“Concept to Reality” mid-scale LNG

Background
Liquefied natural gas (LNG) is natural gas that has been cooled to the point that it condenses to a liquid, which occurs at a temperature of approximately -256°F (-161°C) and at atmospheric pressure.

In today’s market climate there is a renewed interest in monetizing natural gas from smaller gas fields that have in the past been considered uneconomical. The production of LNG is via mechanical refrigeration offers a commercially and technically proven method for monetizing natural gas, however the selection of the technology employed as well of the size and configuration of the facility should be tailored to the geographic location of the gas field, the quantity of gas residing in the field, and economics of monetizing of the gas extracted from the field.

There are several refrigeration cycle configurations that can be employed commercially to liquefy natural gas. Each cycle has it advantages and disadvantages when evaluated for use in a specific application. The selection becomes a capital – energy trade-off against the design parameters for the facility, including the quantity and quality of the gas reserves as well as their geographical location.

Liquefaction cycles vary in both sophistication and power consumption. Choosing the optimum cycle is crucial to plant capital cost as reduction in liquefier costs also reduces utilities and offsite costs. The choice of liquefaction cycle (complexity, efficiency, etc.) depends on many factors including among others:

• Quantity/quality of gas reserves
• Site location (remoteness)
• Skilled labor availability
• Supporting infrastructure (roads, water access, power, vendor service, etc.)
• Machinery configuration, reliability requirements and driver options
• Specific power requirement (efficiency)
• Required flexibility
• Ease of operation/start-up/shutdown
• Shipping constraints (equipment)

The “un-conventional” wisdom of mid scale LNG
Until recently, conventional wisdom regarding the development of LNG facilities has been targeted on better economies of scale through the implementation of larger and larger single liquefaction trains.

In fact, over the last 35 years single train size for “Baseload” facilities has increased from less than 1 mm tons per year to over 5 mm tons per year  driven primarily by concerted efforts to reduce the specific capital cost ($/ ton of LNG produced) for these “mega” field opportunities ( 50-500 Tcf).

However, as the size of a single train increases so does the inherent risk associated with assured long term availability of the natural gas feedstock from a mid scale gas field and the simultaneous attainment of a high degree of operational reliability and on-stream efficiency. In other words, as the cost and complexity of a larger and more sophisticated train increases, the risk associated with the potential of a non- or under performing asset increases dramatically, whether due to technical / operational difficulties or feedstock availability.

And in today’s economic climate, characterized by growing demand accompanied by shortages of natural gas and rising prices, there are “time-to-market” issues as well. To be a player in this market one can’t wait for 5 years to bring a plant on stream.

With mid tier fields, typified by relatively limited size, geographical isolation or unconventional production challenges, the exploitation of what is a major share of global natural-gas reserves has traditionally been deemed uneconomical or technically infeasible. In the present economic situation however, the past assessments are no longer necessarily valid and are now being re-evaluated.

Recent research identifies some 2,000 small and mid-size natural gas reserves (1-5 Tcf and less) traditionally considered as “stranded”. With mid tier gas fields, where there is a limited potential for long term gas supply and time to market issue are paramount , “conventional wisdom” (the larger train mentality) just doesn’t work!  In the mid tier arena, another method of monetizing this so called “stranded” gas necessarily must be considered.

Against the backdrop of spiraling primary energy costs; flexible business models and the availability of a “scale-adapted” modularized liquefaction can paint an entirely different picture, opening up opportunities for substantial revenues to owners of stranded-gas reserves.

Quicker monetization and time to profitability
While typical large-scale LNG plants would require the collection of several small fields into a large joint venture with a multiplicity of partners, mid tier liquefaction solutions allow stranded natural-gas assets to be monetized at a far earlier stage. Standardized, modularized small-scale LNG solutions offer a host of benefits. Notably, substantially lower initial capital investment is necessary in order to start leveraging stranded gas resources. Moreover, smaller investments will be necessary for expanding the plant by adding identical trains thus reducing financial risk.

Properly designed and implemented this strategy can drive a “self-funding” mechanism for monetizing mid tier fields. As a result, capital is provided for further development of resources and eventual upgrading of the liquefaction facility. Furthermore, stranded-gas owners would need fewer partners to join forces with. This, in turn, means easier decision-making processes and work to keep their independence. Depending upon the situation, one might also consider dynamic ownership models wherein additional trains could have different partnership structures. On the other side of the coin, when the field does play out, the equipment associated with each modular train is still within a size range that makes it fairly easily to dismantle and relocate.

“Scale-adapted”, standardized, modularized, expandable & efficient
Chart Energy & Chemicals, Inc. offers a repeatable solution specifically tailored for monetizing small and mid-scale natural-gas reserves through LNG liquefaction. The liquefaction plant configuration of Chart’s mid-scale solution complements the benefits of small-scale, standardized, repeatable “Scale-Adapted” liquefaction trains of 0.5 to 1.0 MMTPA utilizing proven shop fabricated equipment available commercially in today’s market.

Downsized or “Scale-adapted” in the present context refers to solutions achieving high efficiencies despite the relatively limited size of the gas resources. This solution is to bring to market a standardized and modularized system in order to cut the typically high engineering costs of tailor-made LNG facilities. Moreover, this methodology allows an operator the step-up of plant capacity by adding further identical modularized liquefaction trains to an existing facility where the supporting infrastructure is already either in place or pre-designed for incremental expansion. Each major equipment item has been selected for a “best fit for purpose” approach to make the system not only repeatable but highly efficient as well.

Combined-cycle power plants combined with the use of electric motor driven refrigeration compression equipment provide significant potential for improving overall thermal efficiencies. Even including distribution losses electric drive systems achieve 96 percent efficiency, resulting in an overall refrigeration-system efficiency of up to 45 percent, compared to approx. 32 percent for traditional mechanical drive solutions. Combined-cycle power plants also reduce greenhouse-gas emissions by around 30 percent compared to traditional mechanical compressor drives. All inclusive, overall thermal efficiency may reach as much as 90 percent.

Superior productivity & better redundancy
While today’s vast majority of refrigeration compressors in LNG liquefaction plants are driven by gas turbines, the use of an electric motor driven compression concept is an intrinsic part of the Chart approach. This solution stands out as economically and ecologically superior, despite a higher initial investment for a larger thermal power plant.

By placing proper redundancy within the power plant, the electric motor approach provides for up to 365 days per year of uninterrupted refrigeration-gas circulation in the liquefaction plant which is not limited by either the driver or the compressor string itself. This allows for a substantial increase of productivity by eliminating downtimes of the refrigeration compression trains.

What’s more, with the Chart liquefaction plant solution, size is no longer restricted by available mechanical drives and there is no need for fired equipment and associated scheduled maintenance inside the process plant. Furthermore, the risks associated with placing gas fired equipment within the process battery limit are eliminated which can result in reduced insurance costs. With an electric motor driven compression system, quick and controlled starting and re-starting of a pressurized compressor minimizes downtime and eliminates the potential for flaring large quantities of expensive refrigerant constituents. In addition, compressor speeds can be optimized and target production can be reached with smaller train capacity while remaining insensitive to swings in ambient temperature.

Competitive pricing & faster project exectution
Smaller-size facilities offer a number of benefits with regard to construction, too. As the size of the project becomes smaller, there will be a greater the number of potential contractors or vendors who will be available to handle the various tenders, e.g. civil work. Consequentially, pricing will be more competitive.

Due to their standardized and modularized design, Chart’s modularized liquefaction trains and other components of a the repeatable small or mid-scale LNG facility can speed the project schedule by up to 30% percent in comparison to custom-engineered solutions.

A changing market
Market research by ZEUS implies that, in a not so distant future, the vast majority of LNG plants may well be of the small to medium-scale variety. With the availability of scale-adapted LNG solutions, new players will enter the market and gradually diversify global supply of LNG, with a marked impact on market dynamics.

Chart’s “un-conventional” wisdom, discussed herein, with regard to economies-of-scale is well past the point of conjecture and is proceeding rapidly to implementation in fabrication shops around the world.

Energy World Group has taken the repeatable 0.5 MTPA modular liquefaction plant “concept” conceived with Chart Energy & Chemicals, Inc. and is now bringing it “to reality” through the construction of 4 identical trains having a total capacity of 2 MTPA of LNG in South Sulawesi, Indonesia.

Chart Energy & Chemicals, Inc. is working together with companies like Energy World Group to bring the world’s stranded gas reserves to market.

The companies
Chart Energy & Chemicals’ Process Systems group is a process designer and fabricator of engineered "concept to reality" solutions, which are used to cool light hydrocarbon gas mixtures to cryogenic temperatures, where the component gases liquefy and can be separated and purified for further use in multiple industrial applications, such as LNG. Using technology pioneered by the Process Systems group, Chart’s brazed aluminum heat exchangers are incorporated into cold box systems to facilitate efficient and cost effective cooling, purification and liquefaction.

Energy World Group (“EWG”), formed in 1988, is an integrated energy company based in Hong Kong and listed on the Australian and New Zealand Stock Exchanges. The company owns and operates power stations, LNG production facilities, and gas and oil fields in Australia and Indonesia and has a current market capitalization in excess of USD 1 billion. It was the pioneer development in 1989 of Australia’s first domestic LNG facility, in Central Australia.