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School of Petroleum Management

ADVANCED TECHNOLOGIES THROUGHOUT THE VALUE-CHAIN OF LNG

A Research Report

By:

1. Mohit Suri 20121033 2. Narsimha Murthy 20121035 3. Nishit Jain 20121037 4. Rishabh Diwakar 20121045 5. Tushar Shah 20121058

(MBA Energy & Infrastructure) School of Petroleum management Gandhinagar, Gujarat 7/13/2013

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Table of Contents:

Executive Summary

A. Introduction………………………………………………………………….…….….3

Natural Gas, Where natural gas is found

B. Natural Gas Utilization In India…………………………………………….....….....3

C. Liquefied Natural Gas (LNG) …………………………………………..……….…..5

LNG Imports to India, Why LNG required, Current Scenario

D. LNG Value Chain…………………………………………………………….……....8

E. Advanced Technologies Used in LNG Value Chain...………………………….…..9

1. Natural Gas Production

3D-4D Seismic Imaging, Measurement while drilling, Hydraulic Fracturing

2. Gas transportation by pipelines

Hydraulic testing of pipelines, SCADA systems

3. Liquefaction

LNG Floating Production Storage Offloading (FPSO)

4. Regasification

Floating Storage Regasification Unit (FSRU)

F. Challenges and Opportunities for developing LNG in India…..……………..…..17

G. References……………………………………………………………………...…….19

H. Appendix……………………………………………………………………..….…...24

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EXECUTIVE SUMMARY

In last decade, Indian economy has shown incredible growth. Steadily and slowly, India is

gaining strategic importance globally owing to the impressive economic growth pattern and

market attractiveness. Soon India will become Gas based economy replacing the diesel based

economy. With the massive rate of urbanization, the demand for energy has grown manifold in

the past few years and will continue to grow in future. Last decade also showed tremendous

growth in Indian gas sector and gas has slowly emerged as a primary source of energy for India

along with coal and oil.

The demand of natural gas has sharply increased in the last two decades. In India natural gas was

first discovered off the west coast in 1970s, and today, it constitutes 10% of India's total energy

consumption. As a result of growth in demand and supply, Indian gas sector offers large value

creation potential across upstream, midstream and downstream of gas value chain.

Recent Technology, Innovative Practices and Development have already started shaping and

reflecting a change in natural gas business.

This report examines the current status of LNG in India and identifies the various advance

technologies which are being used throughout the value chain of LNG by the gas industry. Each

step of LNG value chain is examined and the technology associated with it has been studied.

Technologies such as 3D-4D Seismic Imaging, Measurement while drilling, Hydraulic

Fracturing, Hydraulic Testing of pipelines, SCADA systems, LNG Floating Production Storage

Offloading (FPSO), Floating Storage Regasification Unit (FSRU) have been analyzed to look at

the merits and demerits of these advance technologies.

From this research report it is concluded that to have a continuous and compounding growth of

our Nation, it is very essential to build, develop and foster our research and development sector,

as they carry the seeds of running the economy. Imports of liquefied natural gas (LNG) by India

will soar in the next decade to fuel an expanding economy as the country’s domestic gas output

struggles, hinting, India’s future lies in Liquefied natural gas (LNG).

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A. INTRODUCTION:

Natural gas is a naturally occurring hydrocarbon gas mixture consisting primarily of methane,

but commonly includes varying amounts of other higher alkanes and even a lesser percentage of

carbon dioxide, nitrogen, and hydrogen sulfide. Natural gas is an energy source often used for

heating, cooking, and electricity generation. It is also used as fuel for vehicles and as a chemical

feedstock in the manufacture of plastics and other commercially important organic chemicals.

Natural gas is one of the most abundant energy resources on the planet, yet more than one-third

of global natural gas reserves remain stranded and undeveloped.70% of gas traded

internationally is exported by pipeline; 30% by liquefied natural gas (LNG).

Where Natural Gas is found?

Natural gas is found in deep underground natural rock formations or associated with other

hydrocarbon reservoirs in coal beds and as methane clathrates. Petroleum is also another

resource found in proximity to and with natural gas. Most natural gas was created over time by

two mechanisms: biogenic and thermogenic. Biogenic gas is created by methanogenic organisms

in marshes, bogs, landfills, and shallow sediments. Deeper in the earth, at greater temperature

and pressure, thermogenic gas is created from buried organic material.

Before natural gas can be used as a fuel, it must undergo processing to remove impurities,

including water, to meet the specifications of marketable natural gas. The by-products of

processing include ethane, propane, butanes, pentanes, and higher molecular weight

hydrocarbons, hydrogen sulfide (which may be converted into pure sulfur), carbon dioxide,

water vapor, and sometimes helium and nitrogen.

Natural gas is often informally referred to simply as gas, especially when compared to other

energy sources such as oil or coal. But not to be confused with gasoline especially in North

America, the term gasoline also is often shortened in colloquial usage to gas.

B. NATURAL GAS UTILISATION IN INDIA:

1. Natural gas has emerged as the most preferred fuel due to its inherent environmentally

benign nature, greater efficiency and cost effectiveness. The demand of natural gas has

sharply increased in the last two decades at the global level. In India too, the natural gas

sector has gained importance, particularly over the last decade, and is being termed as the

Fuel of the 21st Century.

2. Production of natural gas, which was almost negligible at the time of independence, is at

present at the level of around 87 million standard cubic meters per day (MMSCMD). The

main producers of natural gas are Oil & Natural Gas Corporation Ltd. (ONGC), Oil India

Limited (OIL) and JVs of Tapti, Panna-Mukta and Ravva. Under the Production Sharing

Contracts, private parties from some of the fields are also producing gas. Government have

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also offered blocks under New Exploration Licensing Policy (NELP) to private and public

sector companies with the right to market gas at market determined prices.

3. Out of the total production of around 87 MMSCMD, after internal consumption, extraction

of LPG and unavoidable flaring, around 74 MMSCMD is available for sale to various

consumers.

4. Most of the production of gas comes from the Western offshore area. The on-shore fields in

Assam, Andhra Pradesh and Gujarat States are other major producers of gas. Smaller

quantities of gas are also produced in Tripura, Tamil Nadu and Rajasthan States. OIL is

operating in Assam and Rajasthan States, whereas ONGC is operating in the Western

offshore fields and in other states. The gas produced by ONGC and a part of gas produced by

the JV consortiums is marketed by the GAIL (India) Ltd. The gas produced by OIL is

marketed by OIL itself except in Rajasthan where GAIL is marketing its gas. Gas produced

by Cairn Energy from Lakshmi fields and Gujarat State Petroleum Corporation Ltd.

(GSPCL) from Hazira fields is being sold directly by them at market determined prices.

5. Natural gas has been utilized in Assam and Gujarat since the sixties. There was a major

increase in the production & utilization of natural gas in the late seventies with the

development of the Bombay High fields and again in the late eighties when the South

Bassein field in the Western Offshore was brought to production.

6. The gas produced in the western offshore fields is brought to Uran in Maharashtra and partly

in Gujarat. The gas brought to Uran is utilized in and around Mumbai. The gas brought to

Hazira is sour gas which has to be sweetened by removing the sulphur present in the gas.

After sweetening, the gas is partly utilized at Hazira and the rest is fed into the Hazira-

Bijaipur-Jagdhishpur (HBJ) pipeline which passes through Gujarat, MadhyaPradesh,

Rajasthan, U.P., Delhi and Haryana. The gas produced in Gujarat, Assam, etc. is utilized

within the respective states.

7. Natural Gas is currently the source of half of the LPG produced in the country. LPG is now

being extracted from gas at Duliajan in Assam, Bijaipur in M.P., Hazira and Vaghodia in

Gujarat, Uran in Maharashtra, Pata in UP and Nagapattinam in Tamil Nadu. Two new plants

have also been set up at Lakwa in Assam and at Ussar in Maharastra in 1998-99. One more

plant is being set up at Gandhar in Gujarat. Natural gas containing C2/C3, which is a

feedstock for the Petrochemical industry, is currently being used at Uran for Maharashtra Gas

Cracker Complex at Nagothane. GAIL has also set up a 3 lakh TPA of Ethylene gas based

petrochemical complex at Auraiya in 1998-99.1

1 Journal of Petroleum Technology – Natural gas utilization in India

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C. LIQUEFIED NATURAL GAS (LNG):

Natural gas at -1610°c transforms into liquid. This is done for easy storage and transportation

since it reduces the volume occupied by gas by a factor of 600. LNG is transported in specially

built ships with cryogenic tanks. It is received at the LNG receiving terminals and is degasified

to be supplied as natural gas to the consumers. LNG projects are highly capital intensive in

nature. The whole process consists of five elements:-

1. Dedicated gas field development and production.

2. Liquefaction plant.

3. Transportation in special vessels.

4. Regasification Plant.

5. Transportation & distribution to the Gas consumer.

LNG supply contracts are generally of long term nature and the prices are linked to the

international crude oil prices. However, the LNG importing countries in recent times had started

asking for medium/short term contracts with varying linkages.

LNG Imports to India:

1. The major exporting countries of LNG are Algeria, Qatar, Indonesia, Malaysia, Australia,

whereas, the major importers are Japan, South Korea, Taiwan and Western Europe. The

LNG trade started in mid-60's and has increased rapidly. In 1992 it was around 80 Billion

Cubic Meters (BCM) per annum and crossed the 100 BCM mark in 1996. World trade in

LNG is currently in the range of 150 BCM.

2. Geographically, India is very strategically located and is flanked by large gas reserves on

both the east and west. India is relatively close to four of the world's top five countries in

terms of proven gas reserves, viz. Iran, Qatar, Saudi Arabia and Abu Dhabi.

Why LNG is required?

LNG has been the world’s fastest energy growing option over the last two decades. The worlds

proven reserves of natural gas are abundant and estimated to be more than 155.8 tcm equivalent

to approximately 140 btoe. This quantity is almost three quarters of the proven oil reserves. The

efficient and effective movement of natural gas from producing regions to consumption regions

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requires an extensive and elaborate transportation system. In many instances, natural gas

produced from a particular well will have to travel a great distance to reach its point of use. The

transportation system for natural gas consists of a complex network of pipelines, designed to

quickly and efficiently transport natural gas from its origin, to areas of high natural gas demand.

Pipelines can be characterized as interstate or intrastate. Interstate pipelines are similar to in the

interstate highway system: they carry natural gas across state boundaries, in some cases clear

across the country. Intrastate pipelines, on the other hand, transport natural gas within a

particular state. LNG is principally used for transporting natural gas to markets, where it is

regasified and distributed as pipeline natural gas. It can be used in natural gas vehicles, although

it is more common to design vehicles to use compressed natural gas. Its relatively high cost of

production and the need to store it in expensive cryogenic tanks have hindered widespread

commercial use. However transportation of natural gas can directly be transmitted through

pipelines but for places where transportation of natural gas is not possible through pipelines we

go for LNG. 2

Figure 1: LNG Density vs. Natural Gas

2 National Energy Board

1m cube of LNG corresponds to 600m cube natural gas

(S=Standard rate, 15°C and 1 atmosphere). At temperature

above -110°C, LNG vapour is lighter than air. LNG is

lighter than water.

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Current Scenario:

India is currently 13th

largest gas consumer (190 MMSCMD) and 6th

largest LNG importer (44

MMSCMD), Economy increasing at CAGR of 7-8% p.a. with similar increase in Energy

consumption. Consumption of LNG in India is expected to grow in view of the potential increase

in gaseous fuel consumption. Various pipeline projects are coming up in India. Currently India

has 2 LNG Terminals (+ 5 planned) and 15 Gas Carriers belonging to SCI, Great Eastern and

Varun Shipping. So far, this has not been sufficient to meet India’s LNG demand. 3

Figure 2: Gas Supply – Demand in India

3 Mantrana Maritime Advisory

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D. LNG Value Chain:

The LNG value chain is composed of large scale, complex segments. It consists of discreet

functions of finding and producing natural gas, transporting the gas to the liquefaction plant,

liquefying that gas for shipment, shipping it to the final destination and regasification at import

terminals.

The first step in the LNG value chain involves exploring the gas by an upstream company either

in onshore or offshore fields and identifying the recoverable prospects of the field. The gas is

then recovered at the production stage after drilling and developing the wells, which after being

processed by the processing unit is transported through the pipelines to the liquefaction plant

unit. The efficient and effective movement of natural gas from producing region to consumption

regions requires an extensive and elaborate transportation system. In many instances the natural

gas produced from a particular well will have to travel to great distance to reach the liquefaction

plant. The transportation system for natural gas consists of a complex network of pipelines,

designed to quickly and efficiently transport natural gas from its origin to liquefaction plant. At

liquefaction facility first the gas is pre-heated to remove natural gas liquids and all components

that would freeze under cryogenic temperatures. Under atmospheric temperature using cooling

process the gas is cooled down to 111k or -161decree C, thus becoming liquid and shrinking to

about 1/600th

of its original volume. The LNG is then transported into specially designed ships

with double hulls protecting the cargo system from damage or leaks. These carriers are insulated

to prevent the evaporation of LNG. These carriers offload their cargo at the regasification

terminal and the LNG is returned to cryogenic storage tanks, usually varying in capacity from

100,000 to 160,000 cubic meters. Regasification consists of gradually warming the gas back to

the temperature of over 0 degree Celsius under a high pressure of 60 to 100 bars.4

4 Energy Economics Research – Introduction to LNG

Gas production Gas

transportion Liquefaction LNG Shipping Regasification Sales

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E. ADVANCED TEHNOLOGIES USED IN LNG VALUE CHAIN:

1. Natural Gas Production:

Natural gas is a fossil fuel formed when layers of buried plants and animals are exposed to

intense heat and pressure over thousands of years. It primarily consists of methane but

commonly includes varying amounts of other higher alkanes and even a less percentage of

carbon dioxide, nitrogen and hydrogen sulphides. Natural gas is a common resource often used

for heating, cooking, electricity generation, fuel for vehicles, as a chemical feedstock in the

manufacture of plastics and other important commercial applications.

The first step in natural gas production involves carrying out exploration activities to locate the

probable reserve of the fuel. Various seismic data and computer simulations are studied to assess

the underground formations and select the best location to drill. The next step includes drilling

the well until the well reaches the gas formation. As we drill the well, we install protective steel

casing that maintains the integrity of the well and protects the surrounding formations, including

any groundwater aquifers. Once the drilling has reached the reservoir, and we are confident that

there are sufficient quantities of natural gas, the next step is to complete the well for production.

We install the proper equipment to ensure an efficient flow of natural gas out of the natural gas

out of the well and up to the surface. Production tubing is placed inside the casing and connected

to the well head, a device containing valves to control production rates. Once the well is

completed and natural gas is flowing, the natural gas is ready to be moved from the wellhead by

pipeline to the treatment plant. At the treatment facility, the gas is processed to meet market

specifications and the gas is then transported through the pipelines to residential, industrial and

commercial customers.

The technological innovation in the exploration and production sector has equipped the industry

to continually increase the production of natural gas to meet the rising demand. The advanced

technologies help in unlocking the resources so that they can be commercially viable. Also these

technologies serve to make the exploration and production of natural gas more efficient, safe and

environment friendly.

Some of the major technological innovations in exploration and production sector include:

3D Seismic Imaging

One of the biggest breakthroughs in computer-aided exploration was the development of three-

dimensional (3-D) seismic imaging. Three-D imaging utilizes seismic field data to generate a

three dimensional 'picture' of underground formations and geologic features. This allows the

geophysicist and geologist to see a clear picture of the composition of the Earth's crust in a

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particular area. This is tremendously useful in allowing for the exploration of petroleum and

natural gas, as an actual image could be used to estimate the probability of formations existing in

a particular area, and the characteristics of that potential formation. This technology has been

extremely successful in raising the success rate of exploration efforts. In fact, using 3-D seismic

has been estimated to increase the likelihood of successful reservoir location by 50 percent.

Although this technology is very useful, it is also very costly. Three-D seismic imaging can cost

hundreds of thousands of dollars per square mile. Therefore, it is usually used in conjunction

with other exploration techniques. For example, a geophysicist may use traditional 2-D modeling

and examination of geologic features to determine if there is a probability of the presence of

natural gas. Once these basic techniques are used, 3-D seismic imaging may be used only in

those areas that have a high probability of containing reservoirs.5

Figure 3: 3D Seismic Survey

4D Seismic Imaging

Four dimensional (4D) seismic imaging is an extension of 3D imaging technology. However,

instead of achieving a simple, static image of the underground, in 4-D imaging the changes in

structures and properties of underground formations are observed over time. Since the fourth

dimension in 4-D imaging is time, it is also referred to as 4-D 'time lapse' imaging. Various

seismic readings of a particular area are taken at different times, and this sequence of data is fed

into a powerful computer. By studying how seismic images change over time, geologists can

gain a better understanding of many properties of the rock, including underground fluid flow,

viscosity, temperature and saturation. Although very important in the exploration process, 4-D

seismic images can also be used by petroleum geologists to evaluate the properties of a reservoir,

including how it is expected to deplete once petroleum extraction has begun. Using 4-D imaging

5 Offshore technology – 4D Seismic Imaging

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on a reservoir can increase recovery rates above what can be achieved using 2-D or 3-D imaging.

Where the recovery rates using these two types of images are 25 to 30 percent and 40 to 50

percent respectively, the use of 4-D imaging can result in recovery rates of 65 to 70 percent. 6

Logging while drilling (LWD)/ Measurement while drilling (MWD)

LWD helps locate target layer during drilling and select the correct combination of wire line

evaluation tool, for detailed well analysis. The main objectives of drilling were safe drilling and

accurate formation evaluation. By reducing total logging time, LWD operation also provide

significant rig time saving. For example, where a well cannot be with wireline tools or if the hole

is lost, LWD logs may prove invaluable.

Figure 4: LWD Technology

MWD tools enhance drilling performance and safety. This helps in taking corrective action while

drilling. The use of real time caliper has revealed that hole shape and condition, thus making it

easier to evaluate formations and make appropriate completion decisions.

The purpose to use this technology is to save rig time, promise quality formation and risk

reduction with faster drilling.

Key Features of MWD:

a. Accurate formation evaluation:

Provide a comprehensive multifunction formation evaluation without a chemical radioactive

source. It also provides critical data to optimize completion quality.

b. Real time formation compositions:

6 Rigzone- How does MWD work

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It saves rig time by providing all measurements close to the bit. Therefore, increases efficiency

and safety by integrating all sensors in one collar, and avoids complex sidetracking and lengthy

fishing operations.

c. Reduce risk:

Source less formation evaluation LWD eliminated the risk of leaving a chemical source in hole

without sacrificing the acquisition of petro physical data in the challenging environment of this

exploration well.

d. Reduce rat hole expenses: By acquiring the complete dataset in real time while drilling, the

operator saved the costs associated with additional open hole logging.

Hydraulic Fracturing

Hydraulic fracturing is the fracturing of rock by a pressurized liquid. Hydraulic fracturing also

known as fracking is a technique in which typically water is mixed with sand and chemicals, and

the mixture is injected at high pressure into the wellbore to create fractures which form conduits

along which fluids such as gas, petroleum and groundwater may migrate to the well. The fluid

injected into the rock is typically, slurry of water, proppants, and additives. Additionally gels,

foams, and compressed gases, including nitrogen, carbon dioxide and air can be injected.

Typically, of the fracturing fluid 90% is water and 9.5% is sand with the chemical additives

accounting to about 0.5%.

2. Gas Transportation by pipelines:

Pipeline transport is the transportation of goods through a pipe. Natural gas travels from the

wellhead to end consumers through a series of pipelines. These pipelines -- including flow lines,

gathering lines, transmission lines, distribution lines, and service lines -- carry gas at varying

rates of pressure. These are usually buried underground. Pipelines are generally the most

economical way to transport large quantities of oil, refined oil products or natural gas over land.

For natural gas, pipelines are constructed of carbon steel and vary in size from 2 to 60 inches (51

to 1,500 mm) in diameter, depending on the type of pipeline. Although pipelines can be built

under the sea, that process is economically and technically demanding, so the majority of oil at

sea is transported by tanker ships.

Some of the major technological innovations in exploration and production sector include:

Hydrostatic testing of pipelines

A hydrostatic test is a way in which pressure vessels such as pipelines, plumbing, gas

cylinders, boilers and fuel tanks can be tested for strength and leaks. The test involves filling the

vessel or pipe system with a liquid, usually water, and pressurization of the vessel to the

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specified test pressure. Pressure tightness can be tested by shutting off the supply valve and

observing whether there is a pressure loss. The location of a leak can be visually identified more

easily if the water contains a colorant. Strength is usually tested by measuring permanent

deformation of the container. Hydrostatic testing is the most common method employed for

testing pipes and pressure vessels. Using this test helps maintain safety standards and durability

of a vessel over time. Buried high pressure oil and gas pipelines are tested for strength by

pressurizing them to at least 125% of their maximum operating pressure (MAOP) at any point

along their length.

There are several types of flaws that can be detected by hydrostatic testing, such as:

Existing flaws in the material,

Stress Corrosion Cracking (SCC) and actual mechanical properties of the pipe,

Active corrosion cells

SCADA Systems

Supervisory control and data acquisition (SCADA) is a type of industrial control system that

monitors and controls industrial processes that exist in the physical world. These systems are

essentially sophisticated communication systems that take measurements and collect data along

the pipeline (usually in compressor and metering stations and valves) and transmit the data to the

centralized control station. Flow rate through the pipeline, operational status, pressure, and

temperature readings may all be used to assess the status of the pipeline at any time.

The SCADA system works in real time so there is little lag time between taking measurements

along the pipeline and transmitting them to the control system. The status of the equipment is

taken every 6 to 90 seconds depending on the communication technology used in the field.

Natural gas pipeline companies have customers on both ends of the pipeline – the producers and

processors that input gas into the pipeline and the consumers and local distribution companies

that take out gas out of the pipeline. To

manage the natural gas that enters the pipeline

and ensure that all customers receive timely

delivery of their portion of gas, sophisticated

control systems are required to monitor the gas

as it travels through all sections of a potentially

very lengthy pipeline network. To accomplish

the task of monitoring and controlling the

natural gas that is travelling through the

pipeline, centralized gas control stations

collect, assimilate, and manage the data

received from monitoring city gas stations and

compressor stations all along the pipeline. This

information allows pipeline engineers to know

exactly what is happening along the pipelines

Figure 5: SCADA System

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at all times, which permits quick reactions to equipment malfunctions, leaks or any other unusual

activity along the pipeline, as well as to monitoring load control. Some SCADA systems also

incorporate the ability to certain equipment along the pipeline remotely, including compressor

stations, which allow engineers in a centralized control center to adjust flow rates in the pipeline

immediately and easily.

Pipeline companies use SCADA systems to monitor and record operating data and to evaluate

the role of SCADA systems in leak detection. Advances in technology have reduced the cost of

SCADA systems, facilitating widespread SCADA implementation for pipeline control. 7

3. Liquefaction:

Feed gas to the liquefaction plant comes from the production field. The contaminants found in

produced natural gas are removed to avoid freezing up and damaging equipment when the gas is

cooled to LNG temperature (-256oF) and to meet pipeline specifications at the delivery point.

The liquefaction process can be designed to purify the LNG to almost 100 percent methane. The

liquefaction process entails cooling the clean feed gas by using refrigerants. The natural gas is

liquefied for shipping at a temperature of approximately -256oF. By liquefying the gas, its

volume is reduced by a factor of 600, which means that LNG at -256oF uses 1/600th of the space

required for a comparable amount of gas at room temperature and atmospheric pressure. LNG is

a cryogenic liquid. The term “cryogenic” means low temperature, generally below -100oF. LNG

is clear liquid, with a density of about 45 percent the density of water.

LNG FPSO

A floating production, storage and offloading (FPSO) unit is a floating vessel used by

the offshore oil and gas industry for the processing of hydrocarbons and for storage of liquefied

gas. An FPSO vessel is designed to receive hydrocarbons produced from

nearby platforms or subsea template, process them, and store liquefied gas until it can be

offloaded onto a tanker or, less frequently, transported through a pipeline. All of this is done at

sea in close proximity to relevant gas field. Floating production, storage and offloading vessels

are particularly effective in remote or deep-water locations where seabed pipelines are not cost

effective. FPSOs eliminate the need to lay expensive long-distance pipelines from the processing

facility to an onshore terminal. The LNG FPSOs has many potential advantages over traditional

on-shore liquefaction plants. This can provide an economically attractive solution for smaller oil

fields which can be exhausted in a few years and do not justify the expense of installing a

pipeline. Furthermore, once the field is depleted, the FPSO can be moved to a new location. The

new FPSOs for LNG will now be able to provide a means to develop gas reserves that were

7 SCADA and Telemetry in Gas Transmission Systems

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previously impractical or unprofitable for development by means of traditional pipelines or

onshore liquefaction plants.

Figure 6: LNG FPSO

The new FPSOs will be able to solve the remote gas problem i.e. liquefying the gas so that it can

be delivered and sold as a commercial product.8

4. LNG Regasification:

To return LNG to a gaseous state, it is fed into a regasification plant. On arrival at the receiving

terminal in its liquid state, LNG is pumped first to a double-walled storage tank, similar to those

used in the liquefaction plant, at atmospheric pressure, then pumped at high pressure through

various terminal components where it is warmed in a controlled environment. The LNG is

warmed by passing it through pipes heated by direct-fired heaters, or seawater, or through pipes

that are in heated water. The vaporized gas is then regulated for pressure and enters the pipeline

system as natural gas. Finally, residential and commercial consumers receive natural gas for

daily use from local gas utilities or in the form of electricity.

Floating Storage Regasification Unit (FSRU)

An FSRU represents a new technological approach to providing import terminal services. Under

this approach LNG storage, offloading and vaporization equipment is housed on a floating, L

shaped structure equipped with positioning thrusters. An FSRU would resemble an oversized

LNG carrier and provide storage capacities between 250,000 and 350,000 m3 of LNG, over the

twice the capacity of most typical LNG carriers. An FSRU would be permanently moored to an

8 Cathexis Consultancy Services Ltd. (CCSL)

16

offshore platform or floating buoy, and LNG carriers would berth alongside it to accomplish of

their LNG cargoes. After offloading LNG stored in the FSRU would be vaporized and sent out at

capacities up to about 1 Bcfd through sub-sea pipelines and interconnect with existing interstate

pipeline infrastructure.

The LNG market in India has grown significantly since 2004 with Government of India’s push to

switch to natural gas as the fuel of the future, and the increased availability through the State-

backed Petronet 5 MTPA LNG import terminal at Dahej and Shell’s 2.5 MTPA Hazira LNG

terminals. Many more projects are in planning stage to meet future demand. Although till now

LNG terminal were like receiving terminal in India. The perceived safety risks and resistance

from the public have resulted in an increasingly difficult and lengthy permitting process for new

onshore terminals and terminal expansions with - sometimes uncertain outcome.

Figure 7: FRSU terminal

Figure 1: 12th five year plan for Natural Gas

(Source: India Energy Handbook, 2012)

12th

Five year plan shows LNG have vital role to play in India energy basket to meet demand.

Therefore, every year LNG project will increase in number. This results in a good market for

emerging technology in LNG business.

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Most of the LNG terminals operating all over the world are onshore LNG terminals. However,

there are following disadvantages of building onshore LNG terminal:

Onshore LNG terminals are relatively costlier.

It takes a very long time to construct onshore LNG terminal. Typical time frame for

constructing LNG terminal is 4-5 years, starting from conceptualization.

It suffers from NIMBY (not in my back yard) syndromes as lots of communities are

concerned about safety issues and aesthetics.

In view of these limitations of onshore LNG receiving terminals, the concept of Floating Storage

and Regasification Units (FSRU) has been developed and is rapidly becoming very popular

amongst all potential LNG import terminals being planned and built.

Typically, existing LNG ships are converted to FSRU by making necessary changes to

accommodate unloading arms, regasification system and utilizing the storage tank on the ship as

storage media. The FSRU can be either moored in the mid sea with turret mooring with seabed

or can be permanently moored using single buoy mooring or can be berthed at jetty near the

shore permanently. One of the biggest advantages of FSRU project is that FSRU conversion and

its operations can be commenced within 1 to 1.5 years if no new port related facilities are

required to be developed.9

F. CHALLENGES & OPPORTUNITIES FOR LNG IN INDIA:

Challenges

Pricing and affordability has been the key issue in introducing LNG into Indian Market. The

reasons are very obvious, and one of them is big difference in price of Natural Gas produced by

domestic national oil companies where the price of gas was Government controlled and the price

of LNG, which is certainly higher comparatively. Price of delivered regasified LNG to

consumers in Indian market is almost double compared to the domestic gas and consumers were

hesitant to take regasified LNG at that price. In such a situation the affordability of regasified

LNG for the core sectors like power and fertilizer was always an issue as these major consumers

were drawing Government price controlled gas. In order to tackle this issue the structure for

LNG from Dahej terminal was designed in such a way that LNG is procured at most competitive

price and facilities are also created through international competitive tender route to supply

regasified LNG to consumers at competitive rates. This lead to a great success and majority of

consumers in India tied up the regasified LNG from first LNG terminal at Dahej. Pricing of LNG

and affordability is a key and sensitive issue particularly in developing countries, which have

been for long under subsidy regime. Both India and China have remained protected markets due

to Government policies and to provide subsidies to power and fertilizer sector in order to keep

enhanced agriculture production and lower food prices to meet the social obligations.

9 Infraline Energy –FSRU, a promising opportunity in the waiting for India

18

Government in India is finalizing setting up of regulatory board to address the issue of pricing

and other issues.

Opportunities:

India with low per capita gas consumption is projected to have more than 6% growth in gas

consumption. This projected growth of natural gas can be met only through developing domestic

resources of gas and also developing LNG and pipeline gas import infrastructure in the country.

Feasibility of transporting natural gas in compressed mode by cosselle design CNG ships and its

economic viability is also being worked out. India has chalked out a development of large gas

based infrastructure during next 20 years. India is a developing nation and has projected an

economic growth of more than 8% to meet the expectations of the people and this level of

economic development will require energy consumption to grow at about 5 to 6% during next

two decades. Government has given a large emphasis on development of gas-based infrastructure

to meet the increasing demand of gas in the country. The India–Hydrocarbon vision document

prepared by Government of India projects the share of natural gas to grow from current level of

9% to 20% by the year 2025. The Hydrocarbon Vision 2025 has projected the demand of gas to

increase from around 150 million standard cubic meters per day (MMSCMD) in 2001-2002 to

391 MMSCMD in 2024- 2025. Natural gas demand as per the Hydrocarbon

Vision 2025 is given below in the table:

Table 1: Natural Gas Demand in India

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G. REFERENCES :

1. Journal of Petroleum Technology – Natural gas utilization in India

2. National Energy Board

3. Mantrana Maritime Advisory, http://www.mantrana.in

4. Energy Economics Research – Introduction to LNG

5. Offshore technology – 4D Seismic Imaging

6. SCADA and Telemetry in Gas Transmission Systems

7. Cathexis Consultancy Services Ltd. (CCSL), http://www.energyclaims.net

8. Infraline Energy –FSRU, a promising opportunity in the waiting for India

20

H. APPENDIX :