Hope is on the way for all the energy bears on this board, who seem to be hibernating,<g>
March 17, 2005, 12:48AM
LNG milestone at hand
Inaugural ship to mark opening of first terminal in two decades
By TOM FOWLER
Copyright 2005 Houston Chronicle
When the tanker Excelsior starts unloading its cargo 116 miles off Louisiana today, it will mark the opening of the nation's first liquefied natural gas terminal in 20 years.
The terminal is little more than a high-tech submersible buoy and miles of connecting pipeline, but the imaginative twists taken by the operator, Houston's Excelerate Energy, are providing another way for the United States to satisfy its growing appetite for the fuel.
Excelerate's design avoids the need for large fixed facilities to turn the supercooled liquid into a gas by putting that equipment aboard the tanker.
RESOURCES
Graphic: LNG Terminals
It's that need for regasification equipment and storage, and the environmental and safety concerns it raises, that has limited new and existing terminals on land.
"This is a small step, but an important step in getting new LNG imports up and running," said Kevin Petak, director of energy modeling for Energy Environmental Analysis, a Virginia consulting firm that is not involved in the Excelerate project. "It's one of many new LNG projects I would see as relevant."
There are four LNG import terminals in the United States, all of them on land, but dozens more are planned. Many of them are along the Gulf Coast, where communities have been less likely to object to the potential environmental and safety concerns.
Areas of the Northeast, where natural gas supplies are more constrained, have been wary of such projects, but Excelerate has plans for a system similar to its new one off Massachusetts. The company made its first filing with that state this week and, if all goes well, it could be operating as early as spring 2007.
Reconstituting gas
Excelerate's system, called the Energy Bridge, centers on a specially designed buoy anchored 100 feet below the surface by eight lines when not in use. The liquid natural gas stored on the tanker is returned to its gaseous state aboard the ship and fed through the buoy into a flexible pipe, which connects to a subsea pipeline that brings the gas to shore.
Excelerate says the Energy Bridge technology isn't a niche project but rather a long-term solution for bringing LNG to the United States. Its offshore location makes it easier to get permits because it's unlikely to face the same safety and environmental concerns as land-based facilities, said Rob Bryngelson, vice president of development and downstream services.
"It can be used as a short-term solution in some markets since the buoy is removable, but it's designed for the long haul," Bryngelson said.
The tankers each cost about $200 million, or around $30 million more than a regular LNG tanker without the regasification equipment. The company spent between $65 million and $70 million on the buoy system and undersea pipeline connections. The project was built in less than a year, once it received regulatory approvals.
The Excelsior, one of three ships Excelerate has planned, has storage capacity for 3 billion cubic feet of LNG. It can regasify and offload up to 500 million cubic feet through the buoy per day. On April 25, the second ship, the Excellence, will be launched. The third ship, the Excelerate, is expected to launch in Oct. 2006.
Marketing compact
ChevronTexaco has signed an agreement to market the LNG Excelerate delivers to the Gulf of Mexico at least through the end of the year.
Many companies are lining up to participate in LNG projects as U.S. demand for natural gas continues to grow.
Annual domestic natural gas consumption is expected to rise by 36 percent between now and 2020, according to the Department of Energy, while production is unlikely to grow significantly, even with more and more drilling.
While natural gas futures are relatively high in the United States, trading at about $7.19 per thousand cubic feet on Wednesday, it's cheap in many parts of the world where there are few users.
However, getting that natural gas to markets that can use it isn't cheap. To fit enough of it onto a tanker to make it economically viable, it needs to be cooled to minus 260 degrees Fahrenheit and turned into a liquid for transport. The fuel is warmed to gaseous state upon arrival at a terminal before being injected into pipelines.
Many planned LNG projects are able to bring the gas to U.S. markets for between $3.50 and $4 per thousand cubic feet, Petak said. As long as U.S. natural gas prices stay above $6, those projects will continue to attract heavy interest. |
