Small and Medium Scale LNG KPunnonen

Power Gen Asia 2-4 October 2013

Small and Medium Size LNG

for Power Generation

KARI PUNNONEN

AREA BDM, OIL&GAS BUSINESS, MIDDLE-EAST, ASIA &

AUSTRALIA

WRTSIL FINLAND OY

1 Wrtsil 11 October 2013 K. Punnonen

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Disclaimer

This document is provided for informational purposes only and may not be

incorporated into any agreement. The information and conclusions in this document

are based upon calculations (including software built-in assumptions), observations,

assumptions, publicly available competitor information, and other information obtained

by Wrtsil or provided to Wrtsil by its customers, prospective customers or other

third parties (the information) and is not intended to substitute independent

evaluation. No representation or warranty of any kind is made in respect of any such

information. Wrtsil expressly disclaims any responsibility for, and does not

guarantee, the correctness or the completeness of the information. The calculations

and assumptions included in the information do not necessarily take into account all

DISCLAIMERF

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and assumptions included in the information do not necessarily take into account all

the factors that could be relevant.

Nothing in this document shall be construed as a guarantee or warranty of the

performance of any Wrtsil equipment or installation or the savings or other benefits

that could be achieved by using Wrtsil technology, equipment or installations instead

of any or other technology.

All the information contained herein is confidential and may contain Wrtsils

proprietary information and shall not be distributed to any third parties without

Wrtsils prior written consent.


AGENDA:AGENDA:

1.1. Company ProfileCompany Profile

2.2. LNG Supply ChainLNG Supply Chain

SMALL AND MEDIUM SIZE LNG

2.2. LNG Supply ChainLNG Supply Chain

3.3. LNG Terminal with Power PlantLNG Terminal with Power Plant

4.4.LNG Based FeasibilityLNG Based Feasibility


Wrtsil411 October 2013 K. Punnonen

Its Time for LNG

Wrtsil Corporation

19,000 professionals

Marine/Marine/

offshoreoffshorePower GenerationPower Generation

Power Solutions for

Listed in Helsinki

4.9 billion turnover (2012)

Power

Plants

Ship

Power

Services


Installed base Wrtsil Powering the world*

Europe:

Output: 12,1 GW

Plants: 1793

Engines: 3361

Europe:

Output: 12,1 GW

Plants: 1793

Engines: 3361

Asia:

Output: 18,7 GW

Plants: 1645

Engines: 3627

Asia:

Output: 18,7 GW

Plants: 1645

Engines: 3627Americas:

Output: 11,3 GW

Plants: 395

Engines: 1342

Americas:

Output: 11,3 GW

Plants: 395

Engines: 1342

Total: 53,7 GW

Plants: 4689

Engines: 10584

Oil & gas

Flexible baseload

Industrial self-generation

Grid stability & peaking

Africa & Middle East:

Output: 11,9 GW

Plants: 856

Engines: 2254

Africa & Middle East:

Output: 11,9 GW

Plants: 856

Engines: 2254

* On-shore Power Plants

December 2012

30 April 2013 POWER PLANTS 20136 Wrtsil

Engines: 10584

Countries: 169

Wrtsil Hamworthy Gas Excellence

Your perfect match

WRTSIL is a global leader in complete lifecycle power solutions for the marine and

energy markets. In addition to being a world class engine manufacturer and supplier, energy markets. In addition to being a world class engine manufacturer and supplier,

Wrtsil is also a recognized EPC contractor in the power generation sector with extensive

references for turn key delivery of onshore power plants and floating power barges.

HAMWORTHY OIL & GAS SYSTEMS was a leading designer, developer and manufacturer

of advanced gas handling systems for onshore, marine and offshore applications.

Hamworthy has patented LNG technology within LNG liquefaction and is a recognized

provider of technology and systems for various LNG applications worldwide.

With Hamworthy now being an integrated part of Wrtsil the two companies extensive

project execution experience and technology portfolios are combined into a seamless and

fully accountable one stop shop for complete small and mid scale LNG production facilities.

Wrtsil Oil & Gas Systems

LPG LNG Gas Recovery Separation Technology

LPG cargo handling systems VOC recovery systemsBOG reliquefaction plants

Aftermarket

Complete site support servicesSeparator design

Products and Organization from Wrtsil Oil & Gas Systems

Reliquefaction & cooling plants

Cargo heaters & vaporizers

Small scale LNG plants

LNG regasification plants Project life time supportZero Flare solutions

Ship- and cargo tank design

HC blanket gas and recovery

LNG fuel gas systems Flare gas recovery and ignition Compact separation

VIEC /VIEC-LW internals

Interface level and profilers Training

How to get LNG? Conventional LNG supply chain

LiquiLiqui--

factionfaction

Large Large

scale scale

shippingshipping

HubHubEvaporatEvaporat

ionionPipelinePipeline

End user End user

(NG)(NG)

Gas Gas

exploexplo--

rationration


LARGE SCALE

Large Scale LNG

Intercontinental transport

Millions of tons per year

LNG Terminal feeding into

pipeline system

Providing a commodity

Jetty capable of offloading ships

from 35,000 m3

to 145,000 m3

Single containment tank

(160,000 m3)

125 MMSCFD Regas and

Sendout

How to get LNG? Mid and Small Size LNG

Gas Gas

exploexplo--

rationration

LiquiLiqui--

factionfaction

Large Large

scale scale

shippingshipping

HubHubEvaporatEvaporat

ionionPipelinePipeline

End user End user

(NG)(NG)

Mid Mid

scale scale

storagestorage

End userEnd user

(NG)(NG)

Small Small

scale scale

shippingshipping

EvapoEvapo--

rationration

Truck Truck

transtrans--

portport

Small Small

scale scale

storagestorage

End user End user

(NG)(NG)

EvapoEvapo--

rationrationportport

Ship Ship

bunkeringbunkering

storagestorage(NG)(NG)rationration


From Large Size to Small Size


Small Size LNG Carrier

Typical small size LNG carrier. The vessel is often a combined gas and

chemical carrier 5 800 / 10 000 cbm.

Small Size LNG

Regional supply

Directly to end-users

Providing an energy solution

previously not available

10,000 m3 Multigas Carrier


Source: Norgas

Source: Knutsen

Small Size LNG Harbour

LNG Carrier loading

Road tanker loading

LNG Recieving Terminal Power Plant

Does it make sense to invest into a Single

Purpose LNG Receiving Terminal - as a


Purpose LNG Receiving Terminal - as a

fuel system for a Power Plant?

LNG Based Power Plant

A Feasibility Analyze was done to evaluate this

question. The results are presented here:

Natural Gas has become the fuel of preference and is

expected to pass coal within a decade or so


Power Output

Fuel Consumption

LNG Consumption

Power Plant Technical Solution

30 April 2013 POWER PLANTS 201316 Wrtsil

Wrtsil Power Plant Technical Solution

Power Output

Single Cycle, gas engine 9MW and 18 MW

Net Power at Step-Up Trafo: 50, 100, 300 MW

Outgoing Voltage: 110 kV

Fuel Consumption

Fuel: LNG (Natural Gas)

Generator set efficiency: 46%

Own electrical consumption: 4 MW at 400V

Plan Net Electrical Efficiency: 43,1 - 44,5%

Chosen Power Plant Characteristics for the study

Ambient Conditions

Average ambient temp: 29 C (min. 10 C, max. 40C)

Height above sea level: max. 100 m

Methane number 80

Operational Profile

Annual Running Hours: 7000

Plant average load: 80%

Utilization factor: 64%


Power Plant Configuration

Plant Size 50 MWe 100 MWe 300 MWe

Prime Mover 6X20V34SG 12X20V34SG 18X20V50SG

Plant Net Output

@site conditions

53 MWe 106 MWe 304 Mwe

Net Electrical Eff.

Net Heat Rate

43,1%

8271 kJ/kWhe

43,2%

8250 kJ/kWhe

44,5%

8013 kJ/kWhe


LNG cons/day 511 m3 1022 m3 2840 m3


LNG consumption by power plant (base load)

100MW plant

100% utilization

0.14 Million Ton/year (MTPA)

0.31Millon m3/year

300MW plant

100% utilization

0.41 Million Ton/year (MTPA)

0.94 Million m3/year


Wrtsil 300 MW power plant based on W50SG

Wrtsil 2011

LNG Carrier Capacity

Storage Tank Capacity

Re-Gasification Process

LNG Recieving Terminal Technical Solution


LNG Consumption at max. and average loads


Power Plant Consumption,

max. load

511 m3/day 1022 m3/day 2840 m3/day

Additional Gas Take-Off, max.

Load

701 m3/day 1360 m3/day 1754 m3/day

Total Gas Consumption, max.

load

1212 m3/day 2382 m3/day 4593 m3/day

Total Gas Consumption,

average load

677 m3/day 1311 m3/day 2604 m3/day


Annual Consumption,

Average load

247.000 m3 478.000 m3 950.000 m3

Terminal optimization

The most important parameter when optimizing the terminal is the LNG supply.

The ship size will determine the cargo that will be received. Shipping time and

needed weather margins will determine the time between cargos. But also

available HUB slots and costs need to be considered.

The average consumption requirement will determine the slope of the volume

curves and thus the needed re-gasification capacities.

Heel Requirement is for safe-guarding the cry-temperature in the LNG tank at all

times

Shipping time

Incl. loading and unloading

Total storage

volume

Emergency

Inventory

Vo

lum

e

Time

Sh

ip

carg

o

Heel requirement


LNG Carrier Capacity Determination

Main Parameters for carrier capacity determination:

Transportation Distance: 1500 NM

LNG Carrier average speed: 15 Knots

LNG Tank sizes as defined

Gas consumption as defined

For average capacity

Carrier Capacity

Plant

Size

No Gas

Off-Take

With Gas

Off-Take

50 MWe 6000 m3 13.000 m350 MWe 6000 m3 13.000 m3

100 MWe 12.000 m3 30.000 m3

300 MWe 35.000 m3 52.000 m3

LNG Storage Tank Capacity Determination

Main Parameters for storage tank capacity determination:

Safety inventory: 7 days

Heel requirement: 10%

Shipping information as defined

Gas consumption as defined

For average gas consumption

LNG-Tank Capacity

Plant

Size

No Gas

Off-Take

With Gas

Off-Take

50 MWe 10.000 m3 25.000 m3

100 MWe 20.000 m3 45.000 m3100 MWe 20.000 m3 45.000 m3

300 MWe 57.000 m3 90.000 m3

Re-Gasification Low Pressure System

LNG Re-Gasification Process to deliver Low Pressure Gas:

Low pressure consumer, i.e. Power Plant

Atmospheric full containment tank

Delivery Pressure @10 bar(g)

Boil Off Gas fed into low pressure gas supply system

Heating media for re-gas: ambient air, sea water of hot water/steam

Dimenioned for max. gas consumption

11.10.2013

To Engines

BOG Heater

Re-Gasification High Pressure System

LNG Re-Gasification Process to deliver Low and High Pressure Gas:

Low pressure, 10 bar(g), High pressure to NG pipeline, 50 bar(g)

Atmospheric full containment tank

Boil Off Gas fed into low pressure gas supply system

Heating media for re-gas: ambient air, sea water of hot water/steam

Dimenioned for max. gas consumption

11.10.2013

Pump

LNG

LNG Tank

HP-pump LNG Vaporizer

To Engines

BOG

Natural BOG

Compressor

LNG Supply

Vapor Return

Excessive BOG

Compressor

Loading Arms 5000 m3/h each

Blowdown to

Vent/Flare

Regas Phase 2

Regas Phase 1

To Gas Grid

Re-Gasification High Pressure System

Heating media: Seawater

Intermediate: Propane, phase-change

Heating media: Steam

Intermediate: Water/Glycol

REGASIFICATION SYSTEMS

Petronas Melaka

Re-Gas Capacity 3*221 t/h

Pressure: 70 bar

Sea Water Heating

Dry Weight 945 tons

LNG Recieving Terminal Power Plant


Terminal Effect on gas price

-transportation cost

-investment cost

-operation and maintenance cost

LNG Feasibility Analyze STEP 1

Distribution Gas

Price: US$/MMBtu

LNG LNG

TransportationTransportation

LNG Receiving LNG Receiving

TerminalTerminal

LNGLNG

ReRe--GasificationGasification

LNG FOB-Price

At Main Hub

US$/MMBtu

Power Plant Power Plant

energy energy

conversionconversion

STEP-1

STEP-2

11 October 2013

Conversion Cost

-fuel cost

-investment cost

-O&M cost

Sales Power Tariff

US$/MWh


Distribution Gas

Price as fuel Cost

US$/MMBtu

LNG Terminal Effect

LNG transportation Terminal Investment Terminal O&M

STEP 1STEP 1

FOB LNG FOB LNG

PurchasePurchase

LNG LNG


LNG LNG

Storage Storage

LNG ReLNG Re--

GasificationGasificationPower PlantPower Plant Power SalesPower Sales

Own LNG carrier operation

Out-sourced Carrier operation to

third party

Transportation through LNG

provider

All In Cost by LNG provider is

considered. Depends according

to LNG volume

Tank and main process

Re-gasification process

Other: land, on-shore and off-

shore infrastructure

Working Capital, LNG tied in

vessel and storage tank

Considered as total investment

Operational Man Power

Maintenance Man Power

Spare parts and Material for

maintenance

Typical estimation 1-2% of the

investment in annual bases


LNG Terminal Effect

Back-Ground

Investment Fundaments for TerminalExisting harbour facilities available next to the Terminal and Power Plant sites no maritime or off-shore works

Project Life time for evaluation and gas price calculations: 25 years

Weighted average cost of capital: 10%

On top of the power plant gas consumption, additional gas Off-Take was considered as in a similar magnitude as

the power plant itself. Gas delivered to Off-Takers via 50 bar pipeline system

LNG average inventory Working Capital between 3 to 22 M depending on the project capacity

Terminal Effect Constituents

LNG transportation All in cost by LNG provider is

considered. Gas price increase due

to transportation.

All in Transportation Cost (US$/MMBTU) :

50 MW 2,14 US$/MMBtu



Terminal InvestmentTotal Investment effect on gas

price:

Effect on Gas Price (US$/MMBtu)

Plant Size No-Off-Take With Off-Take

50 MW 4,09 2,04

100 MW 2,28 1,47

300 MW 1,60 1,34

Terminal O&M Operational cost relatively

insensitive for Terminal size

Maintenance cost follows the size

Effect on Gas Price (US$/MMBtu)

Plant Size No-Off-Take With Off-Take

50 MW 1,57 0,76

100 MW 1,05 0,52

300 MW 0,47 0,33


LNG Terminal Effect

Terminal Effect - $/MMBtu

Plant Size No Gas

Off-Take

With Gas

Off-Take

50 MWe 7,80 4,94

100 MWe 5,18 3,85

300 MWe 3,50 3,1

8

9

$/MMBtu

Terminal Effect

0

1

2

3

4

5

6

7

8

50 MW No

Off-Take

50 MW

with Off-

Take

100 MW

No Off-

Take

100 MW

with Off-

Take

300 MW

No Off-

Take

300 MW

with Off-

Take

$/MMBtu


Terminal Related

Transportation

Terminal Effect

Distribution Gas Price


LNG Consumption 247.000 m3 478.000 m3 950.000 m3

LNG FOB Price- $/MMBtu

Plant Size No Gas

Off-Take

With Gas

Off-Take

50 MWe 17,82 17,11

100 MWe 16,39 15,68

300 MWe 14,97 14,25

LNG FOB-Prices

negotiated based on

estimated annual

LNG consumption


0

5

10

15

20

25

30

50 MW

No Off-

Take

50 MW

with Off-

Take

100 MW

No Off-

Take

100 MW

with Off-

Take

300 MW

No Off-

Take

300 MW

with Off-

Take

Terminal related

Capex&Opex

Transportaiton

FOB Price

US$/MMBtu


LNG Feasibility Analyze STEP 2

Terminal Effect on gas price

-transportation cost

-investment cost

-operation and maintenance cost

Distribution Gas

Price: US$/MMBtu

LNG LNG


LNG Receiving LNG Receiving

TerminalTerminal

LNGLNG

ReRe--GasificationGasification

LNG FOB-Price

At Main Hub

US$/MMBtu

Power Plant Power Plant

energy energy


STEP-1

STEP-2

11 October 2013

Conversion Cost

-fuel cost

-investment cost

-O&M cost

Sales Power Tariff

US$/MWh

Distribution Gas

Price as fuel Cost

US$/MMBtu

LNG Based Power Tariff

EPC cost

Other up-front costs: land, on-shore

infrastructure, licenses, etc.

O&M mobilisation costs

Considered as total investment

Power Plant Investment

Operational Manpower

Maintenance Manpower

Spare parts and Material for

maintenance

Fixed O&M cost

Power Plant O&M

FOB LNG FOB LNG

PurchasePurchase

LNG LNG


LNG LNG

Storage Storage

LNG ReLNG Re--

GasificationGasification

STEP 2STEP 2

Power PlantPower Plant Power SalesPower Sales

Considered as total investment Fixed O&M cost

Variable O&M cost


LNG Based Power Tariff

Back-Ground

Investment Fundaments for Power PlantPower Plant Site location next to the LNG Terminal

Gas delivered to plant at 10 bar(g)

For simplicity; 100% equity financing considered

Return on Equity (ROE) Target: 15%

Project Life time for evaluation and power tariff calculations: 25 years

Running profile: annual running hours 7000h, average load 80%, capacity factor 63,9%

Power Tariff Constituents

Fuel CostFuel cost for power plant as per the


Lube oil consumption: 0,3 g/kWh

Lube oil price: 1 US$/Litre

Power Plant

InvestmentEPC part of total Investment (M)

50 MW 880 US$/kW

100 MW 850 US$/kW

300 MW 845 US$/kW

Power Plant O&M Variable O&M cost: 7-9 US$/MWh

Fixed O&M cost typically between

5 10 US$/kW annually

Fixed insurance cost

Fixed Administrative costs

Sasol New Energy Holdings, South Africa O&M Agreement with thousands of MW sView of 6 engines modular engine hall

Absolute Power Tariffs

0

50

100

150

200

250

300

FOB

Tariff

Terminal

Tariff

FOB

Tariff

Terminal

Tariff

ROE

Fixed O&M Cost

Variable Cost

Fuel Cost

US$/MWh 50 MW Power Plant Solution

0

50

100

150

200

250

FOB Terminal FOB Terminal

ROE

Fixed O&M Cost

Variable Cost

Fuel Cost

US$/MWh 100 MW Power Plant Solution


Tariff Tariff Tariff Tariff

No Re-gas With Re-gas

FOB

Tariff

Terminal

Tariff

FOB

Tariff

Terminal

Tariff


0

50

100

150

200

FOB

Tariff

Terminal

Tariff

FOB

Tariff

Terminal

Tariff

ROE

Fixed O&M Cost

Variable Cost

Fuel Cost

US$/MWh


300 MW Power Plant Solution

100

150

200

250

300

ROE

Fixed O&M Cost

Variable Cost

Fuel Cost

US$/MWh

Terminal Effect Power Tariffs, No Gas Off-Take

Power Tariffs, Terminal Effect No Re-Gas

Simple Pay-Back Time

less than 6 years

0

50

100

50 MW Plant 100 MW Plant 300 MW Plant

Fuel Costless than 6 years

ROE-chart for 300 MW plant,

No Gas Off-Take

-fuel price: 18,5 US$/MMBtu


100

150

200

250

ROE

Fixed O&M Cost

Variable Cost

Fuel Cost

US$/MWh

Terminal Effect Power Tariffs, With Gas Off-Take

Power Tariffs, Terminal Effect With Re-Gas

Simple Pay-Back Time

less than 6 years

0

50

50 MW Plant 100 MW Plant 300 MW Plant

Fuel Costless than 6 years

ROE-chart for 300 MW plant

with Gas Off-Take

-fuel price: 17,4 US$/MMBtu


Final Conclusions

Single Purpose Terminal can make

sense

For remote location LNG can be the only

acceptable fuel. Alternative would be HFO

LNG Terminal can serve the regional

industry with clean and affordable fuel

LNG can be a domestic fuel

Terminal economics is case specific

Each case must be studied indivudually

Gas fired power plant a natural choice

For Green-Field power development

LNG is preferable vs. HFO

Power tariff difference is 37% between

the two extremities

At its highist the Terminal Effect will

increase the power tariff with around 25%

At its lowest the Terminal Effect will

increase the power tariff with less than

10% Each case must be studied indivudually

LNG FOB-price dominates the

Distribution Gas Price structure

Additional Gas Off-Take will benefit the

project feasibility

Difference between the best FOB-price

and Distribution price is around 20%

10%


With right LNG FOB price and power tariff a

Single Purpose LNG Terminal can make sense...

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Small and Medium Scale LNG KPunnonen