LNG - Potential Challenges and Pathways to Success in a Low Carbon Intensity World. Life Cycle Analysis

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1 LNG - Potential Challenges and Pathways to Success in a Low Carbon Intensity World Life Cycle Analysis Carbon Management Canada Banff, Alberta May 28 th, 2014 James D. Brown P.Eng. ICF Consulting Canada Calgary, Alberta 0

2 Global Presence Publically traded (ICFI:NASDAQ) consultancy Headquarters in the metro Washington, D.C. area ICF has approximately 4,500 employees, including many who are recognized as thought leaders in their respective fields Annual revenue approximately $950 million Major division Energy, Environment & Transportation (~42% of revenue) Operates in Canada as ICF Consulting Canada, Inc. 1

3 LIFECYCLE ANALYSIS Overview 2

4 ICF GMM ICF s Projection for Natural Gas Production U.S. & Canadian Shale Gas Production (BCFD) Bakken and Utica Western Canada All Other US Eagle Ford Marcellus Haynesville Barnett Fayetteville Woodford U.S. & Canadian Natural Gas Production (TCF/ Yr) 3

5 Life Cycle Analysis Overview Models such as GREET and GHGenius serve a useful role: Allowing those not fully skilled LCA methodology to compare alternatives; and/or Comply with regulatory requirements But there are issues associated with packaged models: Because they were originally developed to compare renewables with conventional fuels, they can lack the rigor to compare similar alternatives; A user with only a basic or rudimentary understanding of life cycle methodology can generate output relying upon brand recognition of the model; and Generalist users lack the understanding of the detailed model structure and assumptions without an understanding if the data and information is appropriate for the specific scenarios. But built in methodological choices and pre-populated data can affect the final results and interpretation; This does not mean GREET or GHGenius are unreliable: GREET or GHGenius are capable of producing indicative values for natural gas recovery and LNG production, but not the specific emissions to BC s resources or LNG facilities. Detailed analysis though would require custom built fully transparent LCA models reflecting BC s resource base and environment. 4

6 Life Cycle Analysis Considerations When reviewing and evaluating existing LCAs the following should be considered: What was the goal of the LCA? What metric is used to compare alternatives? What is included in the system boundary and what is not? Does the system take into account upstream or downstream effects? How does the scope of the system boundary impact results? How are the impacts of co-products treated? How are emissions associated with byproducts and products treated? Is the data complete, consistent (i.e. marginal vs. average and what does the LCA objective require?), accurate, current, representative, and reproducible? Is the data relevant for the intended scope or goal of the LCA? Does the data represent an appropriate geographical boundary and applicable technologies? Do critical data gaps exist? If so, how have they been filled and what s the potential impact on the usefulness of the LCA? Has the relevant data been peer reviewed? If the LCA is for public dissemination or external stakeholder engagement: Does the data meet the minimum standards of ISO with respect to disclosure of LCA studies and publically disclosed comparative assertions? Can all data, methodological choices, and assumptions be reported for other to read critically? 5

7 Life Cycle Analysis Overview Illustrative LNG Lifecycle Drilling and Completion Well Production and Collection Natural Gas Processing Transportation Natural Gas Liquefaction Transportation Natural Gas Regasification Transportation Use End-of-Life Exploration Site Preparation Liquids Uploading Well Workovers Acid Gas Removal Dehydration Regeneration Intermediate Products Transport Natural Gas Transport NGL Transport Refrigeration Air liquefaction Distribution to End Users Natural Gas Regasification Combustion Decommissioning and Remediation Drilling Raw Gas Transport Other Feed Gas Conditioning LPG Recovery Well Completion C F Stabilization & Fractionation Heat Exchange Process Config. Compression Turbomachinery T ED CG Power Generation Boundary Considerations Temporal Technology Project Lifetime Geographical Inlet Gas Composition Emission constraints Geographical Inlet Gas Composition Emission constraints Temporal and Geographical Gas composition Gas and NGL prices Electricity Temporal and Geographical Gas composition Gas and NGL prices Electricity Goal Product footprint vs. Scenario Analysis Temporal and Geographical Technology Gas and NGL prices Cold energy needs Geographical Infraestructure Energy sources prices Geographical Infraestructure Energy sources prices Temporal and Geographical Technology Emission constraints Technological validity C F Conventional Production Hydraulic Fracturing T E CG Gas Turbines Electric Drivers Cogeneration 6

8 Life Cycle Analysis Overview 7

9 Life Cycle Analysis BC LNG Considerations Distribution of NGL s across unconventional BC plays ranges widely: Montney Average liquids to dry gas ratio is bbl/mmcf Range from 1.3 bbl/mmcf to bbl/mmcf Horn River Average liquids to dry gas ratio is 3.61 bbl/mmcf Range from 0.05 bbl/mmcf to 39.8 bbl/mmcf, Source: ICF Analysis of BC Oil & Gas Commission, Montney Formation Play Atlas NEBC, p. 3; ICF Analysis of BC Gas Production Database 8

10 Life Cycle Analysis BC LNG Considerations Ft. Nelson 1,004 BTU/scf Ft. St. John 1,042 BTU/scf Alliance/Boundary 1,104 BTU/scf Hudson Hope 1,046 BTU/scf Savona 1,039 BTU/scf Pine River 1,011 BTU/scf Alliance/Gordondale 1,064 BTU/scf Dawson Creek 1,070 BTU/scf Kingsvale 1,029 BTU/scf Empress Border 1,012 BTU/scf Huntingdon 1,038 BTU/scf AB/BC Border 1,025 BTU/scf McNeill Border 1,012 BTU/scf 9

11 Life Cycle Analysis Overview 10

12 Life Cycle Analysis Boundary Considerations Refrigerant Circuits Air Liquefaction Chilled industrial water Liquefaction or solidification of carbon dioxide Cascade refrigeration systems Liquid Nitrogen Liquid oxygen Rejection of low grade heat Reduction of evaporative lossess in cooling towers Recovery of ethylene Liquid carbon dioxide Dry ice Industrial or commercial district cooling Frozen foods Freeze-dried foods Cryogenic crushing Sludge treatment systems Water treatment systems LNG Regasification Liquid argon Steel making systems, cutting Welding Crystallization Liquefaction of Gases Cryogenic Power Generation Seawater Desalinization LPG recovering Boil-off gas liquefaction Liquefaction of hydrogen Fresh water Natural Gas Market Quality Specifications Ethane Propane Butane Power 11

13 Life Cycle Analysis Overview 12

14 Life Cycle Analysis Application Example Source: ConocoPhillips (2007). The Darwin LNG Plant Pioneering Aeroderivative Turbines for LNG Refrigeration Service Presentation to GE Oil and Gas Conference, Florence Italy, January Accessed 29 October

15 CHP/Co-gen and Turbines Gas Turbine Configuration with Heat Recovery GE s LM6000 Aeroderivative Gas Turbine Source: GE 14

16 Turbine Design Gas turbine systems operate on the Brayton thermodynamic cycle. Air is compressed, heated, and then expanded. Energy produced by the expander (also called the turbine) is used to drive a compressor and a generator, which produces electricity. Components of a Simple Cycle Gas Turbine The power produced by an expansion turbine and consumed by a compressor is proportional to the absolute temperature of the gas passing through the device. Consequently, it is advantageous to operate the expansion turbine at the highest practical temperature consistent with economic materials and internal blade cooling technology. As technology advances permit higher turbine inlet temperature, the optimum pressure ratio also increases. Higher temperature and pressure ratios result in higher efficiency and specific power, or power-toweight ratio. 15

17 Turbine Design Continuous improvements ~0.7% per year reduction in Specific Fuel Consumption (SFC) Business & General Aviation and Regional carriers as well as larger Air Transport turbines These turbines are basis of today s fixed frame turbines used in co-gen and LNG operations. Historical Air Transport Engine SFC Historical BGA & Regional Engine SFC TFE731-2 TFE731-3 TFE731-20/40/60 CF34-3A TFE CF34-8 CF34-1A BR725 CF34-3B BR715 CF34-10 Passport

18 Life Cycle Analysis Summary LCA is a useful and important means to understand and prioritize efforts to manage GHG emissions. Based on ICF s review, for BC LNG fully transparent modelling applying engineering principles has merit over reliance upon higher level typical facility data in GREET or GHGenius LCA s must be properly defined: Purpose Choices in methodology (e.g., functional unit or allocation) Scope & system boundaries Technologies Data Value of an LCA will be enhanced when combined with a deep understanding of technologies and the resource base. 17

19 James D. Brown P.Eng Principal ICF Consulting Canada, Inc. Calgary, Alberta Jessica Abella B.Eng., M.Sc. Associate LCA Subject Matter Expert ICF Consulting Canada, Inc. Calgary, Alberta 18