Slide Set 3 - Role of LNG, GTL, CNG

PMRE/BUET & UH IELE WORKSHOP
The Role of LNG, GTL, CNG
Dhaka, Bangladesh. January 9-12, 2005
2005 by Institute for Energy, Law & Enterprise, University of Houston Law Center. All rights reserved. 1
How Much Natural Gas Is Out There?
Proved natural gas reserves at end 2003, ~6000 tcf.
BP Statistical Review of World Energy 2004
Monetizing Global Natural Gas
Resources
14% ~ 15 tcf, does
Global Gas Production,not get to market
108 tcf 2000
Marketed Reinjected
Other 11%
Production
14%
86% Vented,
Flared
3%
NORTH AMERICA
RESERVES
4%
WORLD PROVED
RESERVES 2002: Much of this natural gas is stranded,
6,000 TCF
with no or little domestic demand
Monetizing Global Natural Gas Resources Key
Drivers
Abundance of proved Natural Gas

Huge stranded reserves exist countries
and companies want to monetize these
reserves
North America and Europe flat or
declining production
LNG is becoming a cost effective solution
Monetizing Global Natural Gas Resources
What is CNG, LNG, NGLs, LPG, and GTL?
Typical Natural Gas Composition LNG Composition
Ethane
Methane Other
82% 19% Nitrogen Methane Others
95% 5%
Propane
Carbon
Dioxide
Butane
Pentane
NGL Composition
LPG Composition
Ethane,
propane, Others Propane
butane 5% and Butane Others
95% 95% 5%
Monetizing Global Natural Gas Resources
Gas-to-Liquids (GTL)
Source: Deshpande, A & Economides, M.J. University of Houston
Compressed Natural Gas (CNG)
Natural Gas Composition
Typical Range
Component (Mole Percent) (Mole Percent)
Hydrocarbons Methane (C1) 92.77 83.74 98.22
Ethane (C2) 3.36 0.52 7.64
Propane (C3) 1.51 0.18 4.74
Iso-Butane (i-C4) 0.41 0.05 1.10
Normal Butane (n-C4) 0.47 0.06 1.63
Iso-Pentane (i-C5) 0.19 0.03 0.50
Normal Pentane (n-C5) 0.13 0.00 0.42
Hexane (C6) 0.27 0.09 0.78
Inerts Nitrogen (N2) 0.30 0.12 0.91
Helium (He) Trace 0.00 - 0.02
Impurities Carbon Dioxide (CO2) 0.59 0.13 - 1.86
Hydrogen Sulfide (H2S) Trace 0.00 - 0.10
Oxygen (O2) Trace 0.00 3.00
Water (H2O) Trace 0.00 - 0.01
Source: Cheniere
Advantages
Simplicity
Inexpensive onshore facilities
Can start with very modest transporting needs
Energy efficient
Can exploit isolated supply sources
Suitable for small demand markets
Scope of the CNG Technology
Projects using the CNG technology can be

successful technically and commercially
CNG is capable of meeting small market demands
and monetizing small supply areas
Majority of the investment involved with shipping
needs, thus, making the assets movable and used
in other areas of interests
CNG can supply gas for distances of 2500 miles
cheaper than LNG
Opportunities for CNG Marine
Transport
VOTRANS Shifts CNG Paradigm
1,500
Pipelines LNG
RATE, mmscfd
1,000
VOTRANSTM
500
CNG
Hydrates
0 1,000 2,000 3,000 4,000
Transport Distance, nm
Transport Costs
Supply Matched with

Demand Centers
Smaller Demand
Centers can be
converted to gas
Transport costs range from

$1.25-1.75/MMBTU (100-300 MMSCF)
Two technologies for CNG transport

a. The Cran & Stennings approach
b. The Enersea approach
Example: Consider the transportation of 300 MMscf of gas as

CNG
Using the Cran & Stennings approach
Actual volume of CNG: 1.76x106 ft3
Using the Enersea approach
Actual Volume of CNG: 1.2x106 ft3
Transportation of the gas
90% of the investment involved is in shipping of the gas.

Loading and unloading is possible and easy with small
facilities.
CNG Cargo Containment System
CNG Application
For distances up to 2500 miles, CNG
appears more attractive than LNG
Major advantage in terms of market entry
Much less capital deployed in country
Up to 2 Bcf on a ship
Ideal for limited supply, limited consuming
markets
Natural Gas
What Is LNG?
LNG
LNG is natural gas that has been

cooled that it condenses to a liquid
Temperature -256oF (-161oC)
Atmospheric pressure.
Volume is reduced 600 times
Thus economical to transport
locally and between continents in
specially designed ocean vessels
Liquefaction technology makes
natural gas available throughout the
world
What Is LNG?
Typical LNG Composition

LNG is liquid form of the natural gas
used for cooking, heating and power
generation.
The liquefaction process removes Methane Others
almost all contaminants 95% 5%
LNG must meet higher and lower

limits on energy content
LNG composition has traditionally LNG COMPOSITION (Mole Percent)
been set by markets in Japan, Source Methane Ethane Propane Butane Nitrogen
South Korea, and Taiwan Alaska 99.72 0.06 0.0005 0.0005 0.20
Algeria 86.98 9.35 2.33 0.63 0.71
LNG also is used in the U.S. as an Baltimore Gas & Electric 93.32 4.65 0.84 0.18 1.01
alternative fuel for public New York City 98.00 1.40 0.40 0.10 0.10
transportation systems. San Diego Gas & Electric 92.00 6.00 1.00 - 1.00
Source: Liquid Methane Fuel Characterization and Safety Assessment Report . Cryogenic Fuels. Inc. Report
No. CFI-1600, Dec. 1991
LNG Properties
100%
Density
3.9ppg (Water 8.3ppg) Over-Rich
LNG floats on water. Will not burn
Flammability range
5 15%.
Upper Flammability Limit (UFL) 15%
Flammable
Lower Flammability Limit (LFL) 5%
Too Lean - Will not burn
Flammable Range for LNG (Methane)
Comparison of Properties of LNG Liquefied Gasoline Fuel Oil
Liquid Fuels Petroleum Gas
(LPG)
Toxic No No Yes Yes
Carcinogenic No No Yes Yes
Flammable Vapor Yes Yes Yes Yes
Form Vapor Clouds Yes Yes Yes No
Asphyxiant Yes, but in a vapor cloud Yes, same As LNG No No
Extreme Cold Temperature Yes Yes, if refrigerated No No
Other health hazards None None Eye irritant, Same as
narcosis, nausea, gasoline
others.
o
Flash point F -306 -156 -50 140
o
Boiling point F -256 -44 90 400
Flammability Range in air % 5-15 2.1-9.5 1.3-6 N/A
Stored Pressure Atmospheric Pressurized Atmospheric Atmospheric
(atmospheric if
refrigerated)
Behavior if spilled Evaporates, forming visible Evaporates, forming Evaporates, forms Same as
clouds. Portions of cloud vapor clouds which flammable pool; gasoline
could be flammable or could be flammable or environmental clean
explosive under certain explosive under certain up required.
conditions. conditions.
Source: Lewis, William W., Lewis, James P, Outtrim, Patricia A., PTL: , AiChE Meeting, New Orleans, April 2003 as modified by industry sources.
LNG Facilities - The Real Risk

Auto Ignition Temperature of Liquid
Fuels
Fuel Autoignition
Temperature, oF
LNG (primarily methane) 1004
LPG 850-950
Ethanol 793
Methanol 867
Gasoline 495
Diesel Fuel Approx. 600
Source: New York Energy Planning Board, Report on issues regarding the existing New
York Liquefied Natural Gas Moratorium, November 1998
General LNG Production Process
Ships
LNG
Gas -259 F
Treatment Refrigerant
Compression
Pipeline
Feed Gas
Heat
Exchangers LNG Storage
Pentanes and heavier

Condensates
Impurities Heat expelled
-Carbon Dioxide to water or air
-Mercury
-Hydrogen Sulfide
-Water
-Nitrogen
Source: Cheniere
LNG Plant Site
Bontang Indonesia LNG
BADAK
STORAGE :
LNG : 4 x 95,000 m3 + 2 x 125,000 m3
LPG : 5 X 40,000 m3
Cond. : 10,000 m3 + 12,000 m3
Dock-2
Dock-3
LPG Tanks
Dock-1
4 5
2 3 6
1
A
B
C
D H
G
F
E
With 8 trains running, the
capacity of the plant has
reached 22.25 MMT/year
LNG, 1 MMT/year LPG and
10 MMbbl/year
condensates.
Sources: Ministry of Energy and Mineral Resources of the
Republic of Indonesia
Brief History of LNG
EMERGENCE
1941 First commercial LNG production
1964 Algeria first commercial LNG export facility
Spawned all US receiving terminals and
several European counterparts
1969 Kenai USA starts supply to Japan
1970 Libya starts supply to Italy
DEVELOPMENT
1972-1990 Development of Far Eastern
LNG trade
Brunei, Indonesia, Abu Dhabi, Malaysia, Australia
start production
Korea, Taiwan, USA join Japan as importers British Gas Canvey Island LNG Terminal
A World First Import Terminal
GROWTH
1996 Qatar starts production
1999 - Trinidad starts production
2000 Nigeria starts production
LNG VS PIPELINE
The distance over which
natural gas must be
transported increases, usage
of LNG has economic
advantages over usage of
pipelines.
Liquefying natural gas and
shipping it becomes cheaper
than transporting natural gas
in offshore pipelines for
distances of more than 700
miles or in onshore pipelines
for distances greater than
2,200 miles.
Why LNG Now?
Growing Global LNG Demand
Natural Gas Trade Movement Growth in LNG Demand

2002 6,000
LNG 7% per year growth (1992-2002)
26% 5,000
4,000
bcf
3,000
2,000
1,000
-
Pipeline 1970 1980 1990 1992 1994 1996 1998 2000 2002
74% Japan South Korea Taiwan France Spain USA
Italy Belgium Turkey Greece Portugal UK
Source: Cedigaz, BP Statistical Review of World Energy June 2003
Source: BP Statistical Review of World Energy June 2003
LNG is about 6% of worldwide natural gas consumption

and about 94% of natural gas consumption in Japan.
Global LNG Imports by Basin
In 2002 there are 43 terminals with a
Global LNG IMPORTERS
capacity of over 280 million tonnes, 24 Year 2002
of the terminals are in Japan. Pacific Basin Atlantic Basin
Inter-regional LNG trade is expected to South Korea

16%
Taiwan
5%
increase six fold over the next 30 France
8%
years. Spain
Other 8% USA
Most of the increase in LNG trade 31%
5%
Italy
would be in the Atlantic basin, which Japan
4%
Belgium
will overtake the pacific basin in 48% Portugal

0% Greece
2%
Turkey
volume. 0% 4%
Importing countries will need to add

almost 660 million tonnes of new
regasification capacity.
Source: World Energy Investment Outlook, IEA, Nov. 2003.

Global LNG Imports
Japan 24
23
Importing Country
Existing
Planned
Global LNG Exports
160 Global LNG Exporters
2002
140
Pacific Basin Atlantic Basin
120
Billion cu. m
Brunei UAE
100 Australia 6% 5%
Oman
5%USA
7%
80 1%
Qatar Algeria
60 12% 18%
Other
40 Nigeria
27%
5%
20 Malaysia
Trinidad &
Tobago
14% Libya 4%
0 0%
1970 1975 1980 1985 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Indonesia
23%
Indonesia Algeria Malaysia Qatar

Australia Brunei Oman Nigeria
UAE Trinidad & Tobago USA Libya
There are currently 16 liquefaction plants with 70 trains in operation worldwide
Source: BP Statistics, ,World Energy Investment Outlook, IEA, Nov. 2003.
LNG Liquefaction Facilities
The LNG industry could be poised for dramatic growth
Global LNG Supply
Existing
Under Construction
Proposed
LNG supply growing

Multiple LNG supply proposals
announced
Long term LNG supply outlook
robust
Source: Cedigaz, NPC

30 2005 by Institute for Energy, Law & Enterprise, University of Houston Law Center. All rights reserved. 30
LNG Liquefaction Facilities
Liquefaction Capacity
More than 60% of the 0 5 10
mpta
15 20 25
equity is owned by
Sonatract 23.3
state companies; in Pertamina 17.0
some cases in joint Petronas

Shell 9.1
10.0
ventures with major Qatar Petroleum 8.9

Mitsibushi 4.7
oil and gas producers Exxonmobil 4.7 Others
Japan Indonesia LNG Company (JILCO) 4.6 16%
Total 4.4
Abu Dhabi National Oil Company (ADNOC) 3.8
Brunei Government 3.4
Omani State 3.4
Oil
Nigeria National Petroleum Company 3.0
Companies State
BP 3.0
23% Owned
Nippon Oil Corporation (NOC) 2.6
61%
Vico 2.2
Mitsui 2.0
Unocal 2.0
BHP 1.4
Source EIA
LNG Supply: Summary
Almost all existing liquefaction projects have announced
expansions: Trinidad, Nigeria, Qatar, Oman, Malaysia, Brunei,
Indonesia, Australia. Expect most of these to be built. Would
raise worldwide total capacity by over 40% to approximately
184 million tons per annum.
Additional countries have announced planned and
prospective greenfield liquefaction plants (as of April 2001):
Angola, Australia, Egypt, Indonesia, Iran, Nigeria, Norway,
Papua New Guinea, Russia, U.S. (North Slope), Venezuela,
Yemen.
World LNG Imports and Export
2003 (Billion Cubic Feet)
Source: BP Statistical Review World Energy 2004
Atlantic Basin LNG Supply and Demand
8,000
7,000
Middle East
6,000
New Markets
5,000
Venezuela
Angola Europe
Bcf/yr
4,000 Egypt
3,000 Trinidad
2,000
Nigeria
United States
1,000
Algeria
0
Supply (2001) Demand (2001) Supply (2010) Demand (2010)
Source: Pace Global Energy Services

How Much Does LNG Cost?
LNG costs are LNG COSTS ARE DECLINING

declining. $/MMBTU
2.5
Does not include feedstock prices
Natural gas can be 0.5

2
economically produced
0.1
0.1
and delivered to the U.S. 1.5

2.5
as LNG in a price range 1 1.8
of about $2.50 - 0.5
$3.50/MMBtu depending 0
1980's Liquefaction Shipping Regasification 2000's
largely on shipping cost. and Storage
Sources: El Paso
LNG Project Costs Will Continue Dropping
800
700
600
$/tonne of capacity
500
400
300
200
100
0
mid 1990 2002 2010 2030
Source : IEA Liquefaction Shipping Shipping Regasification and Storage
Typical LNG Value Chain
EXPLORATION & REGASIFICATION

LIQUEFACTION SHIPPING
PRODUCTION & STORAGE
$1.0 - $2.5 billion $1.5 2.0 billion $0.8 - $2.3 billion $0.5 - $1.0 billion
$0.5-$1.0/MMBtu $0.8-$1.20/MMBtu $0.4-$1.0/MMBtu $0.3-$0.5/MMBtu
TOTAL = $3.7 - $7.8 billion or $2.00 - $3.70/MMBTU

Greatest variability is in upstream feedstock for liquefaction and shipping distance.
Sources: Industry
Current LNG Cost Competitiveness
Source: Marcy Darsey et al, Liquefied Natural Gas, Exploring Energy,

Inc.s Future with a Developing Field, UH Law Center, 2004
Liquefaction Costs Transformed
$ per tonne of capacity
700
600
500
400
300
200
100
0
1990 1995 1999 Trinidad 00 Future LNG
Source: BP
LNG Greenfield Liquefaction Costs
500
400
300
$/tpy
200
100
0
1 1 1 1 2
Qatargas Nigeria LNG Atlantic LNG Rasgas, Oman LNG
Source: OGJ
Qatar
World LNG Outlook
Liquefaction Facilities
400
Liquefaction Cost is Dropping
350
300 Technology improvement,

higher capacity plants,
improved economies of
250
$/tonne
scale
200
150
100
50
0
Source: ALNG mid 2002 2010 2030
1990
Liquefaction
Source: IEA
LNG Shipping
166 existing LNG ships, as of
Nov 2004 with 105 on order. The
fleet size needs to increase by 3-
4 times to meet the projected Source: NLNG
growth in trade by 2030. LNG ships built 1965 - Oct 2004
16
Ships built each
14
12
10
8
6
4
2
0
1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004
Source: EL PASO &

LNG OneWorld, /www.lngoneworld.com/
Major Natural Gas Trade Movements
BP Statistical Review of World Energy 2004

New Trade Routes Are Emerging
Existing Trade
Prospective Trade
Source: Iwata, Makoto, Mitsui O.S.K. Lines, Ltd., LNG
Transportation, LNGMinisterial Summit,
2005 by Institute for Energy, LawWashington D.C.,
& Enterprise, University 2003Law Center.
of Houston All rights reserved. 44
LNG Shipping Costs
LNG carrier (125-138,000 cu.m) newbuilding prices
300
200
$M
100
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2001 2002 2003 2004
So urce: LNGOneWo rld 2001
Source: LNG OneWorld, /www.lngoneworld.com/

World LNG Outlook
Shipping
Shipping Cost is Dropping

250
Competition between
shipyards, technology
200 improvement, higher capacity
ships, improved economies of
scale
150
$/tonne
100
50
0
mid 2002 2010 2030
1990
Shipping
Source: IEA
Cost of Transport to the Eastern U.S.*
*Based on Cove Point, MD LNG Import Terminal.
$1.60
$1.40 Mid East W. & N. Africa
$1.20
$1.00
$/MMBtu
$0.80
$0.60
$0.40
$0.20
$-
it)
pt
en
ia
ia
ad
la
ria
an
r
a
n
ts
a
el
ne
Ira
er
ab
go
en
hv
y
at
ge
id
m
Eg
zu
ig
ui
Q
no
Ar
An
in
ar
Ye
O
Al
ne
N
lG
Tr
-B
(S
i
ud
Ve
ria
ay
a
Sa
to
si
w
us
ua
or
R
Eq
Source: Pace Global Energy Services

LNG Value Chain
Shipping opportunities
10,000
Much closer to Much closer to Broadly equidistant from US
US markets European markets and European markets
8,000 Likely cargo / trade swap players Likely market arbitrage players
Nautical miles
6,000 Barcelona
Lake
4,000 Charles
2,000
0
Atlantic Venezuela Egyptian Algeria Nigeria Angola Snohvit
LNG LNG LNG LNG LNG
Arbitrage and swap opportunities

Source : BG
Source: BG
LNG Spot Cargo - Volume
8
Volume of LNG Spot Cargo
7
MTPA
6
5
4 Spot Trading is
3 increasing rapidly
2
5 fold increase
1
from 1998
0
'9 5 '9 6 '9 7 '9 8 '9 9 '0 0 '0 1 '0 2 '0 3
Sources : Clarkson Research Studies, LNG Trade & Transport, 2003, BP
Source: Iwata, Makoto, Mitsui O.S.K. Lines, Ltd., LNG

Transportation, LNG Ministerial Summit, Washington D.C., 2003
World LNG Outlook
Storage and Regasification Facilities
Storage and Regasification Cost is Dropping

140
120 Larger capacity plants,

improved economies of
100 scale
$/tonne
80
60
40
20
0
mid 2002 2010 2030
1990
Regasification and Storage
Source: IEA
Offshore Storage & Regasification
Terminals
Proposed Cabrillo Port FSRU (Floating Storage and

Re-gasification Unit), Oxnard, CA.
Proposed ChevronTexaco Port Pelican Project, offshore Source: BHP
Louisiana - Gravity-based structure
Source - ChevronTexaco
Energy Bridge (Shuttle and LNG Regasification System),
Excelerate, Offshore LA.
The Energy Bridge is a regasification vessel and a buoy system that

delivers natural gas into offshore pipelines.
Source: El Paso
Main Pass Energy Hub
Cavern-based LNG Receiving Facility
McMoran, LA.
The Bishop Process

receive LNG directly from an offshore tanker,
pressurize and warm it to 40oF,
Inject the resulting natural gas into underground salt caverns for storage.
effectively eliminate the need to build expensive above-ground cryogenic
storage tanks
Source: Conversion Gas Import

http://www.conversiongas.com/html/bishop_processtm.html
LNG Supply Issues
LNG Interchangeability
LNG HHV Relative to Typical Pipeline Tariff Range
1400
HHV max - 1150

1200 1168
1132 1142 1143
1065 1098
1000
HHV min - 970
HHV, Btu/scf
800
600
400
200
0
Trinidad Algeria Qatar Abu Dhabi Nigeria Oman
Source: WGL
Scheduling coordination, blending, and inert gas injection could result in
consistency of gas product and easily overcome interchangeability concerns.
What are they?
GTL technology converts natural gas into
hydrocarbon liquids and promises to complement LNG
in transporting remote natural gas to distant markets
in the absence of existing pipelines.
Impetus for the GTL technology: Clean fuel obtained
as product and easy transportation
GTL processes convert the gas into

hydrocarbon liquids.
The main products are Middle distillates like
gasoline, kerosene, jet fuel, naphtha and diesel
Source: Economides, M.J. University of Houston
Reasons for GTL attraction
Monetizing stranded natural gas

Salvaging associated gas
Meeting environmental specifications
Maintaining pipeline productivity (e.g., Alaska
pipeline)
Gas to Liquids
The Fischer-Tropsch synthesis (F-T synthesis) is one the
important technologies in GTL.
The main advantage of the F-T products is the absence of

sulphur, nitrogen and complex cyclic hydrocarbons resulting in
almost no emissions of sulfur dioxide, nitrous oxides and
unburned hydrocarbons.
For 100 barrels of liquids there is a need for 1 MMscf of gas
Overview of a typical process
Fischer-Tropsch Method
Processes for converting methane
Existing and Emerging Technologies
Company Syngas Fischer-Tropsch Catalyst Plant Size, bpd
Sasol (SPD) ATR(O2) Slurry phase Fe, Co 50,000

180-250 oC, 10-45 atm
Shell (SMDS) POX(O2) Fixed bed Co 50,000

(Non-catalytic)
180-250 oC, 10-45 atm
ExxonMobil ATR(O2) Slurry phase Co >50,000

AGC-21 (Fluidized bed)
180-250 oC,10- 45 atm (RIM)
BP SMR Fixed bed Co
Syntroleum ATR(air) Fixed bed Co <10,000

180-250 oC, 10-45 atm
Rentech SR Fixed bed, slurry Fe <5,000
GTL Technology Assessment
Source: GTL Study
GTL Technology Assessment
All propose mild hydro-isomerization/hydrocracking for

product upgrading
Exxon and Sasol are considering separate upgrading for
light fraction (naphtha) and heavy fraction (distillate)
Shell proposes single stage hydrocracking/isomerization
Exxons patented oxygenate preservation (for enhanced
lubricity) and fuel formulation technology could well prove
valuable in non-blending fuel markets
Oxygenates improve lubricity of GTL diesel
Benefits in blending markets are doubtful
Upgrading technology is likely to be modified on a site-by-
site basis to extract premium products (waxes, a-olefins,
alcohols, lube feedstock)
Source: GTL Study
GTL Cost
Cost of GTL products: $20+ per bbl of oil required for
economic returns on GTL project.
GTL can satisfy different market needs.
Comparison of CNG and GTL
GTL production costs: $20,000-35000/barrel of liquid produced
For 500MMscf/d plant $1.5 billion
CNG: $30-40 million for 500MMscf/d unit.
Ships used for transporting petroleum products can be leased for

transporting the GTL products.
Shipping is a major part of a CNG project
Comparison of CNG and LNG
Size of investment for a 500MMscf/d plant
CNG LNG
Reserves: Modest Large
Production cost: MM$30-40 MM$750-2000*
Transportation costs: MM$230/ship MM$160/ship
Unloading costs: MM$16-20 MM$500-550
Total investment: $1-2 billion** $2-3 billion**
* Depending upon the location of the production site

** Depending upon the number of ships used for the transport of the gas.
Price of the gas delivered
LNG value chain per MMBTU
Exploration and Production: $0.5-1.0/MMBTU
Liquefaction: $0.8-1.2/ MMBTU.
Shipping: $0.4-1.5/ MMBTU*.
Regasification and Storage: $0.3-0.5/ MMBTU.
$1.00 as netback for the investors
Final price of LNG: $3.00-5.20/MMBTU.
* For transport distances from 1000 miles to 5000 miles
CNG value chain per MMBTU
Exploration and Production: $0.5-1.0/MMBTU
Processing and transportation: $1.08-3.82/MMBTU*
$1.00 as netback to the investor
Final unit price of CNG: $2.58-5.82/MMBTU
* For transport distances from 1000 miles to 5000 miles
Advantages of CNG over LNG
Requirement of lower throughput of gas for a project
Involvement of lower capital
Ease of deployment faster implementation of a project
Ability to access stranded reserves and monetize them
Majority of the investment is in the shipping, making the
assets movable and reducing the risk involved
Disadvantages
Inability to transport large volumes of gas such LNG
Disparity in the volume transport hinders commercial
possibility of CNG
LNG vs. CNG
Trinidad to Australia Venezuela to
GOM to Baja GOM
Feedstock gas 0.75 0.75 0.75

Liquefication 0.95 0.70
Transportation 0.50 1.20 1.65
Regasification 0.45 0.45
TOTAL w/ Margin 3.05 3.45 2.40
Dialogue
CNG experience in India
CNG supply for fleet vehicles established in India

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PMRE/BUET & UH IELE WORKSHOP

The Role of LNG, GTL, CNG

Dhaka, Bangladesh. January 9-12, 2005

BP Statistical Review of World Energy 2004

Abundance of proved Natural Gas

Source: Deshpande, A & Economides, M.J. University of Houston

Source: Deshpande, A & Economides, M.J. University of Houston

Projects using the CNG technology can be

Supply Matched with

Transport costs range from

Two technologies for CNG transport

Example: Consider the transportation of 300 MMscf of gas as

Source: Deshpande, A & Economides, M.J. University of Houston

90% of the investment involved is in shipping of the gas.

Source: Deshpande, A & Economides, M.J. University of Houston

LNG is natural gas that has been

Typical LNG Composition

almost all contaminants 95% 5%

LNG must meet higher and lower

Upper Flammability Limit (UFL) 15%

LNG Facilities - The Real Risk

Pentanes and heavier

Natural Gas Trade Movement Growth in LNG Demand

LNG is about 6% of worldwide natural gas consumption

of the terminals are in Japan. Pacific Basin Atlantic Basin

Inter-regional LNG trade is expected to South Korea

will overtake the pacific basin in 48% Portugal

Importing countries will need to add

Source: World Energy Investment Outlook, IEA, Nov. 2003.

Indonesia Algeria Malaysia Qatar

There are currently 16 liquefaction plants with 70 trains in operation worldwide

Source: BP Statistics, ,World Energy Investment Outlook, IEA, Nov. 2003.

LNG supply growing

Source: Cedigaz, NPC

some cases in joint Petronas

ventures with major Qatar Petroleum 8.9

Source: BP Statistical Review World Energy 2004

Source: Pace Global Energy Services

LNG costs are LNG COSTS ARE DECLINING

Natural gas can be 0.5

and delivered to the U.S. 1.5

as LNG in a price range 1 1.8

of about $2.50 - 0.5

largely on shipping cost. and Storage

EXPLORATION & REGASIFICATION

$0.5-$1.0/MMBtu $0.8-$1.20/MMBtu $0.4-$1.0/MMBtu $0.3-$0.5/MMBtu

TOTAL = $3.7 - $7.8 billion or $2.00 - $3.70/MMBTU

Source: Marcy Darsey et al, Liquefied Natural Gas, Exploring Energy,

300 Technology improvement,

growth in trade by 2030. LNG ships built 1965 - Oct 2004

Source: EL PASO &

BP Statistical Review of World Energy 2004

Source: LNG OneWorld, /www.lngoneworld.com/

Shipping Cost is Dropping

$1.40 Mid East W. & N. Africa

Source: Pace Global Energy Services

Arbitrage and swap opportunities

Sources : Clarkson Research Studies, LNG Trade & Transport, 2003, BP

Source: Iwata, Makoto, Mitsui O.S.K. Lines, Ltd., LNG

Storage and Regasification Cost is Dropping

120 Larger capacity plants,

Regasification and Storage

Proposed Cabrillo Port FSRU (Floating Storage and