ABSTRACT

INTRODUCTION

The purpose of this paper is to report a first-order comparison of the capital cost of natural gas hydrate (NGH) technology to that of established LNG technology. The study shows that capitals cost of an NGH chain are much lower than those of a standard LNG chain. Despite considerable R&D efforts, any reductions in the cost of LNG technology are more likely to be trivial than significant (Mellbye and Tungland 1994).

SNØHVIT CASE STUDY

Shell's Nagelvoort and Tijm (1994) recently stated "LNG technology is in essence mature and since one cannot beat the principles of thermodynamics, it is unrealistic to expect a dramatic decrease in capital costs from a single process improvement", and concluded that with likely improvements in LNG production and shipping technology, a 5 percent capital cost reduction was possible.

Snøhvit’s offshore field is officially planned to produce up to 12.6 million Sm3 (standard cubic meters) of natural gas per day, corresponding to a maximum annual rate of 4.5 billion Sm3. The present study, however, assumes an annual production rate of 3.5 billion Sm3 per year, based on the capacity of three 125,000 m3 LNG ships operating a transport distance of 3000 nautical miles (about 5500 km). Recoverable gas is estimated 103 billion Sm3, recoverable condensate 9 million Sm3 and recoverable oil 46.7 million Sm3. The water depth in the Snøhvit field is 330 m and the reservoir depth 2400 m (Falch and Haugen 1992).

NATURAL GAS HYDRATE

Gudmundsson (1990) suggested that natural gas hydrates need not be refrigerated down to equilibrium temperature, to remain stable under large- scale storing and transport. Instead, hydrates could sufficiently keep under near-adiabatic conditions.

Gudmundsson and Parlaktuna (1992) and Gudmundsson et al. (1994) demonstrated experimentally that the decomposition rate of frozen natural gas hydrates at atmospheric pressure is negligible. In Russia, Ershov and Yakushev (1992) and Yakushev and Istomin (1992) reported unexpected stability of natural gas hydrates stored at atmospheric pressure and temperatures in the range -1 C to -18 C.

CAPITAL COST OF SHIPS

Typical LNG ships carry approximately 125,000 m3 of liquefied natural gas, and 135,000 m3 ships are under construction (Nagelvoort and Tijm 1994). Hydrate ships can be built at least twice that size; to carry i.e. 250,000 m3 of hydrates. Ships designed to carry frozen hydrates need be no larger than insulated bulk carriers - and need not be refrigerated--and will thus be substantially less expensive than LNG ships.

The capital cost of LNG ships (18 knots) is reported to be 280 million USD for 125,000 m3 ships and 250 million USD for 135,000 m3 ships (information available to Aker Engineering in 1994). Four 135,000 S m3 LNG ships under construction in Finland cost 6.5 billion NOK in total (Aftenposten 27.4.93 and Teknisk Ukeblad 6.5.93). Using an exchange rate of 6.8 NOK/USD, the cost per ship approximates 240 million USD (cost highly subject to exchange rate fluctuations). Hydrate ships capable of transporting one-half that of a 125,000 m3 LNG ship need to measure approximately 250,000 m3, assuming solid hydrate. If the solid hydrates’density is 928.5 kg/ m3, its weight will equal 232,125 tons. To avoid bias toward hydrate ships, a 250,000 TDW (tons dead weight) was assumed. The total capital cost of a typical hydrate carrier will be approximate 80 million USD (information available to Aker Engineering in 1994).

Assuming 350 days operation, 3 LNG ships can deliver approximately 3.6 billion Sm3 of natural gas, and 7 hydrate ships 3.7 billion Sm3. Note that hydrate ships could be operated at speeds less than 15 knots and still deliver the same volume of natural gas.

The 3 LNG ships will cost 750 million USD and the 7 NGH ships 560 million USD. The NGH hydrate ships cost 25 percent less than the LNG ships, a saving in Capex of 190 million USD. Hydrate ships capable of transporting one-half that of a 125,000 m3 LNG ship, need to measure about 250,000 m3, assuming solid hydrate. With bulk hydrate porosity of 16.7 percent, the total carrying volume needs to be about 300,000 m3.

For a transport distance of 3000 nautical miles (5500 km), each of the 3 LNG ship will complete 18 voyages annually and each of the 7 NGH ships 16 voyages. The total transport capacity will be respectively 4.1 and 4.2 billion Sm3 of natural gas annually. 4 billion Sm3 per year is assumed in the LNG and NGH production plants below.

CAPITAL COST LNG CHAIN

An import/re-gasification terminal for LNG that handles 400 MMscf/d of natural gas, was estimated to cost approximately 350 million USD in mid- 1985. The Nelson-Farrar cost index (ref. Oil and Gas Journal) can be used to up-date the capital cost estimate of DiNapoli (1986). From mid- 1985 to mid-1994 the cost index increased by nearly 25 percent. A LNG chain (production, shipping, re-gasification) for 4 billion Sm3 of natural gas per year was therefore estimated to cost 2677 million USD.

The LNG production cost equals 886 USD per tonne of annual capacity. The corresponding capital costs for shipping and re-gasification are 378 and 221 mid-1994 USD per tonne of annual capacity. The total capital cost of the LNG chain amounts to 1485 USD per tonne of annual capacity. The density of LNG was assumed 420 kg/m3.

For an exchange rate of 6.8 NOK/USD, the total capital cost amounts to 10.1 billion NOK for the LNG plant, 5.1 billion NOK for the LNG ships and 3.0 billion NOK for the import terminal, representing 56, 28 and 16 percent, respectively. In total, 18.2 billion NOK for the LNG chain. The Snøhvit field development is estimated to cost about 9 billion NOK. It follows that the LNG chain represents 2/3 of the total capital costs and the field development 1/3.

CAPITAL COST NGH CHAIN

A schematic flow diagram of the NGH process is shown in Fig. 1. Water from an arriving ship is pumped into a storage tank. There are four trains of the same design and capacity. Water is pumped through an ice-making process where a 50/50 ice/water slurry is produced. Natural gas arrives under pressure from storage (optional) and gas/liquid separation. The natural gas and ice/water slurry are injected into the first stage of the three-stage hydrate reactor system.

A hydrate/liquid mixture leaves the last reactor stage with a hydrate concentration of about 30 wt. percent. The mixture enters a vertical separator where hydrate concentrate is obtained. The hydrate depleted liquid returns to the reactor system by pumping.

The hydrate concentrate leaving the vertical separator enters a horizontal decanter system, where wet hydrate is squeezed out at one end and water the other. The separation efficiency of this operation is now known.

The cost of the main equipment is estimated to be 1600 million NOK, and cost of bulk materials and plant construction is estimated as 150 percent of the equipment cost, corresponding to recent offshore cost relationships. Marine facilities as well as engineering and management costs are added, resulting in a basic plant cost of 5000 million NOK. Because the process is new, a contingency of 30 percent is added, giving a total erected plant cost of 6500 million NOK. This is the Capex of the 4 billion Sm3 per year NGH production process and export facilities, comparable to an LNG plant’s grassroots installation.

The re-gasification of frozen hydrates will take place by simple melting. A schematic flow diagram of such a process is shown in Fig. 2.

In both the production and melting of natural gas hydrates, natural heat sinks can be used. The NGH process operates at temperatures so near ambient conditions that the heating and cooling systems used will be energy efficient.

Cost of the melting facilities will scale with the capital cost of the production facilities. In the present work, the capital cost of the melting was assumed to be equal to 50 percent that of the production; that is, 3250 million NOK. The capital cost expressed in Capex of a NGH chain for 400 MMscf/d over a distance of 5500 km comes to 1995 million USD.

Total capital costs for a 4 billion Sm3 natural gas production in the Snøhvit field, will approximate 22.55 billion NOK; 9 billion NOK for field development, 6.5 billion NOK for hydrate production process, 3.8 billion NOK for 5500 km ship transport and 3.25 billion NOK for hydrate melting.

COST COMPARISON

The cost data have been up-dated in 1995 in a detailed feasibily study. The overall cost for both NGH and LNG have been reduced, but the Capex percentage difference remain about the same.

CONCLUSIONS

2. Experimental studies in Norway and Russia have shown that natural gas hydrates are stable for up to two years when stored -15 to -5 C at atmospheric pressure.

3. The estimated total capital cost of hydrate production and melting processes was approximately one-quarter less than LNG’s equivalent liquefaction and re-gasification processes.

4. For the same natural gas carrying capacity, the capital cost of 7 NGH ships was also estimated at approximately one-quarter less than that of 3 LNG ships.

REFERENCES

Englezos, P (1993). "Clathrate Hydrates," I&EC Research, 32, 1251-1274.

Ershov, ED and Yakushev VS (1992). "Experimental Research on Gas Hydrate Decomposition in Frozen Rocks," Cold Regions Science and Technology, 20, 147-156.

Falch, T and Haugen, E (1992). "Application of Experiment Design in a Simulation Study of the Snøhvit Thin Oil Zone," Proc. Lerkendal Petroleum Engineering Workshop, Trondheim, 43-54.

Gudmundsson, JS (1990). "Method and Equipment for Production of Gas Hydrates," Norwegian Patent No. 172080.

Gudmundsson, JS and Parlaktuna, M (1992). "Storage of Natural Gas Hydrate at Refrigerated Conditions," AIChE Spring National Meeting, New Orleans, 27 pp.

Gudmundsson, JS, Parlaktuna, M and Khokhar, AA (1994). "Storing Natural Gas as Frozen Hydrate," SPE Production and Facilities, 69-73.

Mellbye, P and Tungland, K (1994). "Norwegian Natural Gas Supplied to Europe," GASTECH 94, Session 9, Paper 4, Kuala Lumpur, 22 pp.

Nagelvoort, RK and Tijm, PJA (1994). "Cost Reductions in LNG Export Facilities," Natural Gas Processing, [13]4, World Petroleum Conference, Stavanger, 9 pp.

Yakushev, VS and Istomin VA (1992). "Gas-Hydrates Self-Preservation Effect," 136-139, Physics and Chemistry of Ice, (ed. N. Maeno and T. Hondoh), Hokkaido Univ. Press, Sapporo.

Table 1 - Comparison of capital costs of LNG chain and NGH chain, assuming 4 billion Sm3 gas rate per year and 5500 km transport distance.

Fig. 1 - Schematic diagram of NGH production process.

Fig. 2 - Schematic diagram of NGH melting process.