We all know that natural gas is an abundant, clean-burning energy source. The challenge, however, is in transporting it economically. By its very nature, gas is always trying to escape.
Pushing it from country to country in pressurized pipelines works well when the countries are neighbours - but a pipe can only reach so far, and the demand for gas is becoming increasingly global. Therefore, liquefied natural gas (LNG) transported by boat is seen as a true worldwide alternative, and Norwegian shipping and oil and gas companies are some of the industry leaders in making this a reality.
Norway sends vast quantities of natural gas to Britain, the Netherlands and Germany through subsea pipelines. But pipelines aren't always the answer. The dawning imbalance between supply and demand in the United States has American energy officials looking far beyond pipeline range for new sources. The European gas market is changing, too. Deregulation there is expected to encourage shorter-term contracts and spot market sales that are incompatible with pipeline delivery. Quite independently, the Europeans and the Americans have settled on the same solution: LNG.
|The November 2004 launch of the Arctic Discoverer, the first of four LNG carriers that will serve Snøhvit when gas begins to flow in 2006.
LNG is methane that has been supercooled beyond the point at which it turns to liquid (-163 degrees Celsius). It occupies 1/600th the volume of gas and can be loaded safely into insulated ship tanks. Japan, South Korea and China have been importing LNG from Southeast Asia, Indonesia and Australia for decades. But the most current activity is found in the Atlantic Ocean. Predominantly due to growth there, analysts expect global LNG output to nearly double by 2010, with today's fleet of 160 LNG ships reaching 300.
Many of the new vessels - specially built for the colder, choppier waters of the Atlantic - will have Norwegian technology, officers and owners. Much of the LNG they carry will be Norwegian, too, as Europe's largest gas-producing country spearheads the development of "floating pipelines" across the Atlantic.
The Revolution's Here
"(It) would seem that the LNG revolution is indeed upon us," Lloyd's Shipping Economist reports. David Yergin, chairman of Cambridge Energy Research Associates, says the rise of flexible LNG transport creates "a new global energy business."
The old part of the business is underpinned by 25- and 30-year delivery contracts. Long-term contracts, like pipeline deals, guarantee investors a return on multibillion-dollar production infrastructure. New LNG producers from Africa to the Arctic have equally large investments to cover, and they too seek long-term sales relationships. But Dr. Yergin foresees an increasingly dynamic marketplace. Future LNG ship crews might even find themselves shifting course in mid-ocean to get the best price. Drawn by free markets and rising demand, he says, most of them will end up somewhere along the American seaboard.
"Today, LNG provides 3% of US (natural gas) supplies," Dr. Yergin recently told the US Congress. "By the year 2020, that share could be 25% to 30%."
Oslo-based Bergesen's Berge Boston tanker transports LNG across the Atlantic Basin. Here, the ship is travelling under the Tobin Bridge in Boston.
© Bergesen d.y. ASA
At present, no LNG is produced in Europe. But in 2006, Norwegian LNG from the Barents Sea will begin flowing - one cargo at a time - across the Atlantic. Norway's Höegh LNG and another shipper will carry the liquefied methane from Statoil's Snøhvit ("Snow White") field to regasification terminals at Cove Point, Maryland, and Bilbao, Spain.
At 71 degrees north latitude, the Snøhvit field was long classified as "stranded". But Norwegians no longer view gas resources in the same manner. The new optimism is in part due to the fact that the cost of building liquefaction plants has fallen from $500 per tonne of annual capacity in the early 1990s to less than $200 today, even as the price of natural gas has risen sharply. Likewise, the cost of building an LNG carrier has fallen from about $275 million to $170 million, even as vessel capacity has increased.
Such trends do more than vindicate the investment in Snøhvit. They also stimulate Russian interest in developing the vast gas fields of the eastern Barents Sea. There, Gazproms fabled Shtokmanovskoye field awaits a development plan that observers say could well follow the Snøhvit model of LNG production, with transport by ship westward to the United States. To that end, Statoil is studying whether to share its LNG storage and regas capacity at Cove Point with Gazprom.
Christian Andersen, Bergesen's LNG chartering manager, anticipates fantastic growth in the liquefied natural gas market over the upcoming decade. Bergesen has invested $1.6 billion in LNG in recent years.
© Bergesen d.y. ASA
Bigger, Better Ships
Norway has been a shipping power since the Viking era and a petroleum power since the 1970s, so it's no surprise that Norwegians are active in today's global LNG upswing.
Golar LNG has ridden the wave expertly, becoming the world's biggest independent LNG shipper. Oslo-based Bergesen is more diversified, but no less attuned to the LNG market.
"Growth in LNG is expected to be fantastic," says Christian Andersen, Bergesen's LNG chartering manager. "We are probably the most conservative company in the whole industry, and even we see yearly growth of seven to eight percent for the next 10 years - most of it going to the US. That's why we've invested more than $1.6 billion in LNG in the past few years."
Right after being interviewed in Oslo, Andersen took off for South Korea to take receipt of River Orashi, the first of 11 new LNG carriers that Bergesen has ordered. The new ship will carry LNG to North America from Nigeria, where LNG production is projected to triple through 2010.
River Orashi has a capacity of 145,000 m3. But the classification society Det Norske Veritas (DNV) expects LNG carrier capacities to grow to 250,000 m3 in the years ahead - a development in which DNV plans to take a lead role. DNV has developed LNG-carrier technology for 40 years, playing a role in every new gas-containment concept.
Making It Better
Ships are only part of the picture as the gas industry retools. Norwegian technology firms are busy developing better liquefaction systems and all-new terminal solutions to satisfy global environmental and safety concerns.
At the production end of things, Statoil has collaborated with Germany's Linde group to develop a new generation of spiral-wound heat exchangers and to patent the mixed fluid cascade (MFC) process of liquefaction. Shell has already applied the technology to onshore liquefaction plants in Australia and Brunei. Recently the Norwegian-German partnership added Aker Kværner to the fold, to help advance MFC for use on floating offshore installations.
Aker Kværner is also busy at the far end of the LNG value chain. More than 40 receiving terminals are on the drawing board in the United States, and some will be built offshore using concrete technology that Aker Kværner developed for North Sea installations. ChevronTexaco has turned to the Norwegian firm to design its Port Pelican LNG receiving terminal off Louisiana and a second terminal off Baja California. Aker Kværner and its associates are also designing a terminal in the Adriatic Sea. The plan there is to receive LNG from Qatar and feed gas into the Italian pipeline network.
Closer to fruition is Excelerate Energy's "Energy Bridge Deepwater Port" in the Gulf of Mexico. A key to the project is its submerged turret loading (STL) system. Developed by Norway's Advanced Production and Loading, this single-point system has been deployed around the world for oil. Its use in LNG offloading represents a coup for the Norwegian supplier.
"We are proud that our STL technology will be deployed as part of the world's first offshore LNG receiving terminal," says Jens Kaalstad, president of the company's US operation. "This technology will add considerable flexibility to the LNG market."
Moving LNG loading and discharge operations offshore has the advantage of avoiding conflicts with NIMBY ("Not in My Backyard") activists who oppose the construction of onshore facilities. But the concept is fraught with challenges. One is that conventional swivel systems for LNG loading arms are not designed to accommodate heavy wave action or the ship-to-ship movement of future LNG-FPSO operations. Framo Engineering, however, has developed an offshore cryogenic loading system with vacuum-insulated flexible piping that can tolerate lots of motion.
Some gas volumes and proposed transport distances are too small to justify large-scale LNG transport or even a pipeline. An example is the gas that comes up as a by-product of oil production. But a transport technology to capture the value of associated gas is being commercialized by Statoil, Teekay Shipping and Höegh & Co. Their idea is to ship gas from offshore fields to onshore terminals aboard special compressed natural gas (CNG) carriers. Knutsen OAS is working on a versatile, low-cost vessel of its own, which it calls a pressurised natural gas (PNG) carrier. Knutsen is also developing small LNG ships. With a capacity of 1,100 m3, its Pioneer Knutsen is the world's smallest.
Innovations on Traditional Pipelines
Amidst all the new transport technology, pipeline experts are holding their own. A quantum leap in multiphase flow technology - long a Norwegian speciality - has led to longer tie-backs for unprocessed wellstreams. Framo Engineering deserves credit for its multiphase booster and metering advances, as do Kværner Process Systems and Vetco Aibel for their work on preventing hydrate plugs. It's partly due to such achievements that Norsk Hydro could contemplate a 200-km step-out for its subsea Ormen Lange project, which will start production in 2007 above the Arctic Circle.
Ormen Lange is proof that Norway's pipeline specialists have nothing to fear from the LNG crowd. After processing ashore, gas from Ormen Lange will flow 1,200 km to Easington, England, through the world's longest subsea export pipeline. Named Langeled, the pipeline's main trunk is to be laid in 2005-2006. The million tonnes of steel involved will carry nearly a fifth of the UK's gas needs.
Sometimes, the old ways are best.
|Norsk Hydro's Ormen Lange project will include the world's longest multiphase pipeline to shore.
© Norsk Hydro