960-XR-001 Rev 1 - The Application of Mid Range LNG Process to Small Scale Liquefaction _Proteus LNG_

The Application of Mid Range LNG Process to Small Scale Liquefaction

(Proteus LNG)

Reference: 960-XR-001

Brian Songhurst Director of LNG

Energy & Power

22 Newman Street London W1T 1PM

United Kingdom

+44 20 7307 5100 [email protected]

The Application of Mid-Range LNG Process to Small Scale Liquefaction (Proteus LNG)

Reference 960-XR-001 Page 2 of 15

CONTENTS

1 AUTHOR’S NOTE .................................................................................................................3 2 ABSTRACT ..........................................................................................................................3 3 WHY SMALL SCALE LNG? ....................................................................................................4 4 THE PROTEUS LNG TECHNOLOGY .......................................................................................6

4.1 Unique and Patented Technology ................................................................................. 6 4.2 Flow Scheme ............................................................................................................ 6 4.3 Equipment Selection .................................................................................................. 8 4.4 Layout and Modularisation .......................................................................................... 8 4.5 Safety...................................................................................................................... 9 4.6 Operations, Control and Maintenance ......................................................................... 10 4.7 High Efficiency ........................................................................................................ 10 4.8 Capital Cost and Project Schedule .............................................................................. 11

5 THE OPPORTUNITIES .......................................................................................................11 5.1 Producing Energy from Currently Uneconomic Gas Reserves .......................................... 11 5.2 Small Onshore Gas Fields ......................................................................................... 12 5.3 Small Offshore Gas Fields ......................................................................................... 12 5.4 Flared Gas from Oil Production .................................................................................. 12 5.5 Coal Bed Methane (CBM) or Coal Seam Gas (CSG) ....................................................... 12 5.6 Waste Site Methane and Biomass............................................................................... 13 5.7 Sustainability .......................................................................................................... 13 5.8 End of Pipeline (Pipeline ‘Extension’) .......................................................................... 13 5.9 New LNG Producers and Operators ............................................................................. 13 5.10 New Equipment Manufacturers .................................................................................. 14

6 STATUS & NEXT STEPS .....................................................................................................14 7 CONCLUSIONS..................................................................................................................14



1 AUTHOR’S NOTE

Since submitting the application to present this paper at the China Power & Gas Conference the Mid

Range LNG (MRLNG) process has be renamed Proteus LNG and this new name has been used in

this paper.

2 ABSTRACT

Over the past 40 years the focus has been on the development of larger and larger LNG

liquefaction plants. Over that period single train throughput has increased from 1 million tons per

annum (MTPA) to nearly 8 MTPA. The development of these larger plants has focused on major gas

fields or associated gas from large scale oil field production. However more than 50% of the proven

gas reserves in the world are currently reported as not economic for development and referred to

as stranded gas. Additionally, even more gas exists in very small fields not included in these

estimates, gas currently flared during small oil field production, gas trapped in coal beds and waste

tips. These additional gas sources need to be produced to meet our future energy needs.

The Mid Range LNG liquefaction process, now called Proteus LNG, has been targeted for the

development of these small reserves with production rates of between 30 t/d and 3,000 t/d

(10,000 TPA – 1 MTPA). The process is able to offer high efficiencies similar to complex multi liquid

refrigerant systems and twice that of the simple nitrogen expander process typically used for small

scale liquefaction. This results in the production of more LNG per unit of gas feed.

The design of a 3,000 t/d unit has been completed and detailed discussions held with potential

major equipment suppliers who have confirmed their equipment is able to perform the required

duties. Further they are prepared to offer process guarantees. Due to the simple process and small

equipment count a 3,000 t/d plant can be supplied as a single module excluding the cold box.

Engineering studies indicate that the capital investment would be in the range of US$220-250 per

TPA on a FOB basis. The EPC contract schedule has been estimated at 30 months, considerably less

than a conventional LNG plant and providing earlier revenue...

A commercial demonstration unit producing 10 t/d is currently planned to commence operation in

2009. Produced LNG will be exported by road tanker to local markets. Design studies are underway

with several potential operating companies for units to be located both onshore and offshore. This

ability to be able to supply the liquefaction unit as a single module offers many benefits for remote

and offshore locations.

In addition to being an enabling technology for the economic development of small gas reserves

Proteus LNG provides opportunities for new equipment suppliers and manufacturers to enter the

lucrative LNG market. It will also enable small gas producers to enter the expanding LNG market

given the relatively low investment costs.



3 WHY SMALL SCALE LNG?

The first commercial production of LNG for export was in Algeria in 1964 and comprised 3 trains

each rated at 1.1 MTPA using the single mixed refrigerant process. The LNG was shipped to the UK

and France. Since then over 80 further trains have been constructed around the world to provide

an economic method of transporting large gas volumes over long distances where pipelines are not

economic. The growth in LNG production is shown in Figure 3.1.

LNG Worldwide Production

0

25

50

75

100

125

150

175

200

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

MTP

A

Figure 3.1 - LNG Worldwide Production Growth

This world scale development of LNG liquefaction plants has focused on larger and larger units to

gain the economies of scale. The size of these plants has been limited by the size of the gas

turbines to drive the refrigeration compressors. Early plants used Frame 5 equivalent machines,

then Frame 7 equivalent and most recently Frame 9 equivalent for Qatar Gas where the plant

throughput is 7.8 MTPA. The growth in plant size is shown in Figure 3.2.

Liquefaction Plant Capacity Growth

0123456789

1960 1970 1980 1990 2000 2010 2020

MTP

A

Figure 3.2 – Growth in LNG Plant Size



For these large plants the main technology providers have been ConocoPhillips with the Optimised

Cascade process using plate fin exchangers and Air Products with their propane pre-cooled mixed

refrigerant process using a proprietary designed and supplied spiral wound cryogenic heat

exchanger.

These world scale developments have resulted in the market being served essentially by the two

major technology providers stated above, a limited number of vendors for the major equipment

(gas turbine compressors and heat exchangers) and a limited number of EPC contractors. With the

increasing demand for LNG the result of these limitations has contributed to the rapid increase in

project cost causing many projects to be put on hold and leaving smaller gas fields as not

economic to develop.

The time has come to shift the paradigm from large scale and few suppliers to smaller plants with

new technologies, new equipment suppliers, lower development costs and shorter schedules.

These large plants developments require very large gas supplies to be economic e.g. a 6 MTPA

plant requires a 200 BCM gas field for an economic production life of 25 years. This paradigm shift

will enable the economic development of much smaller gas fields which are currently overlooked

and regarded as ‘stranded gas’ and provide additional energy supplies to meet the needs of

growing industrial markets.

The application of Proteus LNG liquefaction technology enables this paradigm shift for the following

reasons:-

Simple flow scheme with only 1/3rd of equipment of conventional liquid refrigerant plants;

Low capital cost and less maintenance with less equipment;

Shorter project schedule enabling earlier production and improved cash flow;

Process efficiency close to large scale plants maintaining low fuel consumption and

operating costs;

Modular construction reducing site construction costs and shorter schedule than

conventional site constructed plants;

Applicable to both offshore and onshore locations;

Intrinsically safer than processes using large inventories of highly flammable liquid

refrigerants;

Ease of start up and shutdown including the ability to operate on full recycle;

Opportunity for new vendors to enter the market and provide more competition lowering

costs and shortening delivery times;

Economic for LNG production rates from 30 t/d to 3,000 t/d (10,000 TPA - 1 MTPA).



4 THE PROTEUS LNG TECHNOLOGY

4.1 UNIQUE AND PATENTED TECHNOLOGY

The patented Proteus LNG technology is unique in that the liquefaction of the feed gas (essentially

methane and ethane) takes place directly inside the turbo expander. In all other processes the

liquefaction takes place in a cryogenic heat exchanger using an indirect refrigerant or refrigerants.

The other simple small scale technologies typically provide refrigeration by using either an external

single nitrogen expander cycle or dual nitrogen and methane expander cycles.

The elimination of these external refrigerant(s) circuit(s) significantly reduces the complexity and

number of equipment items and thus reduces plot space, capital cost, maintenance and potential

hydrocarbon leakage points. The flow scheme for the liquefaction process is shown in Figure 4.1.

Figure 4.1 – Proteus LNG Simplified Flow Scheme

4.2 FLOW SCHEME

The feed gas requires pre-treatment in the same way as all other liquefaction process to remove

heavy hydrocarbons, water and carbon dioxide which would freeze at liquefaction temperatures

thus blocking the piping and equipment. A mercury guard bed would also be required to prevent

damage to the aluminium components as is normal practice. The feed gas is pre-cooled with

returning cold recycle gas and mixed with compressed recycled gas and further cooled before

entering the turbo expander where 30-40% of the feed gas is liquefied and sent to storage. The

gas not liquefied is compressed and recycled after cooling with air or cooling water. A part of the

recycled gas is used as fuel for the gas turbine driving the recycle gas compressor. To improve the

process efficiency an auxiliary refrigeration circuit can be used as shown using the recycled gas.



The process flow diagram shown in Figure 4.2 describes the process in more detail. NGLs (natural

gas liquids) are removed from V1 following pre-cooling. It shows the arrangement of the heat

exchangers which would be located in the cold box and the multistage compression of the recycle

gas. The specific arrangement would be optimised for each project based on gas composition and

throughput.

Figure 4.2 - Process Flow Diagram

Figure 4.3 shows how the process is likely to fit into the overall plant. As mentioned earlier the pre-

treatment requirements are the same as to other liquefaction processes.

Figure 4.3 – Proteus LNG showing Pre-Treatment



4.3 EQUIPMENT SELECTION

The equipment comprising the Proteus LNG unit is normal and well proven in the hydrocarbon

processing industry. It is only the arrangement that makes it unique and ideally suited for small

scale plants. Figure 4.4 shows the maturity of each of the main equipment items following

discussion with equipment suppliers.

The only item requiring some testing is the LNG separator located after the turbo-expander as the

LNG will exit the expander as a fine mist. The vendors contacted had every confidence that the

required separation could be achieved. With regard to the turbo-expander the world’s leading

manufacturer has many references for the same liquefaction duty on ethylene service and is

confident their units will perform with methane and ethane and will offer performance guarantees.

Turbo-expanders are well proven with propane where they are extensively used for natural gas

liquids recovery on gas processing plants.

0 20 40 60 80 100

% Maturity

Pumps

Separators

Heat Exchangers

Expanders

Compressors

Equipment Maturity

Figure 4.4 - Equipment Maturity

4.4 LAYOUT AND MODULARISATION

The simplicity and low equipment count of the process makes it ideal for modularisation and layout

studies have been undertaken for 400 t/d and 3,000 t/d units. Even the larger 3,000 t/d unit can

be arranged as a single module with a weight of 2,000 t and dimensions of 36 m long x 24 m wide

x 15 m high (excluding the turbine exhaust sacks). For the larger units 2x50% compression trains

would be used as shown. The cold boxes, also 2x50% would be separate from the main module

and each weighing approximately 250 t. The layout shown assumes cooling water is available, if

not air coolers would be needed with a plot area similar to the main module.

Typical plan and elevation drawings for the larger unit are shown in Figure 4.5 and Figure 4.6. The

weights and dimensions are ideal for installing on a tanker or barge for a floating LNG (F-LNG)



production vessel. Offshore layout studies have been performed for several oil & gas companies

and have proved the viability of process for offshore applications.

Figure 4.5 – Module Plan View

Figure 4.6 – Module Elevation View

4.5 SAFETY

The process is intrinsically safer than conventional processes as there are no flammable external

liquid refrigerants. The system operates totally in the gas phase with the exception of the LNG

separator thereby reducing hydrocarbon inventory. Further it only uses 1/3rd of the equipment of

conventional liquid refrigerant systems which minimises piping and valves and potential

hydrocarbon leakage points.



4.6 OPERATIONS, CONTROL AND MAINTENANCE

The simple process and reduced equipment count enables easy start up and shut down. The unit

can be started in total recycle mode and maintained in that condition if there is an interruption in

the gas feed supply unlike the complex control systems used on multi-refrigerant systems. This

simple control scheme assists ease of plant operations.

The low equipment count also ensures maintenance is relatively simple reducing maintenance costs

and lost production time. A plant availability is expected in excess of 340 days per year (>93%).

4.7 HIGH EFFICIENCY

Proteus LNG offers much higher energy efficiency than other simple small scale expander processes

e.g. nitrogen and methane circuits. The efficiency is closer to that expected from complex multi-

refrigerant circuits thus reducing fuel consumption and operating costs. The efficiencies are

compared in Figure 4.7 expressed as kW per t/d LNG produced.

LIQUEFACTION PROCESS SPECIFIC POWER kW/ton per day

Peak Shaving Units 25-35

Existing Expander Cycles 20-25

Proteus LNG 13-18

Cascade Cycle 13-14

Base Load Mixed Refrigerant 12-13

Figure 4.7 – Liquefaction Efficiency

For a 1 MTPA (3,000 t/d) plant the expected power consumption for a Proteus LNG unit is 39-54

MW - just half of the 60-100 MW typically required for a conventional nitrogen expander circuit but

only slightly more than the 36-42 MW required for the mixed refrigerant or Cascade process.

Assuming a feed gas (wellhead) cost of US$2/MMBTU and gas turbine efficiency of 35% the use of

Proteus LNG would reduce the fuel cost by approximately US$9 million per year for a 1 MTPA plant

when compared to the single nitrogen expander process. Expressed another way this fuel (feed

gas) saving could produce an additional 10% of LNG (100,000 TPA) with an increased revenue of

$27 million per year.

In addition to reducing the operating cost this higher efficiency also reduces the CO2 emission by

50% which offers many benefits not only to the environment but also savings from any imposed

carbon taxes.



4.8 CAPITAL COST AND PROJECT SCHEDULE

Based on the conceptual design the FOB cost for a 1 MTPA modular plant is estimated to be

US$220-250 million. This excludes the gas pre-treatment, LNG storage, utilities and civil and

construction costs. This cost is significantly less than liquefaction plants using other technologies

due mainly to smaller number of equipment items and associated bulk materials.

The project schedule has been estimated as 30 months from award of the EPC contract. The critical

path is though the cryogenic equipment and main gas turbine compressors deliveries. It is hoped

that these delivery periods could be reduced by bringing new manufacturers into the supply chain

and offsetting the extended deliveries caused by the current high demand from limited vendors. An

indicative project schedule is shown on Figure 4.8.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36

Feed

EPC Award

Detailed Design

Procurement

Module Fabrication

Pre-Commisioning

Transportation

Installation

Tie ins

Commisioning

Commence Operation

Months Months MonthsTitle

Figure 4.8 –Indicative Schedule

5 THE OPPORTUNITIES

5.1 PRODUCING ENERGY FROM CURRENTLY UNECONOMIC GAS RESERVES

As Proteus LNG offers lower capital and operating costs than other small scale processes it is an

enabling technology for small scale LNG liquefaction plants in the range 30 t/d to 3000 t/d.

Applications have been identified as follows:-

Small onshore gas fields;

Small offshore gas fields;

Flared gas from oil production;

Coal bed methane or coal seam gas;

Waste site methane and biomass;

End of pipeline (pipeline ‘extension’);

Sustainability.



5.2 SMALL ONSHORE GAS FIELDS

Many small gas fields exist around the world and have been estimated to contain as much as

85,000 BCM (3000 TCF) and could be regarded as ‘stranded gas’ i.e. currently not economic to

develop. This estimate is based on fields that have been identified with reserves greater than 30

BCM (1 TCF). However it is expected that there many gas fields with even smaller reserves that

could be developed economically with Proteus LNG technology and supply much needed energy

resources. These fields could be regarded as below the current ‘radar’ of the industry reserve

estimates. With Proteus LNG technology economic at 30 t/d fields as small as 0.3 BCM could be

developed on a profitable basis.

The shape of these developments is likely to comprise a single modular unit with small buffer

storage and road tanker export. Production of 30 t/d equates to 60 m3/d of LNG and using typical

40m3 road tankers would result in loading 3 tankers every 2 days. Buffer storage could be just one

road tanker.

5.3 SMALL OFFSHORE GAS FIELDS

In general the development cost for offshore facilities is several times higher than the equivalent

onshore facilities thus raising the threshold at which small fields would become economic. This is

compounded by the additional costs associated with marine transportation as cargoes would have

to sufficiently large to be economic. Current studies indicate that 3000 t/d (1 MTPA) is likely to be

the economic break point requiring a field with a reserve of about 30 BCM. This could be reduced

by moving the facility from field to field but this does require considerable relocation costs.

5.4 FLARED GAS FROM OIL PRODUCTION

This scenario is essentially the same as small onshore fields and would be economic down to 10 t/d

providing the market for the LNG was reasonably close and could be delivered by road tanker. This

opportunity not only provides monetising the flared gas but also reducing the CO2 emissions. This

reduction could enable small oil fields to be developed where they are restricted by flaring

limitations. It could also prevent the shut down of existing operations due to pending flaring

limitations.

5.5 COAL BED METHANE (CBM) OR COAL SEAM GAS (CSG)

The industry is becoming aware of this valuable source of methane and it is estimated that

extensive reserves exist around the world. The gas is likely to be rich in methane and contain low

levels of CO2 and other contaminants minimising the size and cost of the gas treatment facilities

and improving the profitability when compared to many gas fields which can contain high levels of

CO2.



Major reserves have been identified in China, Russia, USA, Canada and Australia. Reserves in China

have been reported as 36 TCM and it has been stated that 10 BCM/y will be produced in 2010

compared to 0.1 BCM/y in 2006. A recent collaboration has been agreed with Caterpillar for 15

CBM power generation projects.

CBM has traditionally been vented to the atmosphere and methane has been identified more far

more damaging to the ozone layer than CO2. Hence not only is the development of CBM as an

energy source potentially economic it will also have a positive effect reducing environmental

damage.

5.6 WASTE SITE METHANE AND BIOMASS

Waste sites offer a valuable source of methane gas for LNG production but the gas is likely to be

highly contaminated with heavy and complex hydrocarbons. These will need to be removed as they

will freeze in the liquefaction plant and cause a blockage. Further evaluation is needed to explore

this potential source.

5.7 SUSTAINABILITY

Bringing in the new sources of gas mentioned above will assist in sustaining the supply of LNG to

meet the clean energy needs of the future. Additional LNG production will be able to replace

expensive diesel often used in small power stations. This will not only reduce cost but also

environmental pollution.

5.8 END OF PIPELINE (PIPELINE ‘EXTENSION’)

Small scale LNG is ideally suited for ‘extending’ a natural gas pipeline beyond its economic limit for

small consumers. A small scale plant can be located at the end of the pipeline and small consumers

supplied by LNG road tankers with a small regasification unit and local gas network installed at the

consumer end if needed. Units as small as 10 t/d could be installed. This concept could replace

expensive diesel as a fuel supply for power generation plants in remote locations.

5.9 NEW LNG PRODUCERS AND OPERATORS

The production of LNG to date has been mainly limited to the major oil and gas companies as the

developments have been large, capital intensive and based on large gas reservoirs or associated

gas from large oilfield operations. However this use of small scale LNG production as offered by the

Proteus LNG technology will open up the production opportunities to much smaller companies as

the development costs will be much less and local markets identified which can be served by road

tankers. These new operators are likely to comprise local gas and power companies who are

probably keen to replace expensive diesel or unreliable pipeline gas with a more reliable local

source.



Small scale operations have already commenced in many countries and will increase world wide

particularly as LNG becomes a source of fuel for vehicles and replaces expensive diesel. Many of

the major truck engine manufacturers are currently developing LNG fuelled engines.

5.10 NEW EQUIPMENT MANUFACTURERS

These new smaller plants will require new small LNG production equipment and will provide an

opportunity for new suppliers to enter the market. Whilst the existing manufacturers will no doubt

look at this smaller market it is likely that their focus will remain on the larger contracts with

higher returns. Further for large world scale plants with multi billion US$ investment operators will

only source from proven suppliers as the cost of equipment failure is very high. For the small scale

LNG production investment costs are much lower and this paradigm is shifted providing the way for

new entrants.

6 STATUS & NEXT STEPS

Proteus LNG technology is currently at the engineering stage and an engineering package has been

developed for a 3,000 t/d (1 MTPA) modular plant for either onshore (air cooling) or offshore

application (sea water cooling). Budget quotations and confirmation of equipment performance

have been obtained from the major vendors. A conceptual design will now be performed for a

smaller 150 t/d plant (50,000 TPA).

The next step is the construction and operation of a demonstration unit in 2009 to provide potential

purchasers with the necessary confidence. It is expected that this unit will produce 10t/d and

operate on a commercial basis taking gas from a national grid pipeline. Produced LNG will be

exported by road tanker for distribution to local users. The design of the demonstration has been

completed and the cost has been estimated at US$5 million. Investment partners are currently

being sourced.

7 CONCLUSIONS

For the last 30 years the focus of LNG liquefaction plant development has been on larger and larger

plants increasing from 1 million tons per annum (MTPA) to currently 8 MTPA. This has been based

on using gas from major oil and gas fields.

Proteus LNG technology with capital costs of the order of US$225-250 per TPA will enable the

economic production of LNG in the range 10,000 TPA – 1 MTPA (30 t/d – 3,000 t/d). This will

enable small gas reserves currently regarded as uneconomic to be developed and supply the

increasing world wide need for clean energy.

The process is innovative and simple and uses equipment already well proven in the gas processing

industry. Vendors contacted during the design of the 3,000 t/d unit all confirmed that their



equipment was able to perform the duty requested and they were all prepared to offer full

performance guarantees.

Unlike many other current offerings of small scale LNG production to the industry, Proteus LNG

offers energy efficiency closer to the far more complex liquid refrigerant systems. The expected

efficiency is twice that of the simple nitrogen cycle saving US$9million per year in operating costs

for a 1 MTPA plant or increasing LNG production by 10% for the same feed gas supply delivering an

increased revenue of $US27 million per year.

Further the avoidance of liquid hydrocarbon refrigerants intrinsically increases the safety of the

plant and also avoids any need for expensive refrigerant make up systems particularly difficult for

remote areas and offshore. Most operators wish to avoid the handling and storage of liquid

hydrocarbon refrigerants offshore.

The liquefaction unit can be built as a single module up to 1 MTPA (3,000 t/d) making it ideal for

remote locations where site construction is expensive or difficult due to access or lack of local

labour and resources. This also makes it ideal for offshore locations where it can be simply installed

on a LNG tanker or barge to provide a floating LNG (F-LNG) production system.

A design has been completed for a 1 MTPA plant for use either onshore or offshore and several

application studies have been completed for oil and gas companies. Further studies are currently in

progress including smaller plants of 150 t/d. The demonstration unit designed for 10t/d is expected

to be operational in 2009.

The process can be applied to any source of methane including Coal Bed Methane and Waste Site

Methane. The gas pre-treatment will need to be adjusted accordingly.

Proteus LNG not only provides an opportunity to develop small gas sources currently regarded as

un-economic but also provides opportunities for new equipment manufacturers and suppliers and

new operators to produce and market small scale LNG into these emerging markets.

Documents

960-XR-001 Rev 1 - The Application of Mid Range LNG Process to Small Scale Liquefaction _Proteus LNG_