MONTH 2008
© POTEN & PARTNERS 2008 CONFIDENTIAL
June 2013
Capt Doug Brown, LNG Marine Adviser Platts Private Power in Central America Panama City PANAMA
Gas/LNG Outlook Does LNG work for Central America?
MONTH 2009
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Today’s LNG market has 25 importing countries and 30 exporting projects
MONTH 2009
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Asian demand for LNG will drive tremendous growth Global LNG demand expected to exceed 400 MMt/y by 2025
Global LNG Demand Projection
0
50
100
150
200
250
300
350
400
450
2000 2005 2010 2015 2020 2025 2030
MM
t/y
Asia
Europe
Others
Source: Poten & Partners
MONTH 2009
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South & Central America grows to 16 MMt/y market New import technology will drive expansion in Central America
Source: Poten & Partners
South & Central Americas LNG Demand
0
2
4
6
8
10
12
14
16
18
MM
t/y
South America
Central America
MONTH 2009
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Trinidad, Colombia and Peru could provide regional supply
• Trinidad’s Atlantic LNG is a four-train facility with 15 MMt/y of capacity • Peru LNG is a one-train facility with 4.4 MMt/y of capacity • Pacific Rubiales and Exmar are building a 0.5 MMt/y export plant in Colombia
MONTH 2009
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Central American buyers will compete with Asia Asian netback LNG prices still cheaper than fuel oil
Source: Poten & Partners 0
5
10
15
20
25
2010
2011
2012
2013
2014
2015
2016
Brent
LNG - Asia Pacific
LNG - Spain
UK NBP
US Henry Hub
$/M
MB
tu ($
2012
)Major Price Indices Projections
• Liquefaction, freight, terminal and logistics costs need to be added to the US Henry Hub price to get a delivered, ex-ship price into Central America
MONTH 2009
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Lack of LNG import infrastructure puts Central American importers at a disadvantage
Central American Countries Regional LNG Supplier
Continue normal fuel &
energy operations
Construct LNG terminal
Supply LNG to existing demand centers
Commit LNG supply to
nonexistent terminals
Classic Chicken-and-Egg problem: Who will act first?
MONTH 2009
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How much LNG would I need?
• Assumptions • Plant Utilisation 80% • Ship size 145,000m3, 98.5% filling limit
CCGT Engine Turbine MW 300 300 300 Efficiency 52% 40% 30% MMBtu/day 38,000 49,000 66,000 M3 LNG/year 620,000 800,000 1,070,000 Days supply/ship 84.5 65 48.7 Ships/year 4.3 5.6 7.5 Months/ship 2.8 2.1 1.6
MONTH 2009
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Onshore vs. FSRU import terminal
• Two solutions to the same problem – how best to import LNG?
Images courtesy of Google Images/Google Earth
MONTH 2009
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FSRU offers lower capital but Unit Costs often similar
FSRU-based terminal
Conventional land-based
terminal
$ m
illio
n
Jet ty Structural
LNG Process & Utilities
LNG Storage
FSRU-based terminal
Conventional land-based
terminal
$/M
MBt
u
Opex
Vessel Charter
Capex
Terminal Capital Costs Terminal Costs of Service
Source: Poten & Partners
MONTH 2009
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Land-based LNG Import Facilities ideal for base load
• Traditional LNG import terminal will accept about 135,000- 150,000m3 at a time – full cargo on an LNG carrier
• Import terminal includes deep water berth, storage tank(s), regasification and export pipeline.
• Pros/Cons: • Can accept majority of LNG carriers • Adequate storage • Lower cost of LNG • Long interval between successive cargoes, but • Excessive inventory cost distorts cash flow • Cannot reduce scale of marine facilities, even if taking
part cargoes from large ships. • Lack of small scale shipping availability
MONTH 2009
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FSRU LNG Import Facilities can be built quickly
• Introduced as a quick and relatively cheap way of delivering gas to new markets.
• Had to overcome negativity associated with LNG ship to ship transfer (STS)
• FSRU is converted LNG carrier - receives cargo through ship to ship transfer and remains on site
• Need full scale marine facilities and adequate depth of water
• Construction of LNG import facilities and regasification typically costs about 3-4 times as much as a FSRU solution
Images courtesy of Google Images/Excelerate
• LNG FSRU may have to disconnect and put to sea for hurricane/bad weather
• Requires periodic removal for dry docking
• Not a continuous source of gas
MONTH 2009
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Small Scale LNG shipping does exist, but only in certain niche markets • Europe - Coastal distribution in Norway and cross Med trades (40,000m3_ • Japan - Shipments to small LNG power plants and utilities (pipeline earthquake risk) from
source or from bulk imports • LNG bunkering vessels under development due to increasing interest for LNG as bunker
fuel for ships • Drawback of berth compatibility/availability for small ships
• What are the alternatives: • “Milk run” – part cargo deliveries from LNGCs at multiple ports • Tailored solutions – small scale LNG, CNG, etc
All images courtesy of Google Images
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Several Alternative Schemes Proposed • GoM - ATBs proposed for the carriage of LNG or CNG • CNG - Coselle • Hybrid transportation media – SeaOne, Enersea • Alternative schemes look for cheaper methods of construction and different technology to
carriage of LNG at -160C (-260F) – avoidance of cryogenic processing and materials • Preference is for using pipeline code principles in shipping applications – Containment is
long coil or rack of pipeline packed to high pressure at ambient temperature to accommodate CNG
• Use of “vehicle” for carriage of methane at intermediate temperature/pressure – containment system is “cargo” in near-standard ships
All images courtesy of Google Images
MONTH 2009
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Conclusions
• Asian demand drives LNG growth – and pricing • Adequate USGC and Caribbean supply potential, but • Central America will only grow LNG demand with new technology/approach • LNG pricing attractive over Fuel Oil but new infrastructure is expensive • Supplier/consumer impasse has to be broken – who will move first? • FSRU versus onshore terminal – relative economics, temporary solutions
sometimes become permanent • LNG shipping is a mature operation – over 50 years of experience – but need
full scale facilities for existing vessels, even if importing small quantities • Small scale LNG has merit but cost is still high – small vessels may not be
compatible with local export facilities • Alternative technologies not proven in practice • An opportunity exists, but needs care to identify and implement the most
appropriate supply chain solution • Best infrastructure requirements • Best deal with suppliers
• A collective solution may be better than working in isolation.
MONTH 2009
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LNG & NATURAL GAS CONSULTING CONTACTS:
AMERICAS Contact: Jim Briggs
Email: [email protected] Tel: +1 212 230 2000
EUROPE, MIDDLE EAST, AFRICA Contact: Graham Hartnell
Email: [email protected] Tel: +44 207 493 7272
ASIA PACIFIC Contact: Steve Thompson
Email: [email protected] Tel: +61 8 6468 7942
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