big bada boom. Not enough local atmospheric oxygen to ignite all the gas. Greenhouse gas bitchez. Sorry...we need to tax you more since the terorists struck the big floaty gas ship. LNG tax anyone? Dept of GasLand Security? Moar jobs? Greenish Swamp Gaseous shoots? Obammy........you've done it again!!

Fri, 03/08/2013 - 15:48 | 3313038 hugovanderbubble
hugovanderbubble's picture

I prefer investing in THRESHOLD PHARMACEUTICALS

Fri, 03/08/2013 - 15:51 | 3313045 Dr. No
Dr. No's picture

"Floating LNG production, storage and offloading concepts are revolutionary because"

they do not fall under the jurisdiction of a Country...

Fri, 03/08/2013 - 15:59 | 3313061 debtor of last ...
debtor of last resort's picture

Yet.

Fri, 03/08/2013 - 16:25 | 3313129 zuuma
zuuma's picture

And no expensive Enviro-Nazis to deal with!!

Fri, 03/08/2013 - 16:38 | 3313167 PersonalRespons...
PersonalResponsibility's picture

Yet.

Fri, 03/08/2013 - 17:42 | 3313370 Ident 7777 economy
Ident 7777 economy's picture

Yes dear. Just don't shriek at me .. again ...

"What difference does it make"

Fri, 03/08/2013 - 18:07 | 3313472 PersonalRespons...
PersonalResponsibility's picture

Hopefully, just a little.

Sat, 03/09/2013 - 16:12 | 3315446 Mr. Magniloquent
Mr. Magniloquent's picture

They routinely sabotage and harrass whaling ships on open seas. However, I doubt these mobile factories will be unarmed or unwilling to use them.

Fri, 03/08/2013 - 16:26 | 3313133 NotApplicable
NotApplicable's picture

The UN approves.

Fri, 03/08/2013 - 15:53 | 3313047 Falconsixone
Falconsixone's picture

That ship looks alot more dangerous than a guy with 30 rounds.

Fri, 03/08/2013 - 16:07 | 3313076 kaiserhoff
kaiserhoff's picture

It would only take one round, or as Francis suggests, an unscheduled package, mine, damn near anything.

Sat, 03/09/2013 - 12:10 | 3314847 Lost Word
Lost Word's picture

Terrorist with fire-starter?

Anti-tank weapon?

50 calibur armor piercing round?

Slow leak?

Fri, 03/08/2013 - 15:54 | 3313048 Yen Cross
Yen Cross's picture

  This slipped through some cracks. Japanese Tepco Turns to U.S. Cameron For LNG Purchase - WSJ.com

   if article link gated just Google it.

Fri, 03/08/2013 - 16:53 | 3313209 besnook
besnook's picture

of course they wouldn't think of a pipeline from pusan to japan that originated in russia and/or china. it would be much easier and cheaper

 

this map from google should draw some chuckles for people familiar with the area. expand it to include japan. there are a coupla errors.

http://maps.google.com/maps?oe=utf-8&rls=org.mozilla:en-US:official&clie...

Fri, 03/08/2013 - 16:55 | 3313227 Yen Cross
Yen Cross's picture

 That was an excellent post besnook. Thank You. +1

Fri, 03/08/2013 - 17:07 | 3313267 besnook
besnook's picture

 

(Reuters) - Tokyo Gas Co (9531.T), Japan Petroleum Exploration Co (1662.T) and Nippon Steel & Sumikin Engineering Co are considering a plan to build a natural gas pipeline from Russia's Sakhalin island, to meet Japan's increasing need for the fuel after the Fukushima nuclear disaster, the Asahi newspaper reported.

 

The firms completed a feasibility study for a 1,400-km (840-mile) pipeline from the island north of Japan, which is estimated to cost between 300 billion ($3.73 billion) and 400 billion yen, the Asahi said, citing unidentified sources. Construction would take five to seven years if approved, the paper said.

 

Japanese power companies drove up prices of liquefied natural gas this year as they scoured the world for fuel to run power stations, with all but two of the country's nuclear reactors shut down after the Fukushima disaster last March.


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"We consider it important to diversify feedstock procurement sources, and, as part of looking at possible supplies, we, along with Japan Petroleum Exploration and Nippon Steel & Sumikin Engineering, held a study session," a Tokyo Gas spokesman said, adding that no formal decision had been made.

He declined to give details of the studies, including the price tag, other than to say the companies had compared the costs of importing natural gas by pipeline with bringing it in by tanker in the form of LNG.

The Japanese government is placing priority on getting LNG from a terminal being planned in the Russian port of Vladivostok, which lies to the west of Japan, the Asahi said.

 

----------------------------------------------------------------------------------------------

found this. the next to last sentence says this article is bs. why would gas be shipped if it is cheaper to pipe.

Fri, 03/08/2013 - 19:36 | 3313703 Yen Cross
Yen Cross's picture

 Thanks again. :-)

Fri, 03/08/2013 - 20:08 | 3313766 kaiserhoff
kaiserhoff's picture

Good input, and a nice idea, except that they are dealing with fucking Russia.  Might want to ask Ukraine about that.

Sat, 03/09/2013 - 12:16 | 3314860 Lost Word
Lost Word's picture

Russia may be unreliable due to politics. Russia has already tried to blackmail Europe over natural gas supplies.

Fri, 03/08/2013 - 15:54 | 3313049 Sophist Economicus
Sophist Economicus's picture

ABIOTIC LNG.   There, I said it....

Fri, 03/08/2013 - 17:26 | 3313327 PersonalRespons...
PersonalResponsibility's picture

Better yet, abiotic oil.

Fri, 03/08/2013 - 15:58 | 3313057 lolmao500
lolmao500's picture

Don't worry, the feds are gonna kill it with regulations.

Fri, 03/08/2013 - 15:58 | 3313059 squidward
squidward's picture

This is bullshit.  A race to liquidate American resources and ship them abroad.  As long as we still import middle eastern oil we should be exploiting American resources for America.  But no, we subsidize unproven "green" technology like the Volt. When converting to nat gas is proven and takes advantage of Americas abundant resources.

Fri, 03/08/2013 - 16:08 | 3313078 Mercury
Mercury's picture

Hey, one step at a time - they just finished building an LNG import facility a couple miles offshore from where I am on the East Coast.  Oops.

But yes, Obama has been trying his best to misplay this very fortunate hand.

Fri, 03/08/2013 - 18:01 | 3313447 Flakmeister
Flakmeister's picture

You do realize that the US is still net importer of NG? Do you?

Sat, 03/09/2013 - 12:19 | 3314866 Lost Word
Lost Word's picture

Because we currently export so very little?

Sat, 03/09/2013 - 16:22 | 3315481 Flakmeister
Flakmeister's picture

Do you understand what Net means?

Fri, 03/08/2013 - 16:38 | 3313169 NotApplicable
NotApplicable's picture

It's ALL bullshit. Which part of "government is merely the most organized form of crime" is eluding you?

Fri, 03/08/2013 - 18:35 | 3313549 DCFusor
DCFusor's picture

I can only half agree, being the owner of a Volt (all solar charged off my panels) for over a year, I'd call it proved.

Nat gas sucks for vehicles.  It has a critical temperature below which it will not liquefy under any pressure.  If you want a car with less range than my Volt - get a natgas conversion.  You'll have to run on *compressed* natgas, and maybe you'll get 20 miles for driving a firebomb around.

Or you'd have to have unproven cryo-tech to keep enough liquid natgas (methane) for a decent range. 

Sorry, facts are here, calling bullshit.

 

 

Fri, 03/08/2013 - 21:01 | 3313880 Evil Bugeyes
Evil Bugeyes's picture

A CNG Honda Civic has a range of around 200 miles, not 20 as you claim. And with a Volt, you would be driving around next to a lithium-ion battery. And we know those things never catch fire, right? (At least that is what an engineer from Boeing told me.)

Not that I am advocating CNG cars. For one thing, there aren't many CNG filling stations around. And (in my area at least) the retail price of CNG isn't low enough to make a CNG car worth the trouble.

 

Fri, 03/08/2013 - 20:15 | 3313776 Marco
Marco's picture

CNG on small vehicles has some of the same issues as electric cars, small range ... less of a problem for trucks and busses, which can easily afford extra volume for fuel.

What would be really nice is an efficient method of converting methane to something more useful (propane for instance).

Fri, 03/08/2013 - 16:01 | 3313062 Yen Cross
Yen Cross's picture

 If Shell is sucessfull with that platform project their stock will go ballistic! That is a awesome idea. It's literally an island and free from a huge amount of regulation.

Fri, 03/08/2013 - 16:19 | 3313116 CrashisOptimistic
CrashisOptimistic's picture

Just an FYI about LNG.

1) The loss is about 1%/day to thermal issues.  Even well insulated tanks rise in temperature and stop being liquid at about 1%/day.

2) It requires about 23% of the joules contained in the LNG to cool it down to liquid.

3) This is mostly about Asia.  Indonesia and Qatar shipping to Japan has to be via LNG ships.  The pipeline infrastructure of the US is sufficient for US consumption.

Fri, 03/08/2013 - 16:41 | 3313176 NotApplicable
NotApplicable's picture

Well, compared to the scam known as ethanol, those numbers still look pretty good.

Fri, 03/08/2013 - 16:42 | 3313181 Yen Cross
Yen Cross's picture

 I said (IF).

Fri, 03/08/2013 - 16:43 | 3313186 PersonalRespons...
PersonalResponsibility's picture

Once in the tank it can't turn into a gas while under pressure... physics, study it.

 

Fri, 03/08/2013 - 18:02 | 3313454 Flakmeister
Flakmeister's picture

Oh really? Care to elaborate on that?

Maybe you could explain why all cryogenic tanks have pressure relief valves....

Fri, 03/08/2013 - 18:05 | 3313467 PersonalRespons...
PersonalResponsibility's picture

umm, maybe because, in the event that there's a fire, it's better to vent the tank than to have it blow up?  Am I wrong?

Fri, 03/08/2013 - 18:06 | 3313470 Flakmeister
Flakmeister's picture

You are so full of shit that your eyes are brown....

Fri, 03/08/2013 - 18:11 | 3313481 PersonalRespons...
PersonalResponsibility's picture

If you have to vent a tank to keep it cool because it's not strong enough to handle the pressure, then it's not strong enough to handle the pressure.  Am I wrong?

Fri, 03/08/2013 - 18:14 | 3313498 Flakmeister
Flakmeister's picture

Have you ever even seen a cryogenic tank as opposed to a LPG tank for your BBQ?

Any idea why LNG tankers have the shape they do?

You can start you journery by noting the density of LNG and that of methane at STP.....

Fri, 03/08/2013 - 18:29 | 3313527 PersonalRespons...
PersonalResponsibility's picture

What are we arguing about again?  Sorry, lost track.  I was just saying you could transport the LNG in tanks to near shore and offload into pressurized NG tanks that pipe it to shore.  If the tanks need vents, in the event that the ship catches fire, then sure, why not, better to have a long slow burn than a huge explosion.  I've never seen a huge cryogenic tank, I'm just a programmer who understands basic physics.  If you have some awesome links to these tanks with pictures, I'd love to see them.  If I search google, I'm sure it won't be as good as someone that knows what picture to look at.  I am really curious.  I think this may be a great investment.


Fri, 03/08/2013 - 18:35 | 3313550 falak pema
falak pema's picture

ok you're a bot lost on ZH; get lost! 

Fri, 03/08/2013 - 18:39 | 3313563 PersonalRespons...
PersonalResponsibility's picture

Can't, I feel most comfortable here.  If you point me in the right direction, you can be sure I'll look for the truth there.

Fri, 03/08/2013 - 18:45 | 3313579 falak pema
falak pema's picture

truth is like methane, very evanescent. Stick to pandora's box with its lid firmly on. Best bet.

Fri, 03/08/2013 - 18:47 | 3313584 PersonalRespons...
PersonalResponsibility's picture

Firmly on... with a vent, just in case.  I like this LNG idea.

Sat, 03/09/2013 - 01:07 | 3314286 palmereldritch
palmereldritch's picture

But someone else didn't like the idea hence his lack of response to your completion of the thread logic.

But wait, he may yet respond but this time with another classic chestnut of ad hominem ...as is his habit.

(That's a tell that his own LNG of PR-Prop is on empty and/or that his vanity compels him)

Sat, 03/09/2013 - 10:50 | 3314718 Flakmeister
Flakmeister's picture

Well if someone starts trying to "educate" us on "physics" of cyryogenic liquids tanks and it becomes clear that they have no idea what they are talking about, you sort of have to call them out...

Maybe you can tell us all about the transportation of cryogenic liquids, I can't imagine you know less than that clown...

Fri, 03/08/2013 - 18:36 | 3313554 DCFusor
DCFusor's picture

Yes, it can and does.  Google it, I'm a pysicist.  "Critical temperature" - infinte pressure won't keep methane a liquid above it.

Fri, 03/08/2013 - 18:50 | 3313580 PersonalRespons...
PersonalResponsibility's picture

Sure, but "infinte pressure won't keep methane a liquid above it" <-- how do you get above "infinte pressure"?  Are all of the people here bots, as someone claimed I was?  Obviously you can't keep anything a liguid at infinate pressure.  Am I wrong?

 

-beep-

Fri, 03/08/2013 - 16:01 | 3313063 _ConanTheLibert...
_ConanTheLibertarian_'s picture

(Gas)Bubble ?

Fri, 03/08/2013 - 16:14 | 3313065 falak pema
falak pema's picture

LNG is a very expensive route as you  must liquify at exporter terminal and then regasify upon arrival at user terminal. 

As its methane it has an ominous thermodynamic cost unlike NGL (C2/C4) which liquify more easily. 

However; as we find more gas than liquid fossil since 1980+ we are obliged to consider gas as starting point more often. 

So its either expensive but MORE rigid infrastructure (pipelines and gas recompress along the way) or its more flexible but COSTLY LNG which allows you to transport refrigerated liquid all over the world (unlike pipeline gas). It gives more strategic liberty to USER. (Imagine the constraint for Europe with Putin GAs which is now MASSIVE potential component of long term continent wide  purchases and you will understand the strategic and ideological conundrum this entails BOTH WAYS). 

So as energy is the PRIME economic variable today, both economics and geopolitical constraints should be evaluated in long term plays.  LNG thru more flexibility and 'cos gas is more available world wide makes it an unavoidable but always expensive n sexy route than mundane pipes. 

NB : THe seaborne LNG project of Shell has been around for 30 years, a bit like the Loch Ness! They were involved already in the 1980s on North Shelf off shore gas in Aussi, post North Sea oil platform know how which got them thinking floating LNG then, so I remember its inception! Shell couldn't master the technology then and also the price of Oil/Gas slid down in the mid 80s...Maybe they have got their act together like a latter day dinosaur who develops lateral thinking!

Funny, most of the time dinosaurs just eat grass and go fat on it! These Oil majors are no exception. 

Fri, 03/08/2013 - 16:15 | 3313105 pemdas
pemdas's picture

I have read that something like 30% of the gas is wasted in the liquification/transport/re-gasification process.

Fri, 03/08/2013 - 16:28 | 3313139 Byte Me
Byte Me's picture

I think it's closer to 40% roundtrip.

Hardly a model of efficiency...

Fri, 03/08/2013 - 16:51 | 3313208 PersonalRespons...
PersonalResponsibility's picture

Sorry, but why the fuck does everyone think you have to refrigerate the liquid?  Once cooled and stored, the pressure will build as it warms up.  If the tank is strong enough, it'll stay liquid.  It'll cool again, on its own, when you empty the tank.  Hasn't anyone here taken high-school physics (middle school in Asia)?

Fri, 03/08/2013 - 17:08 | 3313271 defender1be
defender1be's picture

If you had read the artikel, you would now it's about safety.

The higher the pressure, the bigger the chance off explosion or other bad things... physics, understand it.

 

Fri, 03/08/2013 - 17:28 | 3313303 PersonalRespons...
PersonalResponsibility's picture

You had better not use any LP tanks for barbecuing some steak.  The horror.  Stick to coal.  You're right, they can't come up with a stronger tank for LNG.  Nuclear reactor cores, pft, no pressure or danger there as well.  Let's stick with coal and nuclear.  Anyway, everyone needs more plutonium for bombs.

Fri, 03/08/2013 - 17:37 | 3313351 defender1be
defender1be's picture

Thus your LP thank for the barbecue take a entire harbor city with it when it explodes? Think before you start a discusion about safety that involves the lives of 10 000's of people en billions of damadge.

Fri, 03/08/2013 - 17:51 | 3313396 PersonalRespons...
PersonalResponsibility's picture

Come on man, deep breath.  I hear you.  When LNG comes near to shore, they can empty it into high pressure tanks and store it as compressed gas for piping.  There are so many ways to handle this.  All over the USA there are natural gas pipelines feeding many millions of homes.  They are under pressure but not at the high pressure that LNG would need.  Build offshore NG holding tanks where the tankers can refill with LNG, and then head back to their rig.  Run pipes to shore to link into the current NG grid.  No harbor would need to be involved with huge high pressure LNG tanks.  That was off the top of my head and I'm a computer scientist not an engineer.  I'm sure engineers can think of a million ways to keep it safe.  It really seems like the future.  Out of all investments, LNG companies actually seem like a good idea.  no?

Not that I have any money to invest (paying down depts to zero first and well on my way).  When the time comes though, LNG companies may be the way to go.

Fri, 03/08/2013 - 17:52 | 3313408 falak pema
falak pema's picture

for your info LNG is stored liquid at around -160° Celsius at atm Press. You don't fool around with methane cryogenics in double shelled vessels with BIG safety problems and regas/reliquif it at that temp! You keep it liquid on the ship or you lose it! 

Fri, 03/08/2013 - 18:00 | 3313425 PersonalRespons...
PersonalResponsibility's picture

Pressure keeps it liguid, even if it's at room temperature.  Check out my other responses above.  I'm not talking about having LNG in a coffee cup next to me at -160 deg. C at 1 bar.

Fri, 03/08/2013 - 18:53 | 3313553 Evil Bugeyes
Evil Bugeyes's picture

I guess your high school physics class didn't cover the concept of a 'critical point'. The critical temperature of methane is about -83 C.

It is certainly possible to transport NG at room temperature but either the density would be need to be low (requiring a very large, expensive tank) or the pressure would would have to be very high (requiring a very strong, expensive tank).

Fri, 03/08/2013 - 19:08 | 3313629 PersonalRespons...
PersonalResponsibility's picture

You're right.  We need to dig up those thousands of miles of pipelines currently carrying NG all over the USA.  Get on that Stat!  And tell Kevin Henry to start pressing the button some more.

Fri, 03/08/2013 - 20:47 | 3313843 Evil Bugeyes
Evil Bugeyes's picture

I see. So you think that the reason no one has built a NG pipeline from the US to Asia has nothing whatever to do with the expense of building the pipeline. You feel that it is all a fiendishly clever Fed plot by Kevin Henry to keep NG in the US?

I'm curious. How does he do it? Does he meet with those energy company presidents and hypnotize them into building LNG terminals?

 

Fri, 03/08/2013 - 21:47 | 3313952 PersonalRespons...
PersonalResponsibility's picture

Umm, don't know why you are putting words into my mouth.  That said, building LNG terminals, far enough offshore to be safe, seems like a decent idea.  I'm sure Kevin Henry's boss's boss could pull it off. 

Fri, 03/08/2013 - 18:03 | 3313456 PersonalRespons...
PersonalResponsibility's picture

Also, did you see the engineering picture for the article?  That's not a doubleshelled vessel alone.  It's a picture of a double shelled vessel with multiple high pressure LNG tanks on it.  You wouldn't transport LNG like you would oil... obviously.

Fri, 03/08/2013 - 18:38 | 3313559 DCFusor
DCFusor's picture

Yes, PhD physics, actually.  Key word in your post, personal - strong enough.  Work it out with high school physics just how strong it would have to be....you wouldn't be able to move it...

Fri, 03/08/2013 - 21:56 | 3313974 PersonalRespons...
PersonalResponsibility's picture
Is that what's going on.  I will look it up and see what type of pressure you would need to keep LNG a liquid.  Now I'm overblown with curiosity (pun intended).  1 foot thick Titanium walls of a tank wouldn't even handle the pressure according to the insane amount of backlash I've been getting.  I can't wait to find out. Tell you what, if 1 foot thick Titanium walls of a spherical tank will work, then fuck you all.  Fuck me if it's not possible.  
Fri, 03/08/2013 - 22:56 | 3314075 Augustus
Augustus's picture

The reference above to "Critical Temperature" seems to be where you got lost.  Look it up.

Your statement about "IF the tank is strong enough" is the error you are making.  The tank cannot be built strong enough.

The transport ships take the boil off vapors from the methane and chill it, sending it back into the tanks.  Consider a boiling pot of water.  It will not get above 212 f unless it is contained.  So if you simply collect the boiling off vapors and cool them the pot will remain stable and full at atmospheric pressure.  Also remember that LNG methane is not the same as LP gas in the bottles for the kitchen.  Quite a difference in boiling points.  There are many different components in that natural gas production stream, all with different boiling points.  Methane is the lightest and has the lowest boiling point.

Fri, 03/08/2013 - 23:28 | 3314134 PersonalRespons...
PersonalResponsibility's picture

"Consider a boiling pot of water...", dude, I'm not an idiot.  They also use the boil-off to fuel the engines.  It's simple physics.  Maybe those ship tanks were built inferior to using 10 foot thick walls made of carbon fiber layered every millimeter in the shape of a sphere. If it's cheap enough to use a simple insulated double hulled modified vessel where you can afford to keep it cool by venting and refrigeration, then it's probably because there's a huge supply of NG.  I'm starting to see this as a great investment.  Especially if a company finds a way to build a tank where you don't need to refrigerate or vent it unless you want some of the fuel for power.  This LNG thing is really looking good.  Though, I still haven't calculated yet the amount of pressure a tank would have to handle in order to keep it a liquid at, at least, least 120 deg. F.

Fri, 03/08/2013 - 16:03 | 3313069 kito
kito's picture

i love it when i hear how the u.s. will wipe out its trade deficit with the miracle of LNG!!! clearly they dont get the fact that without a u.s. trade deficit, bennyboy is going to have a tough time dispersing his dollars around the world..................wouldnt be a good thing if all of those bennybucks found their way back home in the form of LNG profits..................it would certainly be one viable path to hyperinflation in the u.s..........................................

Fri, 03/08/2013 - 16:15 | 3313081 hedgeless_horseman
hedgeless_horseman's picture

 

 

Fear not, kito, Samsung phones, ships, etc., are from Korea!

Fri, 03/08/2013 - 17:50 | 3313403 DoChenRollingBearing
DoChenRollingBearing's picture

Not to mention KBC and Iljin bearings!

South Korea rocks, I loved my visit there.

Fri, 03/08/2013 - 16:09 | 3313084 Stuck on Zero
Stuck on Zero's picture

LNG may not be the way to go.  Liquid fuels command a premium.  The technology to look for is the production of liquid fuels from natural gas.  Several companies are jumping into this using older technologies for conversion of Methane to Methanol.  At least one company is looking to build small scale converters adequate for a gas station.

 

 

Fri, 03/08/2013 - 18:41 | 3313567 DCFusor
DCFusor's picture

Changning methane into almost anything else is a good move - you have hydrogen (and less clean burn of the product as a result of a lower H/C ratio - but you could use the H2 for process heat).  Almost anything is easier to handle and transport than methane.

Fri, 03/08/2013 - 23:00 | 3314086 Augustus
Augustus's picture

Shell has a NG to Liquid Fuel plant in, I believe, Qatar.  It is referred to as the Pearl Project and started operating about a year ago.  The product ships just like diesel fuel.

Another alternative is to convert it into methanol.  MEOH is a company building a plant in the US to do that.

Fri, 03/08/2013 - 16:13 | 3313089 ebworthen
ebworthen's picture

The process of liquification by freezing, then non-liquification sounds extremely expensive and dangerous.

It brings to mind the use of natural gas in homes and street lamps in the late 1800's and all of the horrific explosions.

I also don't like the idea of natural gas being used in cars and trucks, as it will triple or quadruple the cost of heating a home.

Perhaps for gas-turbines in major cities for elecricity production - would be a lot cleaner than coal and safer than nuclear, but it would still make natural gas for heating much more expensive.

And I'm certain there will be some massive explosions, either via accidents or a new target for terrorists.

Fri, 03/08/2013 - 18:43 | 3313571 DCFusor
DCFusor's picture

You're probalby correct about the safety - at least gasoline fires didn't start out under high pressure.

NO Volts, zero, have caught fire in the wild.  Just in a crash test - three weeks after the crash, after they didn't drain the battery, like they drain the gas tank before a gas car crash test.

Fri, 03/08/2013 - 16:10 | 3313091 walküre
walküre's picture

Clive Cussler's protagonist Dirk Pitt covered a conspiracy around the global race to LNG domination a few years back. Oil tycoons are big time involved in the action because they've got marketshare to protect.

Fri, 03/08/2013 - 16:11 | 3313094 earleflorida
earleflorida's picture

samsung building fleets [  http://www.bloomberg.com/news/2012-09-19/shell-leads-lng-competitors-out-to-sea-with-biggest-ship-energy.html  ]  for shell,... and iran's 'blue-gold' 2nd only to gasprov via turkmenistan [  http://www.tomdispatch.com/post/175071/pepe_escobar_pipelineistan_goes_af_pak   ]

Note: now that Royal Dutch Shell via Rothschild's & Co. have their ducks in order... israel must get Iran's "Blue Gold" STAT!!!

jmo

Fri, 03/08/2013 - 16:12 | 3313098 Nothing To See Here
Nothing To See Here's picture

But but but I thought peak oil was inevitably going to doom us all!?!?

/sarc

Fri, 03/08/2013 - 16:40 | 3313168 css1971
css1971's picture

And... you think this will save the world?

It's lower energy than oil, you have to refrigerate the stuff down to -162°C to move it. You have to burn some of it to re-gassify it at destination. When it's gassified again it has low energy density.

Did you listen to how much they're spending on just the liquefaction ships never mind the wells? Do you have any idea why this is happening now and not 50 years ago? We're moving right on schedule, down the EROEI curve with this technology. This is just evidence the peak oil people are correct.

Sat, 03/09/2013 - 01:36 | 3314318 Augustus
Augustus's picture

With oil at $100, the energy equivalent price for NG is about $15.  Current US price = $3.60.  It would seem to be much cheaper than oil for the same or cleaner energy.  even a hamster could figure out to use the low cost solution.

Fri, 03/08/2013 - 16:13 | 3313099 orangegeek
orangegeek's picture

There may be fewer tankers leaving the straits of hormuz in the years to come.

 

The Saudi's must be in a panic.

Fri, 03/08/2013 - 16:18 | 3313111 Seize Mars
Seize Mars's picture

M'kay, two questions. One, it costs how much to cool the shit down to minus 260? Second, aw who cares. Anyways this oil blog seems pretty Pollyanna to me. Just sayin'.

Fri, 03/08/2013 - 16:33 | 3313155 NotApplicable
NotApplicable's picture

Cost? Why nuthin' man! That's what the Export/Import Bank is for!

Fri, 03/08/2013 - 16:37 | 3313165 ebworthen
ebworthen's picture

Exactly, that's what taxpayer money is for, to subsidize crony capitalist ventures, whether they succeed or not.

Risk capital?  It's all on the public's back.  "It's good to be King!"

Fri, 03/08/2013 - 23:04 | 3314095 Augustus
Augustus's picture

The cost estimates I've seen indicate a cost to convert and transport to be in the $4 range.  That means that the country of origin would have that much domestic cost advantage in it's market. 

Fri, 03/08/2013 - 16:29 | 3313143 css1971
css1971's picture

Hmm, if there was a company which had a physically small Fischer-Tropsch process which could be installed on to one of those ships they might be on to a winner.

 

Fri, 03/08/2013 - 16:35 | 3313164 NotApplicable
NotApplicable's picture

You know who else had a winner with their Fischer-Tropsch process?

Fri, 03/08/2013 - 17:49 | 3313398 ATG
ATG's picture

SASOL in Malaysia, Qatar and South Africa today.

Tomorrow Finland and Westgate, LA.

Germany during WWII  for 9% of German war production of ersatz fuels, 25% of automobile fuel. 

http://en.wikipedia.org/wiki/Fischer%E2%80%93Tropsch_process

Fri, 03/08/2013 - 16:37 | 3313166 Haager
Haager's picture

An investment in Death Star may turn out to be less problematic than this gas-bubble. This LNG-everywhere starts to look like the last ressort, the end of the road.

Fri, 03/08/2013 - 16:46 | 3313197 besnook
besnook's picture

this is mostly about usa gas. euro/asia gas is piped or about to be piped everywhere it needs to be. usa gas can either be used in the usa, piped to canada(why?) or south america(why bother?) or shipped overseas(again, why bother?)

it would be cool to see video of the first major terminal or ship explosion.

Fri, 03/08/2013 - 16:55 | 3313228 Wanton1
Wanton1's picture

Short natural gas.

Methane is literally bubbling out of the Arctic Ocean into the atmosphere.

Soon homeowners will be able to extract natgas direct from Mother Nature.

 

 

Fri, 03/08/2013 - 17:43 | 3313377 ATG
Fri, 03/08/2013 - 18:20 | 3313511 RealeyesRealize
RealeyesRealize's picture

WHat a guy posting the chart and everything.  Try 2.75.  1.50 seems too gloomy man,.

Fri, 03/08/2013 - 18:15 | 3313499 RealeyesRealize
RealeyesRealize's picture

Pshh I'd short this one til the 50DMA honestly.  Overbought on the weekly check the RSI.  Overall may be a good company and prosperous but time will tell.. short term overbought in my opinion

Fri, 03/08/2013 - 21:00 | 3313878 Cable Guy
Cable Guy's picture

And somehow here on Long Island my Keyspan Gas Bill is stil running $300+ per month!  Somewhere some guy in some far off place where we are being told gas prices are 20 times higher....with the same gas appliances I have.....is paying $30 per month.  Long Island, NY Metro, home to the biggest consumer rip offs of all time! 

Fri, 03/08/2013 - 22:14 | 3314007 post turtle saver
post turtle saver's picture

You people are idiots. Please educate yourselves by reading the Wikipedia entries on LNG and LNG Carrier, then come back here to discuss. Not a one of you knows what the hell you're talking about and those two pages make it blatantly obvious.

Fri, 03/08/2013 - 23:08 | 3314102 Dieselclam
Dieselclam's picture

Floating LNG facilities are not some new idea. They have been in use for decades. One such facility was built in Tacoma, Washimgton in the mid 1970's by Concrete Technologies and from what I recall, it's finally about worn out. It was originally towed to somewhere in Indonesia. It really was quite an impressive construction project, but by the standards of today, it's tiny.
To build such a facility that is "six times bigger than the biggest aircraft carrier" seems like putting a lot of eggs in one basket. I cannot imagine thr anchors required to keep something that large in place in a typhoon. A carrier is over a thousand feet long with nuclear-steam propulsion. LNG barges are non self propelled.

Sat, 03/09/2013 - 03:29 | 3314372 yourfather
yourfather's picture

the thing about energy markets is that they are regionalized. you will see Australia move to being the worlds largest gas exporter in front of Qatar in about 18-24 months.

This is why you have different pricing for most petrocarbons.

i.e. brent crude, wti, tapis 

worth a mention is also Chevron (which only gets a throwaway line in the piece above) has a large stake in the Gorgon gas project. They are expected to contain 35.3 trillion cubic feet of gas which they will liquify and export over the next 60 years.

 

Basically, from my research, while 'gasoline' will eventually decline, the big oil companies seem to be pretty confident that gas will fill the gap. 

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