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CONTENTSISSN 1747-1826

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Copyright © Palladian Publications Ltd 2015. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying,

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endorse any of the claims made in the articles or the advertisements. Printed in the UK.

JUNE 2015

18 Securing supplies to JordanHoward McDonagh, BAM International, Jordan, provides an overview of the onshore and offshore structures, and MEP systems needed for the Aqaba LNG Project.

25 Marine environment innovationsDes Gallagher, John Holland, Australia, considers how to overcome technical and logistical challenges in marine LNG environments.

28 The future of US LNGGreg Michaels, SCT&E LNG, USA, introduces the company’s Monkey Island Project in Cameron Parish, Louisiana.

33 On the frontier of FLNGAlessandro Baldanzi, Alessandro Dolci and Oriano Zucchi, GE Oil & Gas, look at how FLNG projects are revolutionising natural gas production.

35 Choosing the right compressorIsao ‘Zac’ Zukeran, J. Simpson and J. Baranowski, Kobelco Compressors America Inc., USA, consider the advantages of oil-injected screw gas compressors for floating LNG applications.

41 FLNG + GBS = a happy marriageArne Børrehaug and Henning Midttun, Aker Solutions, Norway, highlight the advantages of a nearshore LNG facility that can export gas from an onshore gas field.

45 Floating applications on the riseChristopher Campos, Ebara International Corp., Cryodynamics Division, USA, takes a look at the acceleration of floating applications in the LNG industry.

49 Behind the designAdnan Ezzarhouni, Gaztransport & Technigaz (GTT), France, outlines how a sump well design can be used to increase LNG tank asset monetisation.

55 Relieving the pressureJean-Paul Boyer, Pentair Valves & Controls, looks at the critical role of pressure relief valves in LNG storage applications.

59 How much is too much?John Lunde, Crane ChemPharma & Energy, USA, reviews valve industry seat leak rate standards and how they relate to check valve selection and specifications.

63 The challenge for valvesLoïc Boussault, KSB, France, examines the technical development of specific valves for the LNG industry.

68 Preparing for polar operationsChristophe Cheikh, PPG Protective and Marine Coatings, the Netherlands, details the coating challenges of a growing LNG trade.

03 Comment

05 LNG news

12 LNG to grow in Sub-Saharan AfricaFiona King, The Energy Industries Council (EIC), UK, provides an overview of LNG activities in Africa.

Nearly 56 years ago, Louisiana’s Calcasieu

Ship Channel sent forth the first transatlantic

delivery of LNG from the US to the UK. Learn

how SCT&E LNG plans to export LNG globally

from this same ship channel at its future

facilities on Monkey Island in Cameron Parish,

Louisiana.

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12 LNGINDUSTRY JUNE 2015

LNG to grow in

Fiona King, The Energy Industries Council (EIC), UK, provides an overview of LNG activities in Africa.

Sub-SAhaRAn aFrICa

LNG_June_2015_12-17.indd 12 03/06/2015 15:18

JUNE 2015 LNGINDUSTRY 13

Due to the existing and recently discovered vast natural gas reserves within Africa, the region is predicted to emerge as a huge producer of natural gas. It was

estimated in 2013 by BP that the continent holds approximately 500 trillion ft3 in proven natural gas reserves, explaining why many nations are currently expanding or developing infrastructure to accommodate the production of LNG.

Traditionally, within Sub-Saharan Africa, West Africa has been the LNG producing region with Angola, Equatorial Guinea and Nigeria having existing LNG liquefaction capacity. However, the region now faces competition from East Africa where both Mozambique and Tanzania are developing new LNG export facilities. The close proximity of these nations to their export markets within Europe and Asia, coupled with falling transportation costs, provide the region with a distinct advantage compared to other international LNG producers.

However, the development of the LNG liquefaction sector within Sub-Saharan Africa currently has many obstacles

scattered along its development pathway. Regulatory and political barriers need to be removed to secure foreign investment and LNG offtakers must also be in place. It is crucial that emerging LNG producers enter the market at the right time, allowing the region to secure its competitive position, whilst exploiting its resources.

East Africa East Africa has no existing LNG liquefaction capacity. However, with discoveries and increasing reserve estimates of natural gas resources, particularly within the Rovuma Basin, Mozambique and Tanzania are likely to emerge as key players within the global LNG liquefaction sector. Both Mozambique and Tanzania are estimated to hold a combined 200 trillion ft3 of natural gas reserves and are unsurprisingly attracting the required foreign investment that is needed to develop the LNG liquefaction infrastructure.

LNG_June_2015_12-17.indd 13 03/06/2015 15:18

12

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COMMENTCALLUM O’REILLY EDITOR

CONTACT INFORMATION

Managing Editor James Little james.little@lngindustry.comEditor Callum O’Reilly callum.oreilly@lngindustry.com Editorial Assistant Katie Woodward katie.woodward@lngindustry.comAdvertisement Director Rod Hardy rod.hardy@lngindustry.comAdvertisement Manager John Baughen john.baughen@lngindustry.comProduction Stephen North stephen.north@lngindustry.comWebsite Manager Tom Fullertontom.fullerton@lngindustry.com

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Last month, I received an email from the Director of Economic Development in Cameron Parish, Louisiana, US, in response to the comment that I wrote in the

March issue of LNG Industry. Ms Marceaux explained that Cameron Parish is commemorating the 10th anniversary of Hurricane Rita this year, which wiped out 98% of the parish’s housing stock and decreased its population by approximately 30%. Despite these enormous setbacks, Cameron Parish is continuing its recovery: “We are resilient people who value this community in which we live and we have worked hard to build back what once was before Hurricane Rita devastated us a decade ago,” concluded the email.

The LNG industry is playing a very significant role in Cameron Parish’s rebuilding process. Two LNG facilities are currently under construction and four others have been publicly announced.

Ms Marceaux noted that the parish is “looking forward to the construction of these facilities with great enthusiasm,” and it is easy to see why. The projects promise economic development in the region and stand to create thousands of jobs, offering former residents the opportunity to return to the parish.

I have used this comment column on previous occasions to discuss how public opinion can directly impact the success of proposed developments. The importance of obtaining a social licence to operate as well as a government licence has recently been thrust back into the spotlight following new agreements between the government of British Columbia (B.C.) and the Pacific NorthWest LNG (PNW LNG) project, which aim to establish the path to a final investment decision. Although the

lucrative agreements would appear to be a step forward for the project, opposition from local communities could yet set it back a couple of steps. Immediately after the agreements were announced, the Treaty 8 First Nations issued a statement pronouncing their “astonishment” at the deal. Although the First Nations were quick to emphasise that they are not opposed to sustainable and responsible natural resource development, they took issue with the fact that they were not fully informed or consulted about the deal. The Lax Kw’alaams First Nation also rejected a huge benefit package recently, due to concerns over the Skeena River salmon habitat. Once again, the First Nation notes that it is open to the LNG project, but not at the expense of development proximate to Flora Bank. Such setbacks are untimely as B.C. tries to capture a portion of the Asian gas market before the window of opportunity closes.

Returning to Louisiana, it is refreshing to read of the community support for the LNG projects in Cameron Parish. This issue of LNG Industry takes a closer look at one of the proposed export projects: SCT&E LNG’s export terminal on Monkey Island. The company, which is currently meeting with potential investors and offtakers, recently announced that it has signed a Memorandum of Understanding with a sizeable natural gas supplier in the US. You can read more about the project, and the company’s work with the local community, in the article starting on p. 28.

On the topic of public consultation, we are in the process of putting together LNG Industry’s editorial schedule for 2016. If there is a particular topic that you would like to see featured in an upcoming issue, or you have a story to tell, please get in touch.

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JUNE 2015 LNGINDUSTRY 5

USA

SCT&E LNG secures natural gas supply

SCT&E LNG has secured a long-term fixed-price natural gas supply with a US upstream supplier.The company signed a Memorandum of

Understanding (MoU) with the supplier on 19 May, for supply to its Monkey Island LNG project in Cameron Parish, Louisiana.

The agreement provides enough natural gas to enable the company to produce 4 million tpy of LNG. This represents one third of the gas needed for the entire 12 million tpy project, with terms that allow for additional supply.

SCT&E LNG currently has approval from the US Department of Energy (DOE) to export 12 million tpy of LNG to countries with whom the US has a free trade agreement (FTA).

Commenting on the supply agreement, Greg Michaels, Chairman and CEO, said: “During our recent 45-day trip to Asia and South America meeting with potential investors and offtakers, we received extremely positive feedback on the potential for a long-term fixed-price natural gas supply. A number of prospective customers consider our offering as a hedge against future unknown gas prices.”

Canada

First Nations sign pipeline project agreements

T ransCanada’s Prince Rupert Gas Transmission (PRGT) project has entered into project agreements with the

Doig River, Halfway River and Yekooche First Nations, in northern British Columbia (B.C.).

The project agreements provide each First Nation with financial and other benefits related to the pipeline projects. They are part of a comprehensive approach to working with First Nations on LNG opportunities, including developing skills training, employment and involving First Nations in developing business opportunities.

“Reaching agreement with the Doig River, Halfway River and Yekooche First Nations has required a significant investment by all parties in building a meaningful relationship. We are proud of the rapid progress we are making in securing formal support from First Nations along the PRGT route. These agreements reflect our commitment to engage with First Nation communities in a significant and respectful way and to provide fair and meaningful benefits during construction and through the operational life of the project. Doig River, Halfway River and Yekooche have played important roles in helping us refine the PRGT project in their traditional and treaty territories,” commented Dean Patry, President of PRGT.

Russia

Novatek, ENGIE conclude LNG contract

Novatek’s Gas & Power division has concluded a long-term contract with ENGIE (formerly GDF SUEZ)

for the supply of LNG from the Yamal Project, in Western Siberia, Russia.

The 23-year contract stipulates the annual supply of 1 million t of LNG from the volumes that Novatek Gas & Power will purchase from Yamal LNG, according to a previously signed contract. The LNG will be supplied on a Free On Board (FOB) basis to Montoir-de-Bretagne,

France, where it will be transferred to ENGIE’s LNG vessels.

Commenting on the conclusion of the contract, Novatek Chairman, Leonid Mikhelson, stated: “Signing another long-term binding agreement on LNG supply from the Yamal LNG Project ensures [a] well balanced LNG sales portfolio and contributes to closing the project’s external financing. ENGIE is a reliable partner, and we expect that this cooperation will enable us to gain additional expertise in LNG marketing.”

LNGNEWS

6 LNGINDUSTRY JUNE 2015

NEWS HIGHLIGHTS

Singapore

Four companies compete for Singapore LNG

The Energy Market Authority (EMA) in Singapore has shortlisted four companies to participate in Stage Two

of its request for proposal (RFP) to import the next tranche of LNG into the country.

In February 2014, EMA introduced a competitive licensing framework to provide Singapore with the flexibility to procure LNG on a tranche-by-tranche basis.

In June 2014, EMA launched Stage One of the RFP process to appoint up to two importers to meet the next tranche of Singapore’s LNG demand. Due to the competitiveness of the bids, EMA has shortlisted four companies to participate in Stage Two.

The shortlisted companies are: BG Singapore Gas Marketing Pte Ltd; Pavilion Gas Pte Ltd; Sembcorp Industries; and Shell Eastern Petroleum (Pte) Ltd.

Stage Two will close on 29 February 2016. During this period, the four shortlisted companies will negotiate and enter into binding commitments with potential LNG buyers, and submit their proposals to EMA by the deadline for evaluation.

USA

Alaska LNG receives non-FTA export approval

The Alaska LNG Project has received conditional authorisation to export LNG to non-free trade

agreement (FTA) countries from the US Department of Energy (DOE).

The application to export up to 20 million tpy of LNG from Alaska for a 30-year period was submitted to the DOE in July 2014. Authorisation to export to FTA nations was previously received in November 2014.

Commenting on the milestone, Steve Butt, Alaska LNG Senior Project Manager, said: “We are very pleased with the progress this represents. As with any large scale LNG project, access to as many markets as possible will improve the commercial viability of the proposed project.”

The proposed project facilities include a liquefaction facility in the Nikiski area on the Kenai Peninsula, an 800-mile large diameter pipeline, up to eight compression stations, at least five take-off points for in-state gas delivery, a gas treatment plant located on the North Slope and transmission lines to transport gas from Prudhoe Bay and Point Thomson to the gas treatment plant.

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Belgium

Fluxys considers Zeebrugge LNG expansion

F luxys LNG has launched a market test to evaluate the appetite for additional capacity at the Zeebrugge LNG

terminal in Belgium.The company is considering extending the Zeebrugge

terminal as and when the market needs additional capacity. In this preliminary phase, Fluxys LNG will carry out a market test to evaluate the appetite for small scale LNG services, such as loading small LNG bunker and feeder vessels, as well as LNG trailer loading services.

Fluxys is keen to hear from interested parties during this market test which services have to be developed and offered in order to optimise their participation in the LNG supply chain.

An extension of the Zeebrugge terminal is an attractive opportunity for LNG players to secure access to a facility offering competitive tariffs and destination flexibility.

The company will hold discussions with interested parties until the end of September 2015.

Canada

GE Capital, Shell advance LNG in Canada

GE Capital, Canada and Shell Canada Products have signed a commercial agreement to facilitate the trucking

industry’s adoption of LNG in Canada.Under the agreement, GE Capital and Shell will

collaborate to reduce monthly payments for truck fleets that lease natural gas vehicles (NGVs). Fleet owners will be able to sign natural gas fuelling contracts with Shell and secure leases for LNG vehicles with GE Capital.

The agreement also covers equipment that will purchase fuel from Shell’s facilities.

“Through this agreement, we’re giving over-the-road trucking companies the financial incentive to make the shift from diesel to natural gas. Working with Shell will help address truck operators’ concerns regarding the trucks’ value and incremental capital investments and allow them to access the benefits of LNG vehicles from day one,” commented François Nantel, leader of GE Capital, Canada’s transportation business.

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China

ABS to class LNG carrier for Landmark Capital

ABS will provide the approval of a new containment system and classification for a medium-sized LNG vessel,

to be built for Landmark Capital.The 45 000 m3 capacity vessel, featuring self-supporting

IMO Type-A tanks mounted within an insulated hold space, will be built in China.

In 2014, ABS completed an Approval in Principle (AIP) for the LNT A-BOX gas containment system and will review the vessel design, survey the construction and class the ship for operation upon delivery, which is due in 2017.

Landmark Capital affiliate, LNG New Technologies (LNT), has developed the LNT A-BOX system and is providing engineering services for the project. LNT intends to market the containment system to third party shipyards that are looking to enter the LNG market.

The system is a new LNG containment design that has received design approval from ABS. LNT plans to offer the patented system under license to other shipyards once the initial contract is completed.

LNT undertook pre-design work for the vessel, while Swedish naval architect FKAB has been engaged to produce the basic design drawings.

USA

Calcasieu Pass expansion plans announced

Venture Global LNG has secured an additional 432 acres in connection with its proposed LNG project in

Cameron Parish, Louisiana, US.The expansion will increase the available land for the

project, which now totals 938 acres.Commenting on the news, William M. Wicker, CEO of

Venture Global LNG, said: “By nearly doubling the size of its land footprint, the Calcasieu Pass terminal and ancillary facilities have more flexibility in terms of access, buffer zone

and construction laydown. This expansion also accesses excellent ship berthing, parking and office facilities, as well as land for other activities that will support project development.”

The company also recently closed the third round of equity investment, raising additional financial capital of US$84.5 million.

This brings the total capital raised to over US$210 million. The equity was purchased by institutional investors who collectively manage assets exceeding US$1 trillion.

Singapore

Kongsberg secures Golar FLNG contract

Keppel Shipyard and Black & Veatch have awarded Kongsberg Maritime a contract for the delivery of an

electrical package and safety and automation system.The package is for Golar LNG’s conversion of the

ex-LNG carrier, Golar Hilli, into a floating LNG (FLNG) unit.Kongsberg’s technology will form the core of the

integrated control and safety system (ICSS) for the new FLNG unit. In addition to providing automation and control products, the company will supply integrated engineering services to the various main contractors, as well as support installation and commissioning of the delivered systems.

Kongsberg Maritime Engineering will supply the electrical package, including high and low voltage distribution boards and transformers. Design and philosophy documents, as well as electrical analysis, will also be engineered by the company.

Stene Førsund, Executive Vice President − Global Sales and Marketing at Kongsberg Maritime, commented: “We are very proud to have been chosen as a main supplier for Golar Hilli. Like many of our recent contracts, the order for Golar Hilli covers extensive hardware, software and system engineering expertise.”

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12 LNGINDUSTRY JUNE 2015

LNG to grow in

Fiona King, The Energy Industries Council (EIC), UK, provides an overview of LNG activities in Africa.

Sub-Saharan africa

JUNE 2015 LNGINDUSTRY 13

Due to the existing and recently discovered vast natural gas reserves within Africa, the region is predicted to emerge as a huge producer of natural gas. It was

estimated in 2013 by BP that the continent holds approximately 500 trillion ft3 in proven natural gas reserves, explaining why many nations are currently expanding or developing infrastructure to accommodate the production of LNG.

Traditionally, within Sub-Saharan Africa, West Africa has been the LNG producing region with Angola, Equatorial Guinea and Nigeria having existing LNG liquefaction capacity. However, the region now faces competition from East Africa where both Mozambique and Tanzania are developing new LNG export facilities. The close proximity of these nations to their export markets within Europe and Asia, coupled with falling transportation costs, provide the region with a distinct advantage compared to other international LNG producers.

However, the development of the LNG liquefaction sector within Sub-Saharan Africa currently has many obstacles

scattered along its development pathway. Regulatory and political barriers need to be removed to secure foreign investment and LNG offtakers must also be in place. It is crucial that emerging LNG producers enter the market at the right time, allowing the region to secure its competitive position, whilst exploiting its resources.

East Africa East Africa has no existing LNG liquefaction capacity. However, with discoveries and increasing reserve estimates of natural gas resources, particularly within the Rovuma Basin, Mozambique and Tanzania are likely to emerge as key players within the global LNG liquefaction sector. Both Mozambique and Tanzania are estimated to hold a combined 200 trillion ft3 of natural gas reserves and are unsurprisingly attracting the required foreign investment that is needed to develop the LNG liquefaction infrastructure.

14 LNGINDUSTRY JUNE 2015

MozambiqueIt is estimated that Mozambique holds 150 trillion ft3 of natural gas. The country’s offshore gas fields have been highlighted as feedstock for three LNG facilities that are currently under development, with the onshore LNG plants outlined as some of the most ambitious projects in the world.

The largest of these LNG projects will be located onshore at the Afungi LNG Industrial Park. The project is being jointly developed by Eni and a consortium led by Anadarko, who operate Area 4 and Area 1, respectively. After encouragement from the Mozambican Authorities, both entities signed a Heads of Agreement in early 2013 to collaborate on the development of the onshore and offshore infrastructure to reduce costs and environmental impacts. It is proposed that the facility will host a total of 10 LNG liquefaction trains, each with a capacity of 5 million tpy, making this potentially the world’s largest LNG liquefaction facility.

However, the project is progressing slower than initially scheduled. Phase 1 of the development, which involves the construction of Trains 1 and 2, was initially expected to commence operations in 2018, but with no final investment decision (FID) having been made, it is now more realistic that the facility will begin operations around 2020. There have also been delays in awarding the engineering, procurement and construction (EPC) contract. The three-way competitive front-end engineering and design (FEED) process commenced in December 2012 with each of the three selected companies completing the FEED work and additionally submitting EPC plans. A final decision regarding the EPC contract is yet to be announced, and the timeline within which this will occur is unknown. Still, with Anadarko having secured offtakers for two-thirds of the capacity of Train 1 with Asian customers, it suggests that the project will certainly go ahead.

Eni is also developing a floating LNG (FLNG) project with a proposed LNG production capacity of 5 million tpy, which is due to come onstream earlier in 2019. The vessel will be located approximately 30 miles offshore Mozambique and will be fed by the Coral gas discovery, within Area 4, which is estimated to hold between 7 and 10 trillion ft3 of gas in place. This project is currently in the FEED stage with EPC bids scheduled to be submitted in May 2015. The FID is expected to be made around a similar time. Eni is looking to expand the project by deploying a second FLNG vessel.

Eni is further involved in developing Mozambique’s third LNG liquefaction facility, which will also be fed by Area 4. The facility, which will be located onshore at Quionga near the Tanzania border, is still within the very early planning stages.

The ‘Mozambican New Petroleum Law’ entered into force in August 2014 as the previous legislation was considered insufficient for such a rapidly developing oil and gas sector, and additionally it did not cover LNG facilities.

The new law aims to increase the share of benefits that Mozambique will receive from its natural resources and also sets out to establish the High Authority for the Extractive Industry who will regulate activity. However, this new law is not applicable to existing holders of upstream concessions who are planning to develop any related LNG liquefaction facilities, e.g. Eni and Anadarko. It therefore makes it unclear what the implications of the new law are for any LNG projects that are initiated in the future.

The new law also outlines local content requirements that are applicable to goods and services required to develop the

industry. International companies are required to provide employment and training opportunities to nationals, particularly those within the area surrounding the project, to develop a skilled local workforce. Additionally, the law aims to increase to 25% the amount of natural gas that is received for domestic utilisation.

Tanzania Tanzania is estimated to hold significant reserves of gas offshore, equating to approximately 55 trillion ft3 of recoverable resources. BG Group and Statoil are currently developing the country’s only proposed LNG liquefaction facility, which will be fed by gas sourced from Blocks 1 and 2. The facility, which has an expected CAPEX of approximately US$30 billion, will comprise of at least two trains, each with a capacity of 5 million tpy. The FID is now expected in 2016 with the project due to come onstream later than the Mozambique projects, in 2022. The project developers are awaiting a final decision from the Tanzanian government regarding site selection, which is expected to be located in either Lindi or Mtwara.

In October 2014, the Tanzanian government approved a long awaited policy to regulate the natural gas industry. This policy, which corresponds to the Production Sharing Agreement (PSA) that was updated in 2013, states that the domestic market must receive priority with regards to gas supply.

At the same time, the government approved its midstream-focused natural gas policy. An additional policy outlining the exploration and production of the gas sector is currently under development. The progression of this proposed policy has stalled as it will now not be discussed in Parliament, as was previously expected. Due to the upcoming general elections during 2015 it is not known when the bill will be taken to Parliament. Local content requirements are currently outlined in the 2013 PSA that states that companies must comply with the first draft of the government’s local content policy released in April 2014.

This delay leaves Tanzania at a disadvantage compared to Mozambique and may potentially disturb any foreign investment. Companies, including BG Group, have stated that they will not rush into making any investments decisions due to the planned general elections – the outcome of which may have an effect on the new petroleum policies.

West Africa West Africa is the traditional LNG producing region within Sub-Saharan Africa and many nations, most notably Nigeria, have existing LNG liquefaction capacity. The expansion of many of these existing LNG liquefaction facilities is planned alongside the development of new export facilities. Currently, the development of these new projects is experiencing several delays.

Nigeria Nigeria is currently the largest producer and consumer of gas within Sub-Saharan Africa, and is the fifth largest global exporter of LNG. The country’s existing LNG liquefaction facility is located at Bonny Island. The plant commenced operations in 1999 and its capacity has continually been expanded since. Train 6 commenced operations in late 2007, bringing the total capacity up to approximately 22 million tpy.

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