UNECE WPG LNG Chapter 2 Contents 1. Introduction .......................................................................................................................................... 1 1.1. Definition of the LNG value chain ................................................................................................. 1 1.2 History ........................................................................................................................................... 3 2. Segments in the LNG Value Chain ......................................................................................................... 6 2.1. Gas Resources and Reserves ......................................................................................................... 6 2.1.1. Definitions ............................................................................................................................. 6 2.1.2. Global Gas Reserves .............................................................................................................. 7 2.1.3. Unconventional Gas .............................................................................................................. 8 2.1.4. Shale Gas in North America .................................................................................................. 9 2.1.5. Shale and other unconventional gas potential beyond North America ............................. 15 2.2. Liquefaction ................................................................................................................................ 21 2.2.1. Description of current applicable technologies for liquefaction ........................................ 22 2.2.1. Summary of Liquefaction Technologies .............................................................................. 31 2.2.2. Global liquefaction capacity ................................................................................................ 32 2.3. Shipping ....................................................................................................................................... 34 2.3.1. Tanker Technologies ................................................................................................................. 34 2.3.2. Tanker Completions and Capacities .................................................................................... 37 2.3.3. Small-Scale LNG Tankers ..................................................................................................... 40 2.3.4. LNG as a marine fuel and air quality considerations .......................................................... 41 2.4. Regasification .............................................................................................................................. 43 2.4.1. Main components in a regasification facility ...................................................................... 43 2.4.2. Global regasification capacity ............................................................................................. 48 2.5. Floating LNG ................................................................................................................................ 51 2.5.1. Floating Regasification LNG ................................................................................................ 51 2.5.2. Floating Liquefaction LNG ................................................................................................... 54 2.6. Market Technologies .................................................................................................................. 58 2.6.1. Industrial Process and Feedstock Technologies.................................................................. 58 2.6.2. Electricity generation .......................................................................................................... 59 2.6.3. Residential and commercial uses ........................................................................................ 61 Page i Disclaimer: It is necessary to review the copyright restrictions of all graphics prior to publication UNECE WPG LNG Chapter 2 2.6.4. Natural gas vehicles (NGVs) ................................................................................................ 62 2.6.5. Satellite and Peak Shaving plants........................................................................................ 67 3. Economics and Commercial Aspects of the LNG Value Chain ............................................................ 71 3.1 Capital Investment Requirements .............................................................................................. 71 3.2 LNG Business Model Structures ..................................................................................................... 73 3.2.1 Traditional Structure ........................................................................................................... 73 3.2.2 Integrated Project ............................................................................................................... 74 3.2.3 Role of the Aggregator ........................................................................................................ 76 3.2.4 The Tolling Model ............................................................................................................... 77 3.2.5 LNG SPA Contracts .............................................................................................................. 77 3.3 Risk Analysis and Allocation ........................................................................................................ 79 3.3.1 Catalogue of LNG Project Risks – Pre-Completion .............................................................. 79 3.3.2 Insurance ............................................................................................................................. 82 3.3.3 Risk Allocation ..................................................................................................................... 84 Figures Figure 1 – Illustrations of LNG and Pipeline Value Chains ............................................................................ 2 Figure 2 – First LNG cargo ship, the Methane Pioneer ................................................................................. 4 Figure 3 – History of LNG Liquefaction Plants .............................................................................................. 5 Figure 4 – IEA Projection of Rising LNG Global Trade ................................................................................... 5 Figure 5 – Conventional and Unconventional Gas Resources ...................................................................... 9 Figure 6 – Map of US and Canadian Shale Gas Resources .......................................................................... 10 Figure 7 – Illustration of Horizontal Drilling and Hydraulic Fracturing (EIA) ............................................... 11 Figure 8 – IEA Estimate of Unconventional Natural Gas Resources, Tcm .................................................. 15 Figure 9 – US EIA Estimate of Shale Gas Resources, Tcm ........................................................................... 17 Figure 10 – Map of Unconventional Gas Development Activity ................................................................. 19 Page ii Disclaimer: It is necessary to review the copyright restrictions of all graphics prior to publication UNECE WPG LNG Chapter 2 Figure 11 – Location of Shale Gas Resources in Eastern Europe ................................................................ 20 Figure 12 – Block Flow Diagram of an LNG Liquefaction Plant ................................................................... 21 Figure 13 – Natural gas phase diagram....................................................................................................... 22 Figure 14 – Inverse Brayton Cycle, T-S Diagram ......................................................................................... 23 Figure 15 – Nitrogen Expansion Process (APCI) .......................................................................................... 24 Figure 16 – EcoRel Process (Cryostar) ......................................................................................................... 25 Figure 17 – OCX-2 Natural Gas Expansion Cycle (Mustang) ....................................................................... 26 Figure 18 – Inverse Rankine Cycle, T-S Diagram ......................................................................................... 27 Figure 19 – LiMuM Process (Linde) ............................................................................................................. 28 Figure 20 – C3-MR process (APCI) ............................................................................................................... 29 Figure 21 – ConocoPhillips Optimised Cascade .......................................................................................... 30 Figure 22 – Photo of QFlex and Standard Vessel ........................................................................................ 34 Figure 23 – Photo of Spherical Moss Vessel ............................................................................................... 35 Figure 24 – Photo of Membrane Vessel ...................................................................................................... 36 Figure 25 – Photo of Inside View of Membrane Tank ...............................................................................