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Spe 161583 MS
Spe 161583 MS
Abstract
More than 2,600 trillion cubic feet (Tcf) of natural gas reserves are considered as stranded internationally, outside of
North America (i.e., not connected to production).This figure is essentially equal to the 2,800 Tcf currently connected to
production. The total world reserves, including North America, are around 7,000 Tcf. Confusing the situation and putting
impediments to smooth development, in contrast to oil, is the enormous disparity among natural gas prices in various parts of
the world: $1/MMBTU in Russia, $2.5 in the US, $8 in Europe, $16 in the Far East. Lack of adequate and diversified
transportation is the reason.
It has been repeated often that oil is fungible and hence easy to transport with pipelines or easy to load and unload
tankers, whereas natural gas is not. Natural gas can be transported with on-land pipelines but it gets rather expensive with
underwater pipelines. Traditionally, the cost per length of offshore pipelines has been considered ten times the onshore cost.
The main alternative has been liquefied natural gas (LNG) but other options have been offered such as compressed natural
gas (CNG) and the chemical conversion of gas to transportable fuels, collectively called gas-to-liquids (GTL). The latter has
changed over the years with alcohols getting new prominence.
This work presents new information from recent experiences and attempts to provide a methodology of optimization
for the transportation options for natural gas. Emphasis is given to new CNG technologies. Guidelines and new limits are
presented to provide the appropriate means of transportation and reduce the volume of stranded gas currently in place. Worldwide demand for natural gas is expected to force the issue because of massive new needs, headed by China.
Introduction
In its 2010 report the International Energy Agency (IEA) provided an estimation of ultimate natural gas recovery of
over 30,000 Tcf, a figure twice as large as the one contained in the 2009 report. Starting with the new IEA estimate, Figure 1
separates the portion of natural gas that is now considered as reserves (6,609 Tcf) with the expected future reserves (over
23,000 Tcf). Although much more gas exists in the form of natural gas hydrates, Fig. 1 does not include much of that but the
suggested volume already predicts 200 years of natural gas supply at current use of about 110 Tcf of gas per year.
Where is the gas? Figure 2 shows the largest natural gas reserves holders in the world, using US government
sanctioned definitions. Russia leads by far with reserves of almost 1,600 Tcf. Russia dominates European gas exports and is
poised to play a big role in future Chinese imports. Iran follows with over 1,000 and then Qatar with almost 900 Tcf. Qatar is
particularly meaningful because of recent markedly enhanced LNG trade while Iran because of sanctions is a net importer of
natural gas (EIA, 2011). (Note: Figures for reserves or ultimate recovery from different sources vary somewhat. They are
kept intact as in the original sources.)
Expected demand of natural gas will outpace overall world energy demand, the latter expected to show an average
of 1.5 percent increase per year (EIA, 2012.) Natural gas will increase at 1.8 percent as shown in Figure 3 (IEA, 2012.) Even
more significant, non-OECD nations will increase their gas consumption by 2.5 percent. Chinas natural gas demand will
increase by an imposing 7 percent and Indias by 4.7 percent. Natural gas is well on its way to gain energy market share from
both coal in power generation and oil in transportation.
In the emerging world superpower, China has an unusual predicament with natural gas. In 2011, about 70 percent of
Chinas total energy still derived from coal (BP, 2011), 18 percent from oil, and only 4 percent from natural gas. Although
Chinese energy consumption in 2010 reached 96.6 quadrillion Btu (or 2,432 million tonnes oil equivalent) with an annual
growth rate of 11.2 percent, accounting for 20.3 percent of global energy consumption, and surpassing the US as the worlds
largest energy consumer, Chinas energy makeup is still very primitive. Energy consumption per capita, especially natural
SPE 161583
gas consumption per capita, is still far below the average level of energy use in developed countries such as the US (China:
US = 1:27, cubic meters/yr/capita, Wang, 2012). Such an environmentally adverse energy mix has not been seen in the
developed world since the nineteenth century (Tran et. al., 2011). This affects pollution, emissions, and efficiency
(Economides and Wang, 2010). To reach a semblance of a developed countrys energy profile, China must increase its
natural gas usage and this is an expressed policy of the government (Wang and Wang, 2011). Over the next decade natural
gas in Chinas energy mix has been decreed to increase from 4 percent now (4 Tcf) to 10 percent (10.6-12 Tcf) in 2020. This
will be perhaps the greatest geopolitical energy challenge of the coming decade.
Figure 1 World Natural Gas Reserves vs. Ultimate Recovery (Data Source: IEA, 2011)
Figure 2 Top 15 Countries Who Have the Gas (Data Source: BP, 2011)
There is a considerable disparity among countries that produce and consume. Although the US and Russia are both
large producers and large consumers, most other countries are consumers with a few potential exporters of natural gas. A
classic case is the Mediterranean Sea which separates northern African producers with consuming nations in Europe (Figure
4.) The need of transportation across bodies of water becomes necessary.
Because of unresolved transportation issues much of natural gas reserves in the world are stranded, i.e., there is no
market for the gas. About 49 percent of gas reserves in the world are labeled as stranded (IHS, EIA, IEA, 2011). Figure 5
contains additional breakdown of stranded versus connected gas in both offshore and onshore locations outside of North
America.
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Figure 3 Natural Gas Demand by Region in the Golden Roles Case (Data Source: IEA, 2012)
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Figure 4 Natural Gas Production and Consumption in Mediterranean Sea Area (Data Source: BP, 2012)
Figure 5 Stranded Gas That is Outside of North America (Data Sources: IHS, EIA and IEA, 2011)
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2011
986
1,025
4%
298
331
11%
30%
32%
2%
76
103
35%
95
106
12%
108
131
21%
LNG Shares
Qatar LNG Exports, Bcm
Japan LNG Imports, Bcm
China Gas Consumption, Bcm
Incremental
Table 2 Offshore Pipeline Examples (Data Source: ENI, Nord Stream, Gazprom)
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Capacity,
Bcf/d
Type
Company
2.4
Export
Cheniere
Sabine/Lake Charles,
LA, USA
Freeport, TX, USA
1.8
Export
Freeport LNG
1.8
Export
Cheniere
0.7
Export
0.25
Export
Europe/Americas
Asia
Henry Hub
4.00
4.00
Capacity Charge
2.50
2.50
Shipping
1.00
2.80
Fuel/Basis
0.60
0.60
Delivered Cost
8.10
9.90
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SPE 161583
reaches the receiving system pressure, which can typically be around 70 bar (1,015 psi).
Marine CNG can provide a constant or interruptible flow of gas to the final market. This is accomplished by
establishing a fleet of marine CNG ships such that gas can be taken by the supplier on a steady flow or uninterruptible basis,
and then shipped to market, where is offloaded to the gas market or to storage facilities.
For continuous gas deliveries, a system of two or more loading and discharging buoys are used. It should be noted that
the CNG ships can also be equipped with gas drying and compression facilities depending on the nature of the value chain.
After metering, the gas is routed via a pipeline system connecting the onshore or offshore facility with the offshore loading
buoy, which consists of a riser, swivel and connector. The loading buoy is picked up by the same methods as currently used
for offshore oil loading operations and proven at pressures up to 300 bar (4,350 psi).
New Marine CNG Technology: Shifting from Midstream to Upstream
In recent years, despite the crisis of the marine CNG concept, a new technological solution was developed to
overcome the limits of past proposals. The new features of such a technology can be summarized as follows:
Composite lightweight containment system with larger diameter pressure vessels stored vertically inside the ship at
ambient temperature and average 250 bar (3,626 psi). Composite container may weigh as little as 40 percent of
metal containers of similar capacity;
Presence of devices for internal and external inspection of the containment systems;
Capability to carry raw/wet gas, thus avoiding gas treatment onshore or onboard;
Enhanced ship design to ameliorate efficiency during the transportation phase (faster ships, reduced Opex).
Together with the new technology there is a new approach of marine CNG niche towards the upstream petroleum industry.
CNG is today considered not only a viable solution for gas transportation, but is becoming a solution for raw gas
management. Considering the actual trends of gas prices globally and the foreseen unification and reduction of gas price in
future years, CNG cannot be considered only as an economical way to monetize stranded gas, but will became an instrument
to enhance oil production through raw gas disposal. Indeed the economic benefit for petroleum companies is still in oil
production and second on gas monetization. Shifting from a midstream to an upstream solution is a positive challenge that
will rehabilitate CNG over the next few years.
New Marine CNG Technology Description: Composite Tank Design
The design of the new composite pressure tanks is based on the non load-sharing liner concept where an inner nonstructural layer provides impermeability during hydrocarbon transportation and support for the composite material to be
wound externally to the inner layer. The inner layer is often called liner and is also the design feature that provides corrosion
resistance to the overall structure.
The liner can be either metallic or non-metallic. When a metallic liner is selected, the pressure tank is designed and
manufactured with the liner in compressions state, induced by the outer composite structural layer. This compression state is
aimed to extend the fatigue life of the metal liner.
In the case of a non-metallic liner the most common choices are related to thermoplastic or thermosetting polymers.
In this case, a joint of multiple components does not constitute a structural concern like it happens with metal components.
The optimal design for the composite layer is based on the filament winding technique, allowing the reinforcing fibers to be
aligned where the higher strength is needed. Hoop stress is accounted by the circumferential fibers while axial stress is
accounted by the helical fibers. The circumferential winding is only placed in the cylindrical section of the pressure tank
while the helical winding is placed both on the cylindrical section and on the heads of the pressure tank. The heads of the
liners also have a geodesic-isotensoid shape allowing the helical fibers to be wound following geodesic paths.
Only axial openings are foreseen to maintain the highest possible structural integrity of the pressure tank and to
allow simpler certification paths (ASME, 2011). The end fittings often called nozzles are designed to be integrated in the
composite structure and to be compatible with flanges and pipes to be connected externally and to be integrated in the overall
containment system.
The new technologies are conceived to provide a more efficient, cost-effective and lightweight CNG transportation.
The main aspects considered as critical and limiting the CNG industry are the following:
The limit of hydrogen gas containment (ASME, 2010), where natural gas is expected to be less aggressive than
hydrogen on the containment structures;
The limit of certifying manufacturers instead of assessed material properties regarding composites (fibers and resin
systems).
This approach shows the high disparity that currently exists between the certification of metal pressure tanks and the
certification of non-metallic materials for these applications.
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Figure 7 New Generation CNG Pressure Vessel (Courtesy of Blue Power Group, 2012)
Figure 7 shows a new composite CNG container whose diameter ranges from 1 to 3.5 m (3.28-11.5 ft) and the
length from 10 to 25 m (32.8-82.0 ft). Temperature of storage is ambient whereas the pressure is up to 250 bar (3,626 psi).
The liner consists of ductile, lightweight materials for hydraulic containment applications. There are a number of potential
manufacturers of this material which provides for high impregnation properties and high impermeability to NG. The
wrapping consists of lightweight structural materials and fire resistant epoxy resin. There are different fiber solutions (carbon,
glass). The material is stronger than steels (carbon-based composites) and is very damage and defects tolerant.
Figure 8 is a depiction of a vessel carrying the new generation CNG containers. Of particular importance of the
composite CNG containers is their ability to haul raw gas.
Table 5 contains the relevant economic variables for a new generation, 15 Bcf/year CNG project. Of particular
interest is the tariff varying from $4.50 to $6.50 per Mscf, making CNG quite attractive in many parts of the world.
Figure 8 CNG Ship with the New Generation CNG Containers (Courtesy of Blue Power Group, 2012)
10
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Table 5 CNG Costs for a 15 Bcf/yr Project (Courtesy of Blue Power Group, 2012)
Gas to be transported
Ship (260 MMscf capacity x 2 ships)
Equipment (loading-offloading)
Tariff ($/Mscf)
Expected IRR
15 Bcf/yr
$460,000
$65,000
4.50-6.50
8%-15%
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Conclusions
Transportation or lack thereof is crucial to the monetization of natural gas and its extraction from the label stranded.
This will become an increasingly important activity as the world uses more and more natural gas both generally and in
particularly to fulfill the enormous Chinese demand. Pipelines and LNG are well understood and will continue to grow and
fill a vital role in gas transportation. For example, for the transportation of 6 Bcf/d at a distance of 10,000 miles only LNG
can be marshaled. New generation of CNG that would allow the gathering of raw gas from offshore locations, will play a
significantly enhanced role, especially for quantities less than 2 Bcf/d and distances of less than 2,000 km or considerably
less. GTL, especially alcohols from natural gas are likely to emerge as a competitor to all current modes of transportation for
the same natural gas used for the alcohol manufacturing. Extensive and site-specific economic studies are needed for such
choices.
References
American Society of Mechanical Engineers, Boiler and Pressure Vessel Code Section X, 2011, New York
American Society of Mechanical Engineers, Boiler and Pressure Vessel Code Mandatory Appendix 8 Class III Vessels with
Nonload Sharing Liners for Gaseous Hydrogen in Stationary Service, 2010, New York
BP: BP Statistical Review of World Energy, 2011.
BP: BP Statistical Review of World Energy, 2012.
Broeker, R.J.: CNG & MLG-New Natural Gas Transportation Processes, American Gas Journal (July, 1969).
Economides, M. J. and Wang, X.: Integrated Use of Natural Gas in Rural China, SPE 133458, 2010.
EIA: Annual Energy Outlook 2012, June 2012.
IEA: Golden Rules for a Golden Age of Gas, released on May 29, 2012.
Tran, C., Cassidy, B, Pierce, M., Wang, X, and Economides, M. J.: International LNG Prospects 2011 and Beyond, IPTC
14206, 2011.
Wang, X.: Marine CNG Trade: The Time Has Come, Petroleum Economist The LNG Review 2011, 2011.
Wang, X.: The Evolving Unconventional Gas in China, SPE 159580, 2012.
Wang, X and Wang, T.: The Shale Gas Potential of China, SPE 142304, 2011.
Wang, X. and Marongiu-Porcu, M.: The Potential of Compressed Natural Gas Transport in Asia, paper IPTC 12078, 2008.