Transcript Energy Sources: The Emerging Technologies November 11, 2004 Washington, DC David M. Sweet Executive Director International LNG Alliance [email protected] WWW.ILNGA.ORG.

Energy Sources: The Emerging
Technologies
November 11, 2004
Washington, DC
David M. Sweet
Executive Director
International LNG Alliance
[email protected]
WWW.ILNGA.ORG
1
What is ILNGA?
 ILNGA represents broad based LNG
interests
 ILNGA is sponsored by USEA, the US
member of the World Energy Council
 ILNGA serves as the US representative
on LNG to the International Gas Union
2
What is ILNGA?
3
LNG Ministerial Summit
24 Participating Countries:

People’s Democratic
Republic of Algeria

Republic of Angola

Republic of Argentina

Australia

Commonwealth of the
Bahamas

Italy

Mexico

Norway

Sultanate of Oman

Peru

State of Qatar
Russian Federation
Bolivia


Brazil



State of Brunei Darussalam

Canada

Arab Republic of Egypt


Equatorial Guinea


Republic of Indonesia


Kingdom of Saudi
Arabia
Republic of Trinidad and
Tobago
United Arab Emirates
United States of
America
Republic of Venezuela
4
R&D Funding





Global upstream R&D estimated at $5 B
Most R&D performed by service sector –
2% - 4% of revenues
Oil and gas sector R&D spending is
relatively low compared to other
industries
Collaborative research efforts such as
GTI have been slashed
DOE budget proposed $729 million for
fossil research (only $41 million
originally requested for oil and gas)
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LNG Properties and Safety




LNG is natural gas in its liquid state at -259º
Fahrenheit - it is commonly stored and shipped at
slightly above atmospheric pressure.
LNG is odorless, colorless, non-toxic - it neither
explodes nor burns as a liquid.
LNG vapors are flammable only in concentrations of
5% to 15% with air and will not explode in an
unconfined environment - the ignition temperature is
more than 500º Fahrenheit higher than gasoline.
In the past 40 years there have been more than
33,000 LNG ship voyages without a significant accident
or cargo spillage.
-FERC Office of Energy Projects
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LNG Markets are Poised for Growth




North American natural gas demand will continue
to outstrip productive capacity
Market fundamentals support growth in LNG trade
Revamped regulatory structure will spur
infrastructure investment
US economy requires additional gas supply for
system reliability and growth
7
United States: LNG Activity Expanding



U.S. LNG imports in 2003 are expected to reach 540 Bcf
(11 million tons), up from 229 Bcf (4.8 million tons) in
2002.
The United States is both an importer and an exporter
of LNG. LNG has been produced in and exported from
Kenai, Alaska, to Japan for the last 30 years, exporting
63 Bcf (1.3 million tons) in 2002.
While historically Algeria was the United States’ largest
supplier of LNG, since 2000 it has been far surpassed
by Trinidad and Tobago, which now serves as the
source for a full 66 percent of the nation’s LNG
imports. The United States imported 151 Bcf (3.2
million tons) from Trinidad and Tobago in 2002.
-U.S. EIA-DOE
8
The NPC View on Gas Supply



Finding: Traditional North American
producing areas will provide 75% of
long-term U.S. gas needs, but will be
unable to meet projected demand.
The rate of production decline is
increasing.
Production response from increased
drilling has been modest.
9
The NPC View on LNG

“Finding: New, large-scale resources
such as LNG and Arctic gas are available
and could meet 20-25% of demand, but
are higher-cost, have longer lead times,
and face major barriers to
development.”
10
The NPC Balanced Future

“Finding: A balanced future that
includes increased energy efficiency,
immediate development of new
resources, and flexibility in fuel choice
could save $1 trillion in U.S. natural gas
costs over the next 20 years. Public
policy must support these objectives.”
11
The LNG Horse Race
Existing
Permitted
Application Pending
mmcf/d
3,755
6,690
23,167
33,612
market share
6%
11%
39%
56%
Existing terminals supply a small share of the US markets for natural gas.
Permitted, new terminals will increase the share of LNG entering the markets.
Applications pending will add considerably to LNG’s share of the market.
12
FERC
Existing Terminals with Approved Expansions
Existing and Proposed
Lower-48 LNG Terminals
A. Everett, MA : 1.035 Bcfd (Tractebel – DOMAC)
B. Cove Point, MD : 1.0 Bcfd (Dominion – Cove Point LNG)
C. Elba Island, GA : 1.2 Bcfd (El Paso – Southern LNG)
D. Lake Charles, LA : 1.2 Bcfd (Southern Union – Trunkline LNG)
Approved Terminals
1.
2.
3.
4.
5.
(plus Canada and Mexico)
Hackberry, LA : 1.5 Bcfd, (Sempra Energy)
Port Pelican: 1.6 Bcfd, (Chevron Texaco)
Bahamas : 0.84 Bcfd, (AES Ocean Express)*
Gulf of Mexico: 0.5 Bcfd, (El Paso Global)
Bahamas : 0.83 Bcfd, (Calypso Tractebel)*
Proposed Terminals and Expansions – FERC
31
29
28
30
36
34 A
7 21
13 22
B 37
17
8
15
2725
10
1 D 2035
12 14
6
9
38 33 18
19 11 2 4 16
24
32
March 2004
Office of Energy Projects
Proposed Terminals – Coast Guard
15.
16.
17.
18.
California Offshore: 1.5 Bcfd, (Cabrillo Port – BHP Billiton)
Louisiana Offshore : 1.0 Bcfd (Gulf Landing – Shell)
So. California Offshore : 0.5 Bcfd, (Crystal Energy)
Louisiana Offshore : 1.0 Bcfd (McMoRan Exp.)
Planned Terminals and Expansions
C
26
6. Freeport, TX : 1.5 Bcfd, (Cheniere / Freeport LNG Dev.)
7. Fall River, MA : 0.8 Bcfd, (Weaver's Cove Energy)
8. Long Beach, CA : 0.7 Bcfd, (SES/Mitsubishi)
9. Corpus Christi, TX : 2.6 Bcfd, (Cheniere LNG Partners)
10. Sabine, LA : 2.6 Bcfd (Cheniere LNG)
11. Corpus Christi, TX : 1.0 Bcfd (Vista Del Sol/ExxonMobil)
12. Sabine, TX : 1.0 Bcfd (Golden Pass/ExxonMobil)
13. Logan Township, NJ : 1.2 Bcfd (Crown Landing LNG – BP)
14. Lake Charles, LA: 0.6 Bcfd (Southern Union – Trunkline LNG)
3
23
5
19. Brownsville, TX : n/a, (Cheniere LNG Partners)
20. Mobile Bay, AL: 1.0 Bcfd, (ExxonMobil)
21. Somerset, MA : 0.65 Bcfd (Somerset LNG)
22. Belmar, NJ Offshore : n/a (El Paso Global)
23. Bahamas : 0.5 Bcfd, (Seafarer - El Paso/FPL )
24. Altamira, Tamulipas : 1.12 Bcfd, (Shell)
25. Baja California, MX : 1.0 Bcfd, (Sempra & Shell)
26. Baja California - Offshore : 1.4 Bcfd, (Chevron Texaco)
27. California - Offshore : 0.5 Bcfd, (Chevron Texaco)
28. St. John, NB : 0.5 Bcfd, (Canaport - Irving Oil)
29. Point Tupper, NS 1.0 Bcf/d (Bear Head LNG - Access Northeast Energy)
30. Searsport, ME : n/a
31. St. Lawrence, QC : n/a (TCPL and/or Gaz Met)
32. Lázaro Cárdenas, MX : 0.5 Bcfd (Tractebel)
33. Gulf of Mexico : 1.0 Bcfd (ExxonMobil)
34. Providence, RI : 0.5 Bcfd (Keyspan & BG LNG)
35. Mobile Bay, AL: 1.0 Bcfd (Cheniere LNG Partners)
36. Cherry Point, WA: 0.5 Bcfd (Cherry Point Energy LLC)
37. Cove Point, MD : 0.8 Bcfd (Dominion)
38. Corpus Christi, TX : 1.0 Bcfd (Occidental Energy Ventures)
*US pipeline approved; LNG terminal pending in Bahamas
13
How Much Natural Gas Is Out There?
Global LNG
Supply Facilities
Existing
Under Construction
Proposed
NORTH AMERICA
RESERVES
4%
WORLD PROVED
RESERVES 2002:
6,270 TCF
Source: Cedigaz, NPC
• LNG supply growing
• Multiple LNG supply proposals announced
• Long term LNG supply outlook robust
15
LNG Value Chain
Source: BG, ALNG, CMS, University o f Houston (IELE)
16
Improved Technology is Lowering the Cost
of Liquefaction and . . .
17
. . . the Cost of Shipping
18
$/mmBtu
These Reduced Costs Combined with High
Gas Prices in North America Portend
Substantial Growth in LNG
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
Jan-91
Cost of re-gasified LNG
in North America:
$2.50 – 3.50 / mmBtu
Jan-95
Jan-99
Jan-03
Jan-07
Source: Platt’s Gas Daily, FutureSource, UH IELE
19
Supply source heat content could be a
problem for US pipelines
1,400
1,375
1,350
1,250
1,200
1,160
1,141 1,134
1,132
1,150
1,122 1,118 1,116 1,114
1,110
1,100
1,082
1,041
1,050
1,011
1,000 1,000
1,000
Acceptable
BTU
Content
950
Source: Conversion Gas Imports, LLC
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900
Li
Heat Content (Btu/cf)
1,300
Estimates
20
Different quality specifications: historical reasons

Gas producing countries - specs based on
characteristics of local gas :






High inert gas content (UK - Groningen)
Extraction of C3 & C4 to valorize as LPG
Extraction of C2 for petrochemicals feedstock (US
Gulf Coast)
Need to take different gases from diverse sources
(Cont. Europe)
Separate networks (H gas & B gas in Europe)
Countries using imported LNG from the start –
specs based on characteristics of LNG available
in the Asia- Pacific basin:



LNG with low inert gas content
LNG rich in ethane and often also C3 –C4
Adjustment of GCV before distribution, by injection
of LPG
Source:
21
Characteristics of LNGs currently produced
Source:
22
Quality adjustment at the import terminal

Options available:






LPG injection (butane and/or propane)
Nitrogen injection
Extraction of C3+ and even C2
Gas streaming to users
Blending with local gas
Blending different LNG cargoes
Japan
UK, US
US
US, Japan
US, UK, Europe
Everywhere

Terminal specs can be quite different to network specs

Both specs and available equipment may vary over time
 Negotiation on a case-by-case basis
Source:
23
Do you believe the U.S. will face an
energy shortage in the next 10 years?
100%
90%
26%
23%
29%
80%
7%
70%
7%
7%
No
60%
DK/Refused
Yes
50%
40%
67%
30%
71%
63%
20%
10%
0%
Total
San Diego MSA
San Fran MSA
San Francisco MSA residents (71%) are more likely to feel that there will be an energy shortage
within the next 10 years than their San Diego MSA counterparts (63%), though a majority in
both regions concur.
Do you have a favorable or unfavorable view
of Liquefied Natural Gas?
100%
90%
3%
3%
5%
8%
1%
3%
10%
3%
Very Unfavorable
80%
28%
36%
21%
70%
Somewhat
Unfavorable
DK/Refused
60%
Never Heard Of
50%
31%
25%
36%
No Opinion
40%
Somewhat
Favorable
30%
Very Favorable
20%
16%
10%
15%
18%
13%
16%
Total
San Diego MSA
10%
0%
San Fran MSA
While 3 in 10 respondents from both regions have favorable opinions of Liquefied Natural Gas
(LNG), San Diego MSA residents are significantly more unaware (36% - Never Heard Of) of
LNG than San Francisco MSA residents (21% - Never Heard Of).
Would you support or oppose the following
facilities in your district or state?
100%
90%
80%
70%
60%
DK/Refuse
Strongly Oppose
Somewhat Oppose
Somewhat Support
Strongly Support
50%
40%
30%
20%
10%
0%
Distributed
Generation
Units
New GasLiquefied Oil and Gas
Nuclear
Old Coal
fired Power Natural Gas
Wells
Power Plant
Burning
Plant
Facilities
Power Plant
27
In your opinion, how much of a safety risk to your
district or state is each of the following?
100%
90%
80%
70%
DK/Refuse
Minimal Risk
Moderate Risk
Significant Risk
Huge Risk
60%
50%
40%
30%
20%
10%
ni
ts
s
G
en
er
at
io
n
U
la
nt
ow
er
P
C
oa
lP
n
le
a
is
D
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ew
C
G
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N
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ib
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er
P
w
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as
-fi
re
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G
as
N
at
ur
fie
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qu
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la
nt
Fa
ci
lit
ie
s
ls
W
el
as
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Li
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ur
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C
oa
lB
ld
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w
ea
r
uc
l
N
er
P
Pl
a
ag
or
t
Sh
y
er
g
En
la
n
nt
es
0%
28
Anti-import Sentiment Runs High
Importance for the US That 99% of Natural Gas Used in the US Is
Produced in North America
96%
93%
93%
92%
TOTAL
IMPORTANT
95%
72%
69%
73%
64%
Very Important
74%
23%
24%
20%
28%
Somewhat
Important
Feb-03
Sep-02
Apr-02
Feb-02
*Sep-01
21%
4%
6%
5%
7%
TOTAL NOT
IMPORTANT
5%
0%
20%
40%
60%
80%
100%
*Split Sample; n=458
How important do you feel it is for the United States that 99% o f the natural gas
used in the United States is produced here in North America?
29
ILNGA – The Voice of the LNG Industry
David M. Sweet
Executive Director
International LNG Alliance
1300 Pennsylvania Ave., NW suite 550
Washington, DC 20004-3022
[email protected]
Ph: 202 312-1244
WWW.ILNGA.ORG
30