LNG Growth Relevance for Port Authorities

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LNG GrowthRelevance for Port Authorities

• Riaz Ahmed Kamlani
• February 2006

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Presentation Outline

• Natural Gas and LNG Present and Future
• LNG Role of the Middle East and South Asia
• LNG Terminals Challenges
• LNG Industry Safety Record
• Implications for Port Authorities

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Why Natural Gas? The Fuel of the 21st
CenturyNatural Gas could overtake oil as the
global number one fuel of choice by 2025
mln boe/d
150
Oil
125
Gas
100
75
50
Natural Gas as the fuel of the twenty-first
century with increasingly diverse supply, driven
by emerging technologies and the development of
broader gas markets.
25
0
1980
1990
2000
2010
2020
2030
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LNG - Liquefied Natural Gas

• What is LNG?
• Natural gas cooled to 160C
• Volume reduced by factor 600
• - Transport
• - Storage

Cost of Conversion / Transportation
Cost per MMBTU 4
Pipeline
Pipeline/LNG
LNG
Offshore Gas Line
Onshore Gas Line
LNG
0
kilometres
Source SGSI 2005, GPM 2004
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Evolution of LNG Markets.increasing global trade
1990
2003
2020
LNG Imports ( gas supply)
50
bcf/d
20
20
20
14
17
62
10
10
10
65
8
6
2
0.3
0
0
0
1990
2003
2020
1990
2003
2020
1990
2003
2020
North America
Europe
Asia
Korea, Japan, Taiwan, India and China
Sources Cedigaz, bp statistical review 2004,
Shell
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Global LNG Fleet
Number of Ships
Fleet Projected per order book
Projected fleet by 2008 275 vessels
Sources Poten and Partners
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Presentation Outline

• Natural Gas and LNG Present and Future
• LNG Role of the Middle East and South Asia
• LNG Terminals Challenges
• LNG Industry Safety Record
• Implications for Port Authorities

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The Middle East major global supplier by 2015
Global and Middle East LNG capacity (mtpa)
350
Rest of World
Yemen
Middle East
UAE
Libya
Oman
Egypt
140
Qatar
45
155
Iran
25
35
2004
2015
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Emerging Markets in Asia Pacific will drive
Regional LNG Demand Growth
New terminals in Pakistan and India
Source Shell, 2005
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Presentation Outline

• Natural Gas and LNG Present and Future
• LNG Role of the Middle East and South Asia
• LNG Terminals Challenges
• LNG Industry Safety Record
• Implications for Port Authorities

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LNG import terminal Zeebrugge (Belgium)
As a fixed asset, an LNG receiving terminal
represents a very significant capital investment
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Success requires more than terminal realization
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Hurdles to Realization

• Viability and sustainability

• Strategic

• Economic

• Social

• Local Sentiment

• Environmental

• Permitting and regulatory approval

• Technical

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Hurdles to Realization
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Beyond Construction

• The challenges of operation
• Scheduling
• Multiple shippers
• Single shipper terminals require careful
  scheduling as well
• Fitting deliveries into slotted time
• Weather, tide, supplier delays
• Managing storage space and its limitations
• HSSE
• The Unexpected

Terminals often challenged to achieve 100
utilization
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When It Works
Target Marketing Area
Sakhalin
Baja California

• Sakhalin to Baja California
• Fully integrated supply chain
• First direct sale of Russian natural gas to N.
  America
• Commitment to deliver 37 million tons of LNG over
  20 years
• 3 short-term and 2 long-term ships employed for
  520 journeys of over 9000 nautical miles to
  deliver the LNG
• Annually import volumes more than the totality of
  Portuguese demand

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Presentation Outline

• Natural Gas and LNG Present and Future
• LNG Role of the Middle East and South Asia
• LNG Terminals Challenges
• LNG Industry Safety Record
• Implications for Port Authorities

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LNG main features

• LNG extremely cold, clear, non-toxic, non
  corrosive. Shipped and stored at normal
  atmospheric pressure.
• LNG itself poses little danger as long as it is
  contained within storage tanks and handled with
  appropriate equipment.
• LNG lighter than water then floats, LNG floats on
  top of water and quickly vaporizes
• LNG is flammable only in the gaseous form when
  mixed with the right proportion of air.

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Safety record

• There are currently more than 150 LNG carriers
  around the world. Another 50 under construction
• Carriers make approx 1,800 shipments of LNG per
  year.
• Commercial LNG shipments over the past 40 years
  have been without serious incidents. Between 1959
  and 2002 30 safety incidents with LNG carriers
  (grounding, collisions, etc) In none of these
  incidents the cargo containment was breached.
• 40 terminals around the world. Few other
  industrial operations can equal LNGs safety
  performance. Many LNG facilities close to densely
  populated areas in Asia, Europe and the US.

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LNG safety in Shell

• Developed substantial research since the 70s
• Involved Computer modeling and full scale safety
  testing, addressing phenomena like
• Explosion pressures
• Fire radiation
• Gas dispersion
• Rapid phase transition when LNG comes in contact
  with water.
• Shells design facilities are based on surviving
  100 year storm events and are design to support
  severe earthquakes.
• Safety achieved also through sound engineering
  and construction, advanced technology, personnel
  training, strict compliance with procedures for
  safe operations, enforcement of regulations and
  industry and government oversight
• There has not been a single fire or explosion in
  any of Shells LNG facilities or LNG ships during
  the 30 years Shell has been operating plants and
  LNG carriers.

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Presentation Outline

• Natural Gas and LNG Present and Future
• LNG Role of the Middle East and South Asia
• LNG Terminals Challenges
• LNG Industry Safety Record
• Implications for Port Authorities

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Implications for Port Authorities

• Ability to meet requirements of this specialized
  industry.
• Flexibility for expansion.
• Flexibility for evolution.
• Ability to adjust to long lead times.
• Work with credible players with proven abilities.

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Shell Global Position in Natural Gas