Liquefaction Plants

8/6/2019 Liquefaction Plants

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Liquefaction Plants: Development of Technology andInnovation

Working Committee Contribution, 22nd World Gas Conference, Tokyo 2003Ad Smaal, Shell Global Solutions Int., The Netherlands

Abstract

The production of Liquefied Natural Gas (LNG) is of importance to the internationalgas community, as over 20% of cross-border gas trade is in the form of LNG. This

paper discusses LNG market and technological developments up to 2010.

In 2002, about 111 million tons per annum (Mtpa) of LNG was traded worldwide. Asdemand for LNG is growing, especially in the Atlantic Basin, LNG trade is expectedto grow at a pace of 5 to 7 % per annum; global LNG trade is expected to reacharound 190 Mtpa in 2010. Continuous pressure to reduce the cost of LNG has resultedin lower unit costs of carriers and plants; but technological innovation will be crucialto further lower the cost of upstream gas production and liquefaction plants.

Liquefaction plants typically have multiple trains, with integrated gas treating andliquefaction facilities in each train. The liquefaction process and the maximum size ofkey equipment usually determine train size. Cooperation of technology providers andequipment vendors has resulted in larger train sizes, from about 0.4 Mtpa for the firstliquefaction trains in Algeria to 3.9 Mtpa for the LNG trains recently started up inMalaysia. As a result, the specific cost of liquefaction plants has dropped significantlyover the past few decades whilst efficiency has improved. As an example, the LNG

plant of Oman LNG has an efficiency of around 92% and a specific capitalexpenditure around 200 $/ ton per annum, which is of the order of 50% of the specificcosts of the earliest plants.

The pressure to reduce LNG production costs will continue. Technical innovations inliquefaction processes and upstream gas production are needed to achieve this. Aninnovative approach to remote offshore gas is a floating LNG plant, a concept savingon upstream pipeline transport and onshore development costs. For onshore plants,application of electric motors as compressor drivers allows higher availability of theliquefaction process. Electrical drivers also have the advantage of high efficiency,when power is supplied by a combined cycle power station. Parallel line-up of key

equipment allows standardization and more cost effective supply from a wider vendor base. Designs based on three large gasturbines (e.g. GE-7) achieve train sizes ofaround 7 Mtpa. Developments in liquids extraction will increase flexibility for

producing different grades of LNG heating value to suit different markets. As therewill not be one concept that meets all requirements, the challenge will be to offerrobust and flexible designs for train sizes between 3 and 7 Mtpa.

LNG technology has developed over the past decades mostly by capitalizing oneconomy of scale. But in the future, LNG plants will be more diverse, both in size andtechnology. LNG technology providers and contractors will increasingly have to rely

on a flexible portfolio of processes, drivers and plant sizes to achieve fit for purposesolutions.

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Introduction

In the past thirty years, liquefaction has played an increasingly important role in theinternational trade of natural gas. For gas reserves that are remote from mature gasmarkets, liquefaction is often the only solution for gas monetization. From a humble

beginning in 1964, liquefied natural gas (LNG) has become a significant factor in the

transport of gas: in 2002, around 22 % of internationally traded gas was transported inthe form of LNG.

The LNG market has gone through a period of turmoil and rapid growth in the lastfew years. The total global trade of LNG in 1995 was 70 million tons, but global tradehad increased to 111 million tons in 2002, a growth rate of over 7% per year. Theimmediate future of LNG trade can be understood from this trend, but not by linearextrapolation. Although the past decade has been characterized by significantdevelopment of the existing propane-MR technology, designs of future plants arelikely based on a variety of processes.

The purpose of this paper is to give an overview of the most likely developments inliquefaction technology for the coming few years. In the first part of this paper, thecurrent global LNG market and expected growth in trade is described. In the second

part, the past development of LNG plant technology is discussed, followed by adiscussion of proposed improvements of large-scale liquefaction technology. Theconclusions are summarized at the end of the paper.

Global LNG trade

In order to understand developments of global LNG trade, the three major markets

dominating the current trade profile, need to be understood. These are: The Far East, comprising Japan, Korea and Taiwan;

Europe, with France and Spain being the larger importers from a group of six;

The United States of America, so far excluding the Pacific coast.

Far East

The most important importer in the Pacific basin is Japan. In the year 2002, theJapanese import of LNG shrank slightly: 53.7 million tons was imported against 55million tons in 2001. But Korean and Taiwanese imports are growing strongly: Korearelied heavily on spot cargoes last winter. With the construction of the Guangdong

terminal, China will become a new market for LNG in the Far East. With a secondterminal already planned, the Chinese market for LNG is expected to grow rapidly.India is also poised to become an importer of LNG, despite uncertainties in theregulation of the internal gas market.

Indonesia and Malaysia have traditionally been the main providers in the EasternPacific, but Australia, Oman and especially Qatar will significantly increase theirexports into the Far East. When the Sakhalin project starts up, Russia will enter themarket as a new exporter. Thus, both markets and suppliers will become morediverse.

EuropeLNG transport to European markets has to compete with natural gas transported by

pipelines, thus exerting a downward force on LNG price. Nonetheless, the vicinity of

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Algerian gas, and abundant availability of gas in the Middle East and Nigeria willfeed a steadily growing stream of gas and LNG to Europe. Demand growth for LNGwill be especially strong in South Western Europe: Russian pipeline supplies to this

part of Europe are less competitive in view of the large distance.

Algeria will remain an important supplier, potentially also by swapping supplies from

Trinidad. But Nigeria and again Qatar will increase their exported LNG volumes. TheQatari government has made public their plans for export schemes to Italy and theUnited Kingdom, thus it appears certain that part of Qatars new capacity will bediverted west. Egypt is emerging as a new exporter on the Mediterranean side of theSuez Canal.

USA

The United States market is changing insofar the growth of domestic production failsto keep up with the growth of gas demand. This situation has resulted in a season-

bound increase of the natural gas price in the US, thus creating a favorable priceenvironment for LNG. However, permit processes for LNG terminals can be lengthy,

which may temper growth beyond expansion of existing terminal facilities.

Due to its vicinity, Trinidad will be the initial beneficiary from LNG demand growthin the US market. However, new market entries such as Venezuela on the East coastand Russia on the West coast - given recent progress with West coast LNG terminals -may also supply the US market.

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1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008

Year

Export(Mtpa)

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NorwayEgypt

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LibyaUSA

Algeria

Figure 1. Past and expected LNG exports

2002 is considered a year of relatively slow growth in global LNG trade, with anincreased in traded volume of barely 4%. Nonetheless, the longer-term outlook forLNG looks robust, and an annual trade growth of 5 to 7 % is expected. Keeping inmind that no one can predict the future, above considerations lead to an exportscenario as indicated in Figure 1. Recent newcomers such as Qatar, Trinidad and

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Nigeria will evolve into major exporters alongside the traditional large scale LNGexporters Algeria, Indonesia and Malaysia. As plants in Egypt and Norway are alsounder construction, it is clear that a myriad of new LNG expansions will enter themarket in the coming decade.

A trend concurrent to this demand growth is that the cost of new-built LNG carriers

has decreased significantly over the last decade, in line with the specific costreduction of LNG export plants. The price of a 140,000 m3 carrier was approximately200 million US$ in the early nineties, but has dropped to around 150 million US$now.

These trends mean that on the one hand, many new and larger LNG trains will have to be built; the challenge will be to reduce costs of liquefaction trains by both furthereconomy of scale and genuine reduction of process costs. Continuing developmentand innovation of liquefaction technology will be crucial to realize this. But first the

past development of LNG trains will be discussed in the next section.

Past development of liquefaction technology

Liquefaction technology is based on the principle of a refrigeration cycle, where arefrigerant by means of successive expansion and compression transports heat from alower to a higher temperature. LNG plants consist of a number of parallel units, calledtrains, which treat and liquefy natural gas and then send the LNG to several storagetanks.

The capacity of a liquefaction train is primarily determined by the liquefaction

process, the refrigerant used, and largest available size of the compressor / drivercombination that drives the cycle and the heat exchangers that cool the natural gas.

The first LNG plants were built in Algeria, the US and Libya. They used either aCascade process, with 3 pure refrigerants, or a single mixed refrigerant. In Brunei, atwo-cycle process was implemented for the first time, using propane and a mixedrefrigerant, capturing the benefit of the two previous processes. This Propane MixedRefrigerant (MR) process - developed by Air Products & Chemicals Int. (APCI) -started to dominate the industry from the late seventies on.

Economy of scale drove the size of propane-MR trains from 1.1 million tons per

annum (Mtpa) for the first train built in Brunei to 3.9 Mtpa for the last LNG train thatwas recently started up (as part of Malaysia Tiga). This scale increase was realized byclose cooperation of operating companies, process licensors and equipment vendors.As compressors are key equipment of any refrigeration cycle, compressor vendorssuch as Elliot, Dresser, Sulzer and Nuovo Pignone were instrumental in realizingcompressor capacity increases.

The earliest compressors were driven by steam turbines, but Shell and Nuove Pignoneintroduced gas turbines as mechanical drivers. The earliest applied gas turbinesdelivered around 25 MW of power (GE Frame 5), while the latest plants apply gas

turbines that deliver 75 MW of power (GE Frame 7). Last but not least, the size ofspool wound cryogenic heat exchangers, developed by APCI, was steadily increasedto match the developments of compressors and drivers.

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However, costs are not the only driver. The restriction on CO2 production under theKyoto protocol has made efficiency a second driver for considering new processoptions. The Oman LNG plant was built with a specific capital expenditure of 200$/ton, but the plant was also designed for a high energy efficiency of 92%.

All these developments have led to the current state of the art in LNG technology,which is the two-cycle propane-MR process. The 4 Mtpa LNG train currently inoperation in Shell-advised Malaysia Tiga, is considered to be the currently existingsize benchmark. The LNG trains in Shell-advised Oman LNG are thought to be theleading example of cost and energy efficiency. Innovation in liquefaction process andtechnology will be judged against these benchmarks of size, cost and efficiency, butalso operability and reliability will be important parameters.

Two areas can be identified where major improvements are possible: betterintegration of the various elements of the LNG value chain, and using large scale

processes and new technology in LNG production plant design and implementation.

Downstream / upstream integration

To lower total costs of all the facilities from well to market, proper process designintegration between upstream gas gathering systems and the actual liquefaction plantis crucial. An example is increased reliability of upstream gathering systems, whichreduces the need for gas supply redundancy. Both in Australia and Nigeria thisconcept has reduced total costs. The optimal location of for example condensaterecovery can also be only fully optimized in an integrated design process betweenupstream and downstream.

When gas is gathered offshore, it can be beneficial to move facilities inside the gate ofthe LNG plant and so allow offshore platforms to become unmanned. Another

possibility is to move to subsea completion, and multi phase flowlines. If an LNG plant is fed from such a wet transport pipeline, this implies heavy reliance onupstream flow assurance and corrosion control. This concept is proposed for severalGreenfield projects that are now on the drawing board.

Advances in seismic and drilling techniques have markedly improved the chances offinding and producing gas reservoirs. Shell E&P is using these techniques in a newfield development methodology called Smartfields. Drilling itself is poised to become

less capital intensive. An example is the recently developed MonoDiameter boreholetechnique by the Shell/Halliburton Enventure JV, which are particularly suited for gaswells and cheaper than traditional telescopic boreholes.

Another example of upstream / downstream integration is offshore LNG production,also called floating LNG or FLNG. The concept of bringing the liquefaction plant tothe gas instead of the gas to the liquefaction plant eliminates the sub sea transport lineand delays recompression, with potential savings in the hundreds of millions ofdollars. Shell has proposed to apply this concept for the Sunrise reserves in the TimorSea, located several hundreds of kilometers offshore of Northern Australia. Despite

the engineering challenges involved, FLNG currently looks like an attractivepossibility to unlock this reserve.

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Innovations in Liquefaction plant design

As a consequence of the scale increase described previously, the two cycle propane-MR process is facing certain technological limits. In particular, the propanecompressor (four-stage, single casing, around 65 MW) limits the size of the process to

around 4 Mtpa. This means that alternatives to the traditional propane-MR processbecome important in order to further capitalize on economy of scale.

On the one hand, several players develop solutions that maintain the two cycleconcept, and also its inherent operability. Shell developed a liquefaction process withtwo mixed refrigerant cooling cycles, the Dual Mixed Refrigerant or DMR process.This concept allows the designer to choose the load on each cycle. It also uses provenequipment, e.g. spiral wound heat exchangers, throughout the process. The DMR

process is the basis of the Sakhalin LNG plant, with a capacity of 4.8 Mtpa per train.

Shell has also developed technology to further push the capacity of the propane cycle, by employing double casing instead of single casing equipment. This is a reliablemethod to bring the propane-MR process closer to a capacity of 5 Mtpa. Another

possibility for the propane-MR process is to transfer power from the propane cycle tothe mixed refrigerant cycle, a concept developed by APCI. The closer coupling

between the two cycles by mechanical interlinking of compressors is an operationalchallenge. This so-called split MR concept will be applied for Union Fenosas

planned LNG train in Egypt and the Rasgas third LNG train in Qatar.

On the other hand, several players are venturing into three-cycle designs. Processlicensor Phillips and contractor Bechtel updated the Cascade process and developed it

into an alternative to C3-MR. This process results in train sizes of 3 to 3.5 Mtpa andwas used for the LNG trains in Trinidad. Statoil has, in cooperation with Linde,developed a process based on three mixed refrigerant cycles. The process utilizes both

plate fin and spiral wound heat exchangers, and has been selected for the Snohvitplant in Norway.

APCI developed a three-cycle liquefaction technology that uses a nitrogen cycle forfinal cooling behind the normal propane and MR cycles. This process is called AP-X.The additional cycle brings the capacity to around 7 Mtpa. Shell has proposed adesign that also employs three cycles, but with two MR cycles in parallel. Either a

propane or mixed refrigerant cycle can be applied before the two parallel MR cycles.

This PMR or parallel mixed refrigerant concept allows a production capacity of 7Mtpa.

Further capitalizing on economy of scale does reduce specific costs of LNG; however,it also increases the liquefaction plant size, which may make it hard to match withreserve base, financing and market. Thus, genuine cost reduction without scaleincrease is also important.

Decreasing equipment count is a powerful method to reduce cost. This concept wasused to bring cost down for both the Oman and Sakhalin LNG plants, with a strongly

reduced equipment count compared to other recent Greenfield LNG plants.

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Another possibility is to overcome size limits of key equipment by constructing partof the refrigeration cycles in parallel. Although this increases equipment count, it alsodecreases the size of equipment and thus stimulates competition between equipmentvendors: the largest size equipment can usually only be produced by one vendor. ThisGameChanger concept allows a plant size of 5.3 Mtpa, and significant cost savings.

The GameChanger design also introduced electrical motors to drive the refrigerationcycle compressors. In certain situations, electrical motors are a more reliable and less

bulky driver than Frame 7 gas turbines. The needed electricity will be generated by agas turbine-driven power plant. As the redundancy of an additional gas turbine isneeded to ensure reliable power generation (n + 1 concept), maintenance schedulescan be reduced by servicing gas turbines one by one, not disturbing production. Inshort, electrical drive improves the availability of an LNG plant.

50 MW electrical motors are already available for direct drive applications andelectric motor vendors are currently working on 65 MW electrical drivers. Before2010, a 75 MW electrical motor, the equivalent power output of a Frame 7 gas

turbine, will undoubtedly be developed.

Electrical drive may also offer several schedule benefits, as the power plant and theliquefaction plant can be constructed separately. The EPC phase of a greenfield LNG

plant takes on average 39 months from Final Investment Decision to Start up, whilebrownfield projects can be much faster. For a GameChanger plant a reduced scheduleis possible due to the ease of installing smaller equipment. A new level of efficiencycan also be realized via electric drive as the required power can be produced in acombined cycle power plant.

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DMR

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processes

GameChanger

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Figure 2. Specific costs of various processes as a function of capacity

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New liquefaction trains will not only have to be cost effective, but also flexible. Asthe American market will be a major market for growth, LNG producers will have toface the challenge of producing LNG to a lower specification of heating value. As aconsequence, solutions have been developed in order to produce LNG with a reducedheating value. In a LNG production plant, deeper LPG extraction has been developed,while inert blend-in is a possible solution for LNG import terminals.

It is clear that the drive to lower costs will continue via many different routes. Aslarge trains are not appropriate in every market situation, solution providers will haveto be able to offer LNG plant sizes ranging from 3 to 7 Mtpa. As indicated in Figure2, Shell aims to maintain a portfolio of operable LNG plant solutions based on variousdifferent processes and covering the capacity range of 3-7 Mtpa. Rather than

becoming standardized technology, a variety of LNG processes will play a role inliquefaction in the years to come.

Conclusion

Current trends suggest that international trade of LNG trade is set to grow by 5 to 7 %per annum until 2010. This would mean a global trade of LNG of around 190 milliontons in 2010. Recent newcomers such as Qatar, Nigeria and Trinidad will grow intomajor exporters, but a myriad of other new exporters will also enter the market. The

past decade was characterized by a strong decrease in the cost of carriers andincreasing economy of scale for LNG plants. Strong innovation in upstreamdevelopment and liquefaction process will be needed to achieve further reduction ofcosts.

The past three decades have caused the two-cycle propane-MR process to become theworkhorse of the industry. The latest completed propane-MR LNG trains show thatliquefaction trains can be built up to 4 Mtpa, at a specific cost of 200 $/tpa and anenergy efficiency of 92%.

As the two-cycle propane MR process runs into equipment constraints, severalimportant innovations are needed to increase capacity and/or bring costs down. Betterconceptual alignment of tasks between upstream and downstream may bring totalcosts down in the supply chain. An example of closer upstream / downstreamintegration is floating LNG. Alternative processes based on mixed refrigerants ormultiple cycles are being developed. Electric motors in the range of 50 to 75 MW are

becoming alternative drivers for refrigeration cycle compressors. Electric driverssupplied from a combined cycle power plant will significantly lower CO2 emissions.As an alternative to scale increase, GameChanger methodology can bring cost down

by stimulating competition and increasing availability.

As a wider variety of liquefaction processes and train sizes becomes available, bothoffshore and onshore, a portfolio of LNG solutions crystallizes that covers the entirerange of 3 to 7 Mtpa per train.

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