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Emerging opportunities for LNG in Asia: part one

Source:本站Final update:2017-12-26 09:16:11 Author:佚名 Browse:836second

Richard Mortimer, Arup, Hong Kong, explores how LNG is becoming the fuel of choice across Asia as energy demand increases rapidly.

Rapid growth in energy demand across Asia is seeing LNG become the fuel of choice. Driven by expanding populations, rising standards of living, and sprawling urbanisation, demand will only keep growing. With LNG production and transportation at an all-time high, Asia is seeing new opportunities for both land-based import terminals as well as floating storage and regasification facilities.

This trend is set to keep on going, with energy growth predictions for Asia much higher than the rest of the world. Japan and Korea have long relied on LNG for energy security and power generation, but we are now seeing a change across Asia. China, India, Indonesia, the Philippines, Thailand, Vietnam and Bangladesh have followed suit with the recent introduction of gas into their import markets and are helping to drive demand across the region. As these countries increase the demand for the transitional fuel, new ways of bringing new large-scale power generation online quickly also needs to be found to meet these needs.

The natural choice

While locally available coal is still an attractive option in terms of fuel cost, LNG is lower in carbon and particulate emissions. While it is still a fossil fuel, gas is recognised as the intermediate step between where the world is today and where it needs to be in thirty to fifty years’ time. Renewables will have an increasing role to play in this future market, however Asia’s need for large-scale generating capacity is immediate. LNG comes at a scale and development rate not currently possible with renewables, coal or nuclear; coal-fired plants take up to ten years to go from plan to operation and nuclear can take up to 20 years.

Then there is the not-insignificant matter of cost. Renewable costs are coming down but, as Australia has found, countries need to be careful in making intermittent renewables their base supply. The recent blackout events in South Australia which have led to Elon Musk’s commitment to building the largest battery in the world ‘in 100 days or it is free’, have revealed the pitfalls of relying too heavily on renewables (which are intermittent in nature) for base power load. This is why China is making gas a key part of its energy mix, and it is why China’s predicted gas demand is outpacing other fuels.

The drop in the oil price and the gradual but increasing de-linkage between LNG and oil pricing, alongside discoveries of shale gas in the USA and China, means that LNG is also becoming more affordable (e.g. the landed LNG price in Japan has dropped from over US$15/million Btu in early 2015 to below US$6/million Btu in mid-2016 and has only recently risen to above US$8/million Btu). The oil price is not expected to rise substantially any time soon, but demand for gas is rising much more rapidly, so there is pressure from buyers and sellers to de-link the prices of these two commodities.

LNG also lends itself well to particular geographies. Indonesia is the fourth most populated country in the world, with people spread out across numerous islands and demand for energy rising rapidly (the per capita consumption of electricity in Indonesia is expected to rise by over 25% from 2015 to 2020). How can one provide power efficiently across a country like this? Regional LNG import facilities linked to gas-to-power stations provide an ideal solution and where distances are short, pipelines from receiving terminals to other gas-to-power stations located close to population clusters make sense.

Against this backdrop, it is no surprise that many companies are looking at installing LNG import facilities.

Growth in FSRUs

As LNG becomes the fuel of choice across Asia, the region is seeing a change in the way gas is transported and stored. Until recently, the traditional approach has been to use land-based terminals. However, floating systems have become more popular over the last decade. Their price relative to land-based systems has come down and they can also be implemented much faster than land based terminals for those facing immediate demands.

Identifying a site for a land-based terminal, obtaining the necessary permits and approvals and then constructing the facilities all takes time – easily five years or more. Compare this to bringing a FSRU to a port. With minimal engineering work you can create a suitable environment for mooring the FSRU and connecting it to shore with a pipeline. This is cheaper and, more importantly, much quicker. An onshore gas-to-power plant can typically be developed in 12 to 18 months. A new build FSRU is probably around a three year delivery and a conversion of an existing LNG carrier to a FSRU is less efficient but much quicker at probably around 18 months.

Floating terminals offer other benefits, such as secure and flexible operations – especially in areas where local politics and the potential for future gas development are less certain. They are, by their nature, easy to relocate to other opportunities.

Converting LNG carriers into FSRUs, instead of waiting for new ones to be built in Korean shipyards, can make the floating storage options even more commercially attractive. However, care needs to be taken to ensure the candidate vessel will deliver the required operational performance and be serviceable in the long term. Arup is assessing the viability of such conversions, including reduced cost and shorter schedule of converted vessels against the efficiency of a tailor-made FSRU. Aspects specific to FSRU/FSUs like containment system, offloading system, available deck space, berthing and mooring configuration etc. are considered during the evaluation. The decision of converting LNG carriers into floating storage options is driven by factors like suitability of the candidate LNG carrier, intended design life of the terminal, location of the terminal and prevailing metocean condition, terminal utilisation and future operating strategy.

There is innovation in land-based storage too. New, cost-effective solutions for land-based storage that allow for future expansion have been developed to serve smaller facilities. These include the cost-effective modular single-containment tanks that Arup are also developing for small to mid-sized applications.

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