Regasifying LNG at offshore sites

Security is an unavoidable issue in today?s climate of terrorism derived fear and paranoia. Such security fears are strongly impacting development in the natural gas industry, particularly where gas comes ashore at receiving terminals. Many communities now view the risk of such plants, however slight, as unacceptable whatever the economic gain.

The San Francisco Chronicle recently reported that a proposed LNG receiving terminal on Mare Island, near Vallejo in California, has received local opposition due to fears over the safety and security risk of the project, despite it being flagged as an economic engine for the redevelopment of a derelict area. Supplying the terminal, if it is built, would involve up to three ships a week passing under San Francisco?s Golden Gate Bridge, says the newspaper.

In the immediate aftermath of the September 11 attacks, US authorities refused LNG carriers access to Boston?s Everett Terminal due to a perceived security risk. Plans to reactivate Cove Point terminal in Chesapeake Bay have also met strong opposition since September 11 due to the proximity of the Maryland site to a nuclear power station.

Increased natural gas demand in America and Europe brings with it an increased import requirement. Only some of this can be served by existing terminal infrastructure or be met economically by new pipelines. This means many more receiving terminal proposals like Mare Island, Everett and Cove Point. Most will raise local opposition along similar lines. Against this background, offshore receiving plants seem highly attractive.

“All major companies working in LNG are looking out for sites for offshore as well as onshore terminals,” says Per Cristiansen, manager of gas and cryogenics technology at Norway?s Moss Maritime. ABS, the classification society, highlights industry predictions that as many as 20 offshore terminals may be built in the US during the next 10 years in order to meet import demand and overcome objections to land terminals.

Some such terminals, like a proposal submitted last December by ChevronTexaco to the USCG for construction of a deepwater offshore LNG terminal 50 miles off Louisiana, called Port Pelican, involve concrete gravity-based structures fixed to the seabed. Other offshore receiving facility proposals, however, envisage using either adapted LNG tankers or dedicated floating LNG regasification terminals in combination with sophisticated mooring systems and specially developed chicksan arms to offload cargo.

The major obstacle to commercial take-up of these proposals is conservatism within the industry. However proponents argue that there are distinct advantages to floating offshore terminals. These, they say, include reduced investment in fixed capital and lower operating costs. For example, lower installation costs for piping and pumping (for the regasification process) as seawater is taken from directly below the offshore terminal.

There are potential operational advantages too. “It is very likely that in the case of an offshore terminal in deep water outside of a shipping lane that the typical restrictions [for docking and undocking at a shore-based terminal] may be reduced since there is less risk of collision or grounding,” anticipates ABS Staff Consultant Jim Gaughan.

The one offshore unloading system to make a breakthrough is El Paso?s Energy Bridge (see The Motor Ship, June 2002). The company has committed to long-term charters of four 138,000m capacity LNG carriers specially equipped with regasification plants and other apparatus to facilitate offloading. These ships, currently in build at Daewoo Shipbuilding in Korea, hook up to an APL-designed buoy and turret system to supply standard natural gas to a subsea pipeline.

The solution is a neat one. The principal drawback is that unloading a full LNG cargo can take anywhere up to eight days.

A rival proposal from Norway?s Moss Maritime overcomes this drawback. The company is proposing that a floating receiving and regasification terminal is built to which conventional LNG carriers draw up alongside, as they would at a shoreside terminal. A full cargo is offloaded in half-a-day.

This floating receiving and regasification terminal can store up to 280,000m3 of LNG. It would connect to the subsea pipeline system via either a single point or a spread mooring system.

The sophistication and with it the cost of the ships shuttling LNG from its point of liquefaction to the receiving terminal is somewhat lower than that of the Energy Bridge ships. The cost of idle capital, factored over a 20-year lifetime, is also somewhat lower, argues Moss. However, the cost of building the regasification and receiving terminal is quite some bit higher than the cost of siting an Energy Bridge port system.

Despite the different economics, demonstrated in the accompanying table, each solution has its merits set against specific operating scenarios. They are not the only solutions either. Todd Grove in the ABS Offshore project development group says his organisation is involved in a number of proprietary studies involving offshore LNG terminals. These require consideration of numerous factors – sea state limitations, terminal equipment requirements, under keel clearance etc.

Vessel conversions as floating terminals

Moss Maritime has also proposed using a converted Moss-type LNG carrier as an offshore receiving and regasification terminal. The economics of a LNG terminal operation and the requirement of gas buyers for buffer capacity against ship breakdown mean that the storage volume of the receiving facility has to be bigger than the shuttle tanker capacity, explains Per Cristiansen, manager of gas and cryogenics technology at the company.

Most LNG carriers on order or built recently have been about the same size or larger than the largest Moss-type carriers in existence (137,000m3 capacity). A receiving terminal converted from an old LNG carrier would have to be served by shuttle tankers that have considerably lower capacity than this, based on Cristinasen?s assertion. Moss therefore believes that terminals built from converted LNG carriers will serve markets suffering from acute supply shortages for the period of the shortfall. Once the shortage is satisfactorily bridged for the long-term, the terminal is moved to another location.

Moss?s parent Saipem has an agreement with Golar LNG to jointly market the floating receiving terminal concept, based on converted Moss-type LNG carriers, to the Italian gas market. Italian methane consumption is estimated to increase by 50% in the next 10 years and about eight LNG reception terminals proposals are awaiting approval from Italian authorities. Cristiansen says similar agreements exist with other companies for other gas markets.