LNG Business In India 2016
Topics Gas Demand / Supply Balance in India. Sector wise demand & sensitivity to price. Pricing of LNG ( Henry Hub, NBP, Long term ) Pipeline Infrastructure. Regasification Terminal Infrastructure LNG FSRU
GAS DEMAND AND SUPPLY BALANCE
Business Environment 2010 2030 Coal Oil Gas Hydro Nuclear Coal Oil Gas Hydro Nuclear The share of natural gas in the energy mix of India is expected to increase to 20% in 2030 as compared to 11% in 2010. The natural gas demand is all set to grow significantly at a CAGR of 6.8% from 242.6 MMSCD in 2012 13 to 746 MMSCD in 2029 30. LNG imports in India are expected to increase from 44.6 MMSCD in 2012 13 to 214 MMSCD in 2029 30. The increase of LNG imports would translate to significant increase in LNG tonnage requirements
Natural Gas Supply/ Demand 800 700 600 500 400 300 243 265 290 244 326 300 378 367 409 516 490 465 438 384 389 394 400 746 714 684 654 626 598 571 545 431 437 442 448 454 461 467 471 Supply (MMSCD) Demand (MMSCD) 200 146 167 196 100 0
SECTOR WISE DEMAND
Consolidated segment wise demand MMSCD 2012 13 2016 17 2021 22 2026 27 2029 30 Power 86.50 158.88 238.88 308.88 353.80 Fertilizer 59.86 96.85 107.85 110.05 110.05 City Gas 15.30 22.32 46.25 67.96 85.61 Industrial 20.00 27.00 37.00 52.06 63.91 Petrochem/Refinery 54.00 65.01 81.99 103.41 118.85 Sponge Iron Steel 07.00 08.00 10.00 12.19 13.73 TOTAL 242.66 378.06 516.97 654.55 746.03 Power and fertilizer sectors is expected to remain highly sensitive to the price at which the entities in these sectors are able to procure gas. The demand from other consuming sectors (Industrial user segment and city gas distribution) is expected to remain relatively resistant to the price levels at which gas becomes available
Consolidated source wise supply of Natural Gas MMSCD 2012 13 2016 17 2021 22 2026 27 2029 30 Domestic Sources 101.1 156.7 182 211 230 LNG Imports 44.6 143.0 188 214 214 Gas Imports 0 0 30.0 30.0 30.0 Total 145.7 299.7 400 454 474 LNG imports in the country would rise steadily. Since domestic gas production has not kept pace as envisaged in the plan, LNG imports needs to be enhanced in order to maintain adequate natural gas supplies. The steady increase of LNG imports would create demand of LNG tonnage (bringing LNG to India). Note: 3.6 MMSCD = 1 MMTPA
Price Sensitivity Analysis for Indian LNG Market LNG Price (MMBTU) DEMAND UTILIZATION (MMSCD) 16 17 USD 45 Industries, CNG for Transportation 13 14 USD 91 Additionally Refineries & Industrial Power Generation 11 12 USD 126 Additionally Peak Shaving Power Plants 8 10 USD 203 Additionally Base Load Power Plant & Fertilizers
PRICING OF LNG
Gas Pricing (Index Based ) In North America Henry hub (A trading location near Louisiana) is considered as the bench mark price for gas market and hence any LNG pricing is reference to Henry hub pricing Typically LNG pricing in UK market was linked to NBP (national balancing point) a virtual trading location for sale and purchase of natural gas.
Latest LNG DES Price (West India ) : 6.45 USD / MMBTU (SPOT LNG )
Long Term LNG Pricing Relationship With Oil LNG pricing linearly linked to crude oil price is the traditional LNG pricing formula in Asia PLNG = A * P Crude Oil + B Where PLNG = Price of LNG in USD/MMBTU A = Slope of Line P Crude Oil = Price of crude oil in USD/ BBL B = Constant in USD/MMBTU Typically A = 0.125 to 0.16 and B= 0.70 to 0.90 At A = 0.16 and B = 0, LNG is equivalent to crude oil in USD/MMBTU terms
LNG Pricing Linear Formula A typical Case
LNG Value Chain Costs Exploration & Production Liquefaction Shipping Regasification & Storage $0.5 $1.0 / MMBTU $0.8 1.20/MMBTU $0.4 $2.5 / MMBTU $0.3 $0.5 / MMBTU Total Cost = $ 2.00 $ 5.20 Total with 30% Cost escalation = $ 2.60 $ 6.30
PIPELINE INFRASTRUCTURE
Pipeline Infrastructure Uniform Coverage of 31382 KM / Capacity 782 MMSCD by Year 2022
Challenges in creation of Pipeline Infrastructure Resistance from farmers & land owners. Forest & Environment Clearances. Lack of customers for expensive RLNG in the planned pipeline routes. Political Issues.
REGASIFICATION TERMINALS
LNG Terminals Operational / Under Construction 2014 2017 2020 Operational MMTPA MMTPA MMTPA Dahej Petronet LNG 10.0 15.0 20.0 Hazira Hazira LNG (Shell/Total) 3.5 5.0 5.0 Dabhol RGPPL 3.3* 5.0 5.0 Kochi Petronet LNG 5.0 5.0 5.0 Total 21.8 30.0 35.0 Under Construction 2018 2020 Ennore IOCL / TIDCO 5.0 5.0 Mundra GSPC/Adani 5.0 5.0 Gangavaram Petronet LNG 5.0 Total 10.0 15.0 Grand Total 21.8 40.0 50.0 21
Probable LNG Terminals 2020* Remarks Possible MMTPA Kakinada GAIL / GDF Suez /Shell 2017/18 5.0 FSRU Kodinar HPCL / Shapoorji 2019/20 5.0 Onshore Jaffarabad Swan Energy 2018/19 5.0 FSRU Dhamra Adani / IOC/ GAIL 2019/20 5.0 Onshore Kolkata Hiranandani (H Energy) 2018/19 5.0 FSRU Grand Total 25.0 22
India s LNG Terminal & Natural Gas Pipeline Infrastructure Mundra Dahej Hazira Gangavaram H Energy FSRU Adani (Dhamra) SWAN FSRU Dabhol GAIL & Shell FSRU Ennore LNG Kochi 23
Conclusion The LNG imports are gradually going to triple over the years ( at present 14. 5 MMTPA). Pipeline infrastructure is key to growth of LNG imports. Pricing concerns remains but reliability and environmental concerns including support from Government will enhance affordability of RLNG in the country.
LNG FSRU STS 25
FSRU An FSRU is a LNG vessel, moored at a location. It has the capability to accommodate the berthing of LNG vessels for transferring cargo. It stores LNG and then regasifies LNG from storage. It conditions the vaporized LNG in order to meet the gas quality conditions specified by the market. 26
FSRU 27
FSRU It connects to the delivering pipeline and meters send out and accounts for process boil off. It provides for the necessary monitoring and control systems to ensure safe and reliable operation It has accommodation facilities for the FSRU crew that work round the clock. 28
Why a FSRU? Ability to provide high pressure gas directly from the ship into land based gas distribution networks. Reception terminal and the land based gasification & distribution facility not required. Ability to provide Gas/Clean energy to small and remote locations. Circumnavigates facility planning constraints and allows gas to be provided in locations where safety and environmental considerations apply Energy / Gas needs but NIMBY ( Not in my back yard ). Possibility to deploy the unit rapidly where needed (Summer/Winter) 29
Disadvantages of FSRU Vulnerable to supply disruptions during heavy weather when LNG tankers are unable to berth at an FSRU. Operational risks during bad weather. Faster deterioration of FSRU when compared with a shore based terminal. Periodical maintenance (Dry docking) could disrupt supply of R LNG for a couple of weeks. 30
FSRU Issues FSRU terminals receive same degree of scrutiny from Government regulators as their shore based counterpart. Opposition from recreational and commercial fishing interest on grounds that FSRU s ORV will harm marine flora and fauna. Security issues, FSRU could be a target to a terrorist attack. 31
LNG Transfer for FSRU in Offshore Environment FSRU : Moored using either a yoke or a turret system (A) Submerged Turret Loading (deep water) (B) Yoke Mooring System (shallow water) GBS ( For Shallow Depths): Rests on the sea bed 32
FSRU using a Submerged Turret Loading Turret permits the FSRU to weathervane as wind and sea conditions dictate. 33
Submerged Turret Loading LNG is regasified directly on the tanker and transferred from the tanker using the Submerged Turret Loading (STL) buoy system. 34
Yoke Mooring System YMS is attached to the stationary mooring tower and consists of the jacket, the mooring head and the yoke. The jacket is a tubular steel structure with four legs that attach to four piles driven into the seafloor. The mooring head on top of the jacket supports the tubular steel yoke that connects to the FSRU. The yoke has a ballast system that acts as a counterweight and restores the FSRU to equilibrium. The YMS is the preferred technology choice for mooring vessels similar to the FSRU in shallow waters, i.e. 90 feet. 35
Yoke Mooring System 36
Cargo transfer from LNGC to FSRU Side by Side mooring. 37
Gravity Based Structure (GBS) GBS, comprised of concrete structures that sit on the sea bed and contain the LNG storage tanks. The concrete caisson will provide the secondary containment in the event of a leak in the primary tank. This application requires that the facility be located in relatively shallow water. No requirement for a mooring, as the entire structure rests on and is supported by the sea floor. 38
Gravity Based Structure 39
LNG Transfer Options for FSRU in Harbour Conditions Side by side berth using flexible. Side by side berth using chikson. Across a berth 40
LNG Transfer Options Side by Side berth using cryogenic flexible 41
LNG Transfer Options Side by side transfer using chicksons. 42
Across a berth LNG Transfer Options 43
Regasification Process The equipment for regasifying the LNG, along with gas turbines for electricity generation, are located on the FSRU s deck. Most common type of LNG Vaporisers in use are as follows : 1) Shell and Tube type Vaporizers (STVs), 2) Open Rack Vaporizers (ORVs), 3) Submerged Combustion Vaporizers (SCVs), 4) Combined Heat and Power units with SCVs, and 5) Other types, i.e. Ambient air Heated Vaporizers. 44
Factors for choice of Regasification Technology The most significant factors for consideration for an FSRU regasification technology are: Availability and quality of seawater, Size of equipment relative to deck space available Capital cost and fuel cost, and Environmental issues such as air and water emissions 45
Source Report for Broadwater FSRU project. Advanced production and loading (STL) website / written material by STL. Lloyds LNG Seminar hand out. 46
Question and Answers 47