Gas/LNG Outlook Does LNG work for Central America? Doug Brown, LNG Marine Adviser . Platts Private Power in Central America . Panama City PANAMA . Gas/LNG Outlook ... FSRU LNG …

MONTH 2008

© POTEN & PARTNERS 2008 CONFIDENTIAL

June 2013

Capt Doug Brown, LNG Marine Adviser Platts Private Power in Central America Panama City PANAMA

Gas/LNG Outlook Does LNG work for Central America?

MONTH 2009


© POTEN & PARTNERS JUNE 2013 Page 1

Today’s LNG market has 25 importing countries and 30 exporting projects

MONTH 2009



Asian demand for LNG will drive tremendous growth Global LNG demand expected to exceed 400 MMt/y by 2025

Global LNG Demand Projection

0

50

100

150

200

250

300

350

400

450

2000 2005 2010 2015 2020 2025 2030

MM

t/y

Asia

Europe

Others

Source: Poten & Partners

MONTH 2009



South & Central America grows to 16 MMt/y market New import technology will drive expansion in Central America


South & Central Americas LNG Demand

0

2

4

6

8

10

12

14

16

18

MM

t/y

South America

Central America

MONTH 2009



Trinidad, Colombia and Peru could provide regional supply

• Trinidad’s Atlantic LNG is a four-train facility with 15 MMt/y of capacity • Peru LNG is a one-train facility with 4.4 MMt/y of capacity • Pacific Rubiales and Exmar are building a 0.5 MMt/y export plant in Colombia

MONTH 2009



Central American buyers will compete with Asia Asian netback LNG prices still cheaper than fuel oil

Source: Poten & Partners 0

5

10

15

20

25

2010

2011

2012

2013

2014

2015

2016

Brent

LNG - Asia Pacific

LNG - Spain

UK NBP

US Henry Hub

$/M

MB

tu ($

2012

)Major Price Indices Projections

• Liquefaction, freight, terminal and logistics costs need to be added to the US Henry Hub price to get a delivered, ex-ship price into Central America

MONTH 2009



Lack of LNG import infrastructure puts Central American importers at a disadvantage

Central American Countries Regional LNG Supplier

Continue normal fuel &

energy operations

Construct LNG terminal

Supply LNG to existing demand centers

Commit LNG supply to

nonexistent terminals

Classic Chicken-and-Egg problem: Who will act first?

MONTH 2009



How much LNG would I need?

• Assumptions • Plant Utilisation 80% • Ship size 145,000m3, 98.5% filling limit

CCGT Engine Turbine MW 300 300 300 Efficiency 52% 40% 30% MMBtu/day 38,000 49,000 66,000 M3 LNG/year 620,000 800,000 1,070,000 Days supply/ship 84.5 65 48.7 Ships/year 4.3 5.6 7.5 Months/ship 2.8 2.1 1.6

MONTH 2009



Onshore vs. FSRU import terminal

• Two solutions to the same problem – how best to import LNG?

Images courtesy of Google Images/Google Earth

http://www.google.com/url?sa=i&rct=j&q=&source=images&cd=&cad=rja&docid=17QNoh9MRKmA8M&tbnid=IvdcAvkTRlLAtM:&ved=0CAUQjRw&url=http://www.epd.gov.hk/eia/register/report/eiareport/eia_1252006/html/eiareport/Part1/Sec1_3_v2.htm&ei=MZSvUYa3PO-r4APE74DoDA&bvm=bv.47380653,d.dmg&psig=AFQjCNFRhnB5dJ92OgPxmKpP5Mx9LXdKMA&ust=1370547627494731

http://www.google.com/url?sa=i&rct=j&q=fsru&source=images&cd=&cad=rja&docid=s9dDJsg-KW0QoM&tbnid=yIf2nNHlZzmJxM:&ved=0CAUQjRw&url=http://www.offshoreenergytoday.com/indonesia-hoegh-enters-20-year-charter-party-with-pgn-for-fsru/&ei=8ZKvUafHBfi64AOvtoGIDw&psig=AFQjCNE73mz_wZYB6lDZMqzEneFSeMAxnw&ust=1370547215931048

http://www.google.com/url?sa=i&rct=j&q=fsru&source=images&cd=&cad=rja&docid=X2_Ufewh7kuIeM&tbnid=t_EZHA2fYjXARM:&ved=0CAUQjRw&url=http://majarimagazine.com/2011/07/sekilas-tentang-teknologi-floating-storage-and-regasification-unit-fsru/&ei=GpOvUaCAAc_54AOakYCQCw&psig=AFQjCNE73mz_wZYB6lDZMqzEneFSeMAxnw&ust=1370547215931048

MONTH 2009



FSRU offers lower capital but Unit Costs often similar

FSRU-based terminal

Conventional land-based

terminal

$ m

illio

n

Jet ty Structural

LNG Process & Utilities

LNG Storage

FSRU-based terminal

Conventional land-based

terminal

$/M

MBt

u

Opex

Vessel Charter

Capex

Terminal Capital Costs Terminal Costs of Service


MONTH 2009



Land-based LNG Import Facilities ideal for base load

• Traditional LNG import terminal will accept about 135,000- 150,000m3 at a time – full cargo on an LNG carrier

• Import terminal includes deep water berth, storage tank(s), regasification and export pipeline.

• Pros/Cons: • Can accept majority of LNG carriers • Adequate storage • Lower cost of LNG • Long interval between successive cargoes, but • Excessive inventory cost distorts cash flow • Cannot reduce scale of marine facilities, even if taking

part cargoes from large ships. • Lack of small scale shipping availability

MONTH 2009



FSRU LNG Import Facilities can be built quickly

• Introduced as a quick and relatively cheap way of delivering gas to new markets.

• Had to overcome negativity associated with LNG ship to ship transfer (STS)

• FSRU is converted LNG carrier - receives cargo through ship to ship transfer and remains on site

• Need full scale marine facilities and adequate depth of water

• Construction of LNG import facilities and regasification typically costs about 3-4 times as much as a FSRU solution

Images courtesy of Google Images/Excelerate

• LNG FSRU may have to disconnect and put to sea for hurricane/bad weather

• Requires periodic removal for dry docking

• Not a continuous source of gas

http://www.google.com/url?sa=i&rct=j&q=&source=images&cd=&cad=rja&docid=98NVEBT5UzzkFM&tbnid=o7TDHBOeL2xdWM:&ved=0CAUQjRw&url=http://excelerateenergy.com/sts-lng-transfer&ei=rC-3UdDsNcm40AGP4oCYBA&bvm=bv.47534661,d.dmg&psig=AFQjCNHV2h10cZ628oHGBPoGmt_DafaDYA&ust=1371046142389641

http://www.google.com/url?sa=i&rct=j&q=&source=images&cd=&cad=rja&docid=1emgzupsvgUgTM&tbnid=3Fk7uKkwYE4vnM:&ved=0CAUQjRw&url=http://excelerateenergy.com/project/gnl-escobar&ei=iDC3UdCuF63r0QGo-IGIBg&bvm=bv.47534661,d.dmg&psig=AFQjCNHV2h10cZ628oHGBPoGmt_DafaDYA&ust=1371046142389641

MONTH 2009



Small Scale LNG shipping does exist, but only in certain niche markets • Europe - Coastal distribution in Norway and cross Med trades (40,000m3_ • Japan - Shipments to small LNG power plants and utilities (pipeline earthquake risk) from

source or from bulk imports • LNG bunkering vessels under development due to increasing interest for LNG as bunker

fuel for ships • Drawback of berth compatibility/availability for small ships

• What are the alternatives: • “Milk run” – part cargo deliveries from LNGCs at multiple ports • Tailored solutions – small scale LNG, CNG, etc

All images courtesy of Google Images

http://www.google.com/url?sa=i&rct=j&q=&source=images&cd=&cad=rja&docid=lTno3wlaKTdciM&tbnid=tKeefcKP3Ig13M:&ved=0CAUQjRw&url=http://www.ogj.com/articles/print/volume-95/issue-42/in-this-issue/gas-processing/caribbean-lng-project-marks-progress-lng-tanker-launched.html&ei=XpWvUdeNN_Xi4AO6yoH4AQ&bvm=bv.47380653,d.dmg&psig=AFQjCNEER2n6zVYzQVAKEDfcQk8IYYc4PQ&ust=1370547906767864

http://www.google.com/url?sa=i&rct=j&q=small+lng+ships&source=images&cd=&cad=rja&docid=3mWX5aCZ9JUcjM&tbnid=YYcZJYRuoNJdHM:&ved=0CAUQjRw&url=http://www.gl-group.com/en/14832.php&ei=epavUerJI5ip4AOAwIHQCg&bvm=bv.47380653,d.dmg&psig=AFQjCNFbjdwJsyXXghTaTxA4-ZsXMIT9dw&ust=1370548144475122

http://www.google.com/url?sa=i&rct=j&q=&source=images&cd=&cad=rja&docid=PAApTqrtZ-7ZTM&tbnid=sWVHKdxVzlrlQM:&ved=0CAUQjRw&url=http://www.mol.co.jp/opensea_back/0801_nnl.html&ei=OZevUf6PHtTE4APpmYHICQ&bvm=bv.47380653,d.dmg&psig=AFQjCNHNw1U7kco1_0rziM7Mst78cc7o1w&ust=1370548404277596

MONTH 2009



Several Alternative Schemes Proposed • GoM - ATBs proposed for the carriage of LNG or CNG • CNG - Coselle • Hybrid transportation media – SeaOne, Enersea • Alternative schemes look for cheaper methods of construction and different technology to

carriage of LNG at -160C (-260F) – avoidance of cryogenic processing and materials • Preference is for using pipeline code principles in shipping applications – Containment is

long coil or rack of pipeline packed to high pressure at ambient temperature to accommodate CNG

• Use of “vehicle” for carriage of methane at intermediate temperature/pressure – containment system is “cargo” in near-standard ships

All images courtesy of Google Images

http://www.google.com/url?sa=i&rct=j&q=&source=images&cd=&cad=rja&docid=We75ooyYPRYQwM&tbnid=NO6C4ry5r6KkFM:&ved=0CAUQjRw&url=http://www.crowley.com/About-Us/EcoStewardship/Technology/Crowley-is-building-and-operating-the-industry-s-newest-and-most-environmentally-friendly-Articulated-Tug-Barges-ATBs&ei=X5KvUd-NMPjj4AP4_YDYBQ&bvm=bv.47380653,d.dmg&psig=AFQjCNHtXCn00SgrLrNsJ91pKB3J4o7xgw&ust=1370547095511901

http://www.google.com/url?sa=i&rct=j&q=&source=images&cd=&cad=rja&docid=iVjzYjI7JVlsWM&tbnid=FtnBCqRDnU_v3M:&ved=0CAUQjRw&url=http://www.ndtcabin.com/articles/marine/0610001.php&ei=BpGvUYu6LvO34APc2YHQAQ&bvm=bv.47380653,d.dmg&psig=AFQjCNHdZPQmmGHNGXbUPRw55MT4qxUp-g&ust=1370546714138925

http://www.google.com/url?sa=i&rct=j&q=&source=images&cd=&cad=rja&docid=iVjzYjI7JVlsWM&tbnid=FtnBCqRDnU_v3M:&ved=0CAUQjRw&url=http://www.marinelog.com/DOCS/NEWSMMIV/MMIVAug23b.html&ei=YpGvUf-iBbe54APcroHQAg&bvm=bv.47380653,d.dmg&psig=AFQjCNHdZPQmmGHNGXbUPRw55MT4qxUp-g&ust=1370546714138925

MONTH 2009



Conclusions

• Asian demand drives LNG growth – and pricing • Adequate USGC and Caribbean supply potential, but • Central America will only grow LNG demand with new technology/approach • LNG pricing attractive over Fuel Oil but new infrastructure is expensive • Supplier/consumer impasse has to be broken – who will move first? • FSRU versus onshore terminal – relative economics, temporary solutions

sometimes become permanent • LNG shipping is a mature operation – over 50 years of experience – but need

full scale facilities for existing vessels, even if importing small quantities • Small scale LNG has merit but cost is still high – small vessels may not be

compatible with local export facilities • Alternative technologies not proven in practice • An opportunity exists, but needs care to identify and implement the most

appropriate supply chain solution • Best infrastructure requirements • Best deal with suppliers

• A collective solution may be better than working in isolation.

MONTH 2009



LNG & NATURAL GAS CONSULTING CONTACTS:

AMERICAS Contact: Jim Briggs

Email: [email protected] Tel: +1 212 230 2000

EUROPE, MIDDLE EAST, AFRICA Contact: Graham Hartnell


ASIA PACIFIC Contact: Steve Thompson


Documents

Gas/LNG Outlook Does LNG work for Central America? Doug Brown, LNG Marine Adviser . Platts Private Power in Central America . Panama City PANAMA . Gas/LNG Outlook ... FSRU LNG …