Liquified natural gas gains currency
Tanker builders float the idea
A new idea for accelerating growth of international commerce in liquefied natural gas into a global market akin to the oil trade – LNG factory ships – is gaining momentum. Teekay Corp. and Merrill Lynch Commodities Inc. recently agreed to work on developing a prototype with a British Columbia home port.
The deal calls for co-operation on plans to convert the SS Arctic Spirit into a floating natural gas liquefaction plant moored near Kitimat. The facility would be a stone’s throw from a proposed land-based liquefaction terminal, and it is one of several floating liquefaction projects that have come to light as the concept shows increasing economic promise. If the plan works FLNG, floating liquefied natural gas, will be a reality.
Teekay LNG Partners LP will have an option to participate in the project, which would have the capacity to liquefy 75–100 million cubic feet per day of pipeline-quality gas, or about 500,000 tonnes per year of ship cargo. The vessel is one of only two existing LNG tankers with the right containment system, known as “self-supporting prismatic type B,” which should be ideal for the new approach, says Mark J. Kremin, Teekay vice-president for gas services.
“The potential to produce the world’s first floating LNG unit in B.C., where our operations are headquartered, is an exciting prospect.” Kremin says “Reliable Canadian LNG supply should be very attractive for LNG buyers and end-users. This development will prove the feasibility of floating liquefaction and will provide an option for monetizing stranded gas resources in other parts of the world.”
Late last year, Calgary-based Kitimat LNG Inc. was seeking customers for its proposed LNG export terminal at Bish Cove, B.C. The terminal was going to be a regasification facility, but in September, because of shifting global gas supply and demand fundamentals, Kitimat reversed its plan for an import terminal. They opted to construct an export plant instead. Mitsubishi Corp. recently acquired a stake in the project.
Teekay spokeswoman Alana Duffy says the company’s floating LNG terminal would be almost three kilometers south of the Kitimat terminal. The two facilities would be connected to different pipelines she says, and therefore not competitors.
Rising natural gas demand has driven up prices in Asia. In North America, increased supplies have cut prices. Kitimat LNG says these conditions provide a “compelling opportunity” for LNG exports. Duffy says the Teekay-Merrill floating project would likely target Asia and “other premium global markets.”
It can take up to a decade to develop an onshore liquefaction plant. According to projections, a floating production, storage and offloading vessel, known in the industry as an FPSO, takes three to four years to construct.
Floating LNG facilities have garnered interest from a number of energy companies, including Royal Dutch Shell. “We’re very optimistic that costs are going to be realistic and reasonable in the current environment, competitive with land-based alternatives and open up a whole new realm of possibilities for LNG supplies,” Kathleen Eisbrenner, executive vice-president for global LNG with Shell Gas & Power International, said last fall.
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