Working with LNG
CWC Gulf are involved in the planning and development of re-gasification and LNG distribution terminals for clients in Asia and the Gulf. We are also appointed consultants for the negotiation of natural gas feedstock, condensate and mazut contracts.
While industry leaders agree that the bulk of LNG trade will continue to be founded on long-term transactions, in the coming years they expect to see an increase in short-term LNG trade. This translates to sales agreements lasting between one and three years, even spot trade agreements, and agreements lasting less than a year. Pricing and contract structures are likely to become more flexible to suit market requirements. Producers are under pressure to cut costs throughout the LNG chain by adopting a more innovative approach to both the commercial and technological aspects of LNG projects. New technologies, such as floating LNG facilities, are expected to improve the economics of grassroots projects. As for new markets, the industry continues to pin its hopes on China and India.
Oil & Gas
LNG Market 2015-2017
According to the 2015 IGU World LNG Report the Global trade volumes strengthened in 2014, rising above 241 MT and marking the 2nd highest year for LNG trade in the industry’s history. Higher trade was underpinned by new supply from PNG, which became the world’s 19th LNG exporter. This was supported by improved output from Nigeria and Algeria in the Atlantic Basin, though feedstock issues in Egypt and the closure of Angola LNG limited further growth. Lithuania joined the ranks of LNG importers in 2014, bringing the number of countries sourcing LNG from the global market to 29. Regional import patterns held steady, with the Pacific Basin commanding the largest share of demand and continuing to support inter regional trade flows as Atlantic Basin demand remained depressed. The global LNG market is primed for significant change in the years ahead as new supplies from the Pacific Basin and elsewhere break the status quo of a tight market. The first signs of this change were apparent in 2014 as a looser supply-demand balance and the drop in oil prices in the second half of the year led to significant price movements. New LNG supplies combined with potential nuclear restarts in Japan and expected weaker economic growth in China will leave the Pacific Basin well-supplied, reducing the need for diversions from Atlantic Basin markets.
Looking ahead, LNG demand trajectories for most importers are not expected to fundamentally change in 2015, even with lower oil prices. The Pacific Basin is set to remain the largest source of LNG demand, with China acting as the fastest growing market as contracted supplies from new Pacific Basin projects come online. Demand could, however, be somewhat tempered by potential nuclear restarts in Japan and expectations of slower economic growth in China. Further, European and North American LNG demand is likely to remain weak as gas market fundamentals reduce the need for LNG. Latin America will continue to figure as an attractive import market, with countries such as Argentina and Brazil offering premium prices for spot and short-term supplies.
When natural gas is cooled to a temperature of approximately -260°F at atmospheric pressure it condenses to a liquid called liquefied natural gas (LNG). One volume of this liquid takes up about 1/600th the volume of natural gas at a stove burner tip. LNG weighs less than one-half that of water, actually about 45% as much. LNG is odorless, colorless, non-corrosive, and non-toxic. When vaporized it burns only in concentrations of 5% to 15% when mixed with air. Neither LNG, nor its vapor, can explode in an unconfined environment.
Natural gas is composed primarily of methane (typically, at least 90%), but may also contain ethane, propane and heavier hydrocarbons. Small quantities of nitrogen, oxygen, carbon dioxide, sulfur compounds, and water may also be found in “pipeline” natural gas. The liquefaction process removes the oxygen, carbon dioxide, sulfur compounds, and water. The process can also be designed to purify the LNG to almost 100% methane.
LNG tanks are always of double-wall construction with extremely efficient insulation between the walls. Large tanks are low aspect ratio (height to width) and cylindrical in design with a domed roof. Storage pressures in these tanks are very low, less than 5 psig. Smaller quantities, 70,000 gallons and less, are stored in horizontal or vertical, vacuum-jacketed, pressure vessels. These tanks may be at pressures any where from less than 5 psig to over 250 psig. LNG must be maintained cold (at least below -117°F) to remain a liquid, independent of pressure.
The insulation, as efficient as it is, will not keep the temperature of LNG cold by itself. LNG is stored as a “boiling cryogen,” that is, it is a very cold liquid at its boiling point for the pressure it is being stored. Stored LNG is analogous to boiling water, only 470° colder. The temperature of boiling water (212°F) does not change, even with increased heat, as it is cooled by evaporation (steam generation). In much the same way, LNG will stay at near constant temperature if kept at constant pressure. This phenomenon is called “autorefrigeration”. As long as the steam (LNG vapor boil off) is allowed to leave the tea kettle (tank), the temperature will remain constant. If the vapor is not drawn off, then the pressure and temperature inside the vessel will rise. However, even at 100 psig, the LNG temperature will still be only about -200°F.
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