Monday, September 27, 2010

New Transport Technology for LNG

CALGARY - Seaborne natural gas pipelines could make their maiden voyages as soon as next year, if everything goes according to plan for a Calgary company.
Sea NG Corp. — a play on the acronym for compressed natural gas — says it has found a way to transport large quantities the fuel around the world by ship, without the costly task of liquefying it first.
"It's really a floating pipeline," chief financial officer Mark Behrman said in an interview.
Sea NG's technology, called Coselle, was developed more than a decade ago, and has since been deemed safe by the American Bureau of Shipping.
It has also won the backing of Japanese investment company Marubeni Corp., Vancouver shipping giant Teekay Corp. and, most recently, pipeline heavyweight Enbridge Inc. (TSX:ENB).
Coselle — another play on words that combines "coil" and "carousel" — uses up to 21-kilometres of 168-millimetre steel pipe wound inside cylindrical frames. The modules, filled with high-pressure gas, are then loaded on specialized ships.
Sea NG is working on deals to transport natural gas from more than a dozen projects around the world.
"We think one or more of them is going to result in firm contracts in 2011," said Behrman.
He declined to say which companies are developing those gas fields, but hinted that they are hefty names.
"The large international (exploration and production) companies that would come to mind are likely the ones that we're talking to," he said.
Interest has picked up since Enbridge joined Sea NG's global alliance in late August, Behrman added, declining to disclose exactly how much money the Calgary pipeline giant had committed.
"Many of our potential customers are current customers of Enbridge," he said.
Natural gas currently makes its way around the world by sea, but it has to be liquefied in ultra-cold temperatures first, and then converted back into a gas at its final destination.
Liquefied natural gas, or LNG, requires big, pricey terminals to be built at both the origin and end points. And communities living near proposed LNG sites have not always been keen on having those facilities in their backyard. Public outcry forced TransCanada Corp. (TSX:TRP) to nix its US$700-million Broadwater LNG plant off Long Island Sound.
"The one thing where I think we compare very favourably to LNG is that our shore based facilities are very small," said Behrman.
"They have a very small footprint compared to an LNG facility, and I think that actually gives us an advantage over LNG in situations where there are local community concerns about the facilities."
Natural gas fetches considerably higher prices in Europe and Asia than it does in North America, which is flush with the commodity thanks to drilling in emerging shale gas formations, said Ralph Glass, vice-president of operations at AJM Petroleum Consultants in Calgary.
While gas prices here are languishing below US$4 per 1,000 cubic feet, they're up to US$7 in the U.K., for instance, he said.
"Be it CNG or LNG, the market is definitely Asia-Pacific and Europe, not North America," Glass said.
It doesn't make sense to build a large, expensive LNG facility in smaller markets, which may not be near land pipelines.
Sea NG's fleet includes ships of varying sizes, allowing for more flexibility. The firm sees its best opportunities in the Mediterranean and Caribbean regions, where many countries continue to rely on polluting fuel oil to generate electricity.
"With oil prices continuing to move up, and looking like they're going to sustain high levels, it's a great drain on the hard currency of many of those nations," said Behrman.
"Replacing that expensive liquid hydrocarbon with a cheaper natural gas shipped by Sea NG makes a lot of sense for them."

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