1. LNG quality and market flexibility Challenges and solutions

2. Presentation outline
Quality specifications for different distribution networks
Characteristics of LNGs currently produced
Quality adjustment options available to producers and terminal operators
Overall optimization: a suggested approach (case study)

3. Network gas specifications by region
Objectives:
Safety – non-toxic, non-corrosive
Interchangability of gas being distributed
 limit variation range of parameters affecting combustion
Main parameters covered by specifications:
Calorific Value (GCV) per unit volume
Wobbe Index (WI = GCV /  relative density)
ICF, Soot Index, Yellow Tip Factor, …
GCV specs for domestic gas: 3 main regions:
Asia (Japan, Korea, Taiwan): high GCV > 1090 Btu/scf
UK & US: low GCV < 1065 Btu/scf. In addition, WI < 51,41 MJ/m3(s) for UK
Continental Europe: wide range of GCV: 990 to 1160 Btu/scf

4. Different quality specifications: historical reasons
Gas producing countries - specs based on characteristics of local gas :
High inert gas content (UK - Groningen)
Extraction of C3 & C4 to valorize as LPG
Extraction of C2 for petrochemicals feedstock (US Gulf Coast)
Need to take different gases from diverse sources (Cont. Europe)
Separate networks (H gas & B gas in Europe)
Countries using imported LNG from the start – specs based on characteristics of LNG available in the Asia-Pacific basin:
LNG with low inert gas content
LNG rich in ethane and often also C3 – C4
Adjustment of GCV before distribution, by injection of LPG

5. Characteristics of LNGs currently produced
Japan
USA UK

6. Quality adjustment at the import terminal
Options available:
LPG injection (butane and/or propane) Japan
Nitrogen injection UK, US
Extraction of C3+ and even C2 US
Gas streaming to users US, Japan
Blending with local gas US, UK, Europe
Blending different LNG cargoes Everywhere
Terminal specs can be quite different to network specs
Both specs and available equipment may vary over time
Negotiation on a case-by-case basis

7. Terminal specifications - GCV

8. Terminal specifications – Wobbe Index

9. C2+ production from existing plants
Petrochemicals
 Gas production
 GCV
 Gas production
Petrochemicals
 GCV
 GCV

10. LPG extraction at the plant
Negative aspects
Increased Capex and Opex (extraction units, storage and loading facilities)
Marked increase in safety constraints
Risk of saturating port facilities
Positive aspects
Increased amount of feedgas produced
LPG easy to valorize
better project economics
Ethane only worth extracting if petrochemicals outlet nearby

11. Overall optimization – a suggested approach
CONDENSATS
GNL
EXTRACTION
Liquefaction plant
GNL
Shipping
Import terminal
GNL

12. Overall optimization – a suggested approach
 Need for a global approach factoring in shipping
Case study
Delivery of 750 mmscfd to the US Gulf Coast market (~ 5,4 Mt/an)
Production in Middle East (North Field type gas)
Quality compatible with UK specs to allow rerouting
m3 tankers
Voyage duration 24 days

13. Three scenarios studied
Three quality-adjustment options,
but, same amount of energy delivered on the natural gas market
No extraction at plant – Injection of nitrogen at terminal (max. N2 content: US 3%, UK 5%)
Extraction of GPL at plant and valorization at FOB Arabo-Persian Gulf price
No extraction at plant – Extraction of GPL at terminal and valorization at Mont Belvieu price

14. Scenario 1 – No LPG extraction

15. Scenario 2 – LPG extracted at plant

16. Scenario 3 – LPG extracted at terminal

17. Extra costs vs extra product revenues
Case n°1
Case n°2
Case n°3

18. Extra costs vs extra product revenues
Case n°1
Case n°2
Case n°3
Natural gas TBtu/year

19. Extra costs vs extra product revenues
Case n°1
Case n°2
Case n°3
Feed gas (+9%) (+8%)

20. Extra costs vs extra product revenues
Case n°1
Case n°2
Case n°3
Extra LPG kt kt
Extra condensates kt kt

21. Extra costs vs extra product revenues
Case n°1
Case n°2
Case n°3
Extra costs
Nitrogen
Injection
220,000 t

22. Extra costs vs extra product revenues
Case n°1
Case n°2
Case n°3
Extra costs
LPG extraction,
Storage and loading
+3 cargoes cargoes

23. Extra costs vs extra product revenues
Case n°1
Case n°2
Case n°3
Extra costs
Fuel gas
LPG extraction,
Storage and loading
+3 cargoes cargoes
at at
feed-gas Henry Hub
price price

24. Extra costs vs extra product revenues
Case n°1
Case n°2
Case n°3

25. Overall optimization - Conclusions
Extraction of LPG:
Helps boost production from gas field %
Profitability OK at current LPG prices
Extraction at plant rather than US terminal
Need detailed study factoring in real Capex
Sensitive to relative LPG prices in Gulf and US
Extraction at plant  LNG meets both US and UK specs: GCV = 1052 Btu/scf ; WI = MJ/m3(s)
Extraction at US terminal  harder to reroute within Atlantic zone, but LNG meets Asian specs: GCV ~ 43 MJ/m3(n) i.e. 1,100 Btu/scf
Should factor in impact of LNG composition on shipping costs

26. Thank you for your attention
It’s not necessary to dwell too long on the consequences of September the eleventh, but this event, as well as other industrial disasters which occurred recently in Europe, have initiated an intense debate about industrial risk management, and especially the effects of industrial disasters on inhabited areas.
As a result, even tighter safety regulation is likely to be introduced in Europe in the near future.
So, we should assume that an additional level of risk management will have to be considered, in response to the increasing sensitivity of the community to the industrial risk.