Published on November 6, 2007
LNG Transportation: US/Russia Liquefied Natural Gas (LNG) Seminar Moscow April 12, 2005 LNG Transportation Jim Kelley Commercial Manager LNG Shipping ChevronTexaco Shipping Co. LLC Outline: Why LNG Ships are Needed ChevronTexaco Interest in LNG Ships LNG Shipping History and Safety Record LNG Ship Design and Technology Safety and Security Measures LNG Shipyards: Supply and Costs Who Controls the Ships and Why Conclusions Outline LNG Ships Connect LNG Plants and Regasification Terminals: Sources: PE 2005 LNG plants include facilities under construction Americas Asia/Pacific Africa Europe Middle East 2 LNG Plants 1 LNG Plant 8 LNG Plants 7 LNG Plants 4 LNG Plants 31 Proposed Regas Terminals 13 Proposed Regas Terminals 1 Proposed Regas Terminal 13 Proposed Regas Terminals 0 Proposed Regas Terminals 5 Proposed LNG Plants 1 Proposed LNG Plant 6 Proposed LNG Plants 4 Proposed LNG Plants 5 Proposed LNG Plants 7 Regas Terminals 13 Regas Terminals 0 Regas Terminals 27 Regas Terminals 0 Regas Terminals LNG Ships Connect LNG Plants and Regasification Terminals ChevronTexaco Global Gas’ Growing LNG Transportation Requirements: ChevronTexaco Global Gas’ Growing LNG Transportation Requirements Nigeria . Angola Gorgon NWS Venezuela Asian Markets European Markets U.S. Markets North-AmericanMarkets PROJECT INVOLVEMENT SINCE MID-80s Terminals Import ChevronTexaco Shipping’s role in supporting Global Gas Global Gas is Leading Development of Multiple U.S. LNG Import Terminals: Baja California Possible Northeast Locations Global Gas is Leading Development of Multiple U.S. LNG Import Terminals Port Pelican Casotte Landing Sabine Pass LNG ChevronTexaco Global Gas’ North American Regasification Terminal Plans: Port Pelican Casotte Landing Sabine Pass LNG Baja California Possible Northeast Locations Sabine Pass, Louisiana Artist Rendition ChevronTexaco Global Gas’ North American Regasification Terminal Plans Casotte Landing, Mississippi Artist Rendition 7.2 BCM 13.4 BCM 15.5 BCM The LNG Industry’s Attention to Detail has Resulted in an Impressive Safety Record: The LNG Industry’s Attention to Detail has Resulted in an Impressive Safety Record LNG ships have been connecting remote gas supplies and markets for over 40 years LNG ships have an excellent safety record – having completed well over 35,000 voyages without a breach of primary containment or a major release of gas This safety record is not by chance – the LNG industry recognized the importance of safety and reliability from the beginning and intentionally set out to prevent incidents and downtime (e.g., WWW.SIGTTO.ORG) Source: CLNG LNG Ship Design and Technology: Containment and Propulsion: LNG Ship Design and Technology: Containment and Propulsion Moss Spherical Tank Containment System Membrane Tank Containment System The vast majority of existing and all new LNG ships use one of two containment systems (Moss or membrane) Advances in technology have led some firms to order ships with alternative (not traditional steam turbine) propulsion LNG Ship Capacity in Cubic Meters(Growing Over Time): LNG Ship Capacity in Cubic Meters (Growing Over Time) 88% OF THE FLEET CONSIDERED “LARGE” 39% MOSS 59% MEMBRANE 2% INDEPENDENT WORLD LNG FLEET SIZE DISTRIBUTION (Number of ships in each size range) LNG Ship Design and Technology:Safety and Security: Double hull construction results in multiple layers of protection in the event of grounding or collision An extensive cargo monitoring system safely shuts down operations (e.g. stop pumps and close valves) when it detects conditions outside of predetermined parameters State-of-the-art navigation systems (sophisticated radar and positioning systems to track ship’s course, other traffic and monitor hazards) Global marine distress systems and closed-circuit TV Double and triple redundancies on many pieces of critical equipment and instrumentation Extensive firefighting and water deluge systems LNG Ship Design and Technology: Safety and Security LNG Ship Operation:Safety and Security: In addition to training required for conventional vessels (e.g., bridge management, security), all key personnel must take safe handling of liquid cargoes, specialized firefighting and sail in a training/observer capacity Crews participate in ongoing training and emergency drills to enhance their skills – audits are conducted Transit into and out of port is carefully planned including Tug assist and / or escort vessels Guard boats (to ensure separation distances maintained) Vessel Traffic Systems (VTS) Security zones that move with the ship Berthing and unberthing operating limits established Pre-cargo transfer conferences and check-off lists completed by shipmaster and terminal supervisor LNG Ship Operation: Safety and Security LNG Shipyards: Supply and Costs(Ship Market Over Time): EXPECTED ADDITIONAL SHIP ORDERS CURRENT SHIPYARD (S/Y) ORDERBOOK HISTORICAL SHIP DELIVERY OVER TIME PRORATED S/Y PRICE FOR 150,000m3 NEWBUILD EQUIVALENT CUMULATIVE NUMBER OF LNG SHIPS OVER TIME Capacity of all shipyards “technically capable” of building LNG ships Capacity of Major Japanese and Korean shipyards only Active tenders for LNG ships are expected to quickly fill available 2009 slots at the lowest-cost shipyards Cumulative number of LNG ships (read number from left axis) DELIVERY YEAR NOMINAL PRICE FOR 150,000 m3 EQUIVALENT (USD MILLIONS) LNG SHIP DELIVERY/CAPACITY (UNITS PER YEAR) LNG Shipyards: Supply and Costs (Ship Market Over Time) Shipping Costs – Shipping rates from Shtokman to the Gulf Coast are competitive with West Africa and substantially lower than the Middle East: Shtokman Qatar Nigeria Shipping Costs – Shipping rates from Shtokman to the Gulf Coast are competitive with West Africa and substantially lower than the Middle East Access to LNG Ships is Critical: Access to LNG Ships is Critical Without ships, LNG cannot move Historically, little existing surplus supply, new projects generally require new ships Delivery for new LNG ships is typically 32-36 months Lead time means Projects must plan ahead Limitations on shipyard capacity means Projects must monitor the LNG ship market closely to ensure ship (or shipyard construction berth) availability does not become the critical path issue In certain cases, moving to lock-up shipyard berths or slots early may be warranted due to competing demand (from other LNG projects) or unfavorable trends in market prices Control of Shipping:Why / Who?: Divert “baseload” cargoes; monetize “extra” cargoes Capture market differentials & seasonal premiums Enable contract flexibility (e.g. turndown, ramp-up) Optimize transport costs (within or across projects) Ensure reliability; minimize consequential effects Better access to spot ships & market intelligence Export Project Control Import Project Control Marketing, Trading & Shipping Control Control typically goes to party that values it most highly… …a business model must be developed by each party Control of Shipping: Why / Who? Conclusions: Conclusions The LNG shipping industry has an excellent safety record due to proactive ship design and operational procedures Technology is advancing (propulsion) and LNG ships are growing in size to attain better economies-of-scale The tremendous growth in LNG development has resulted in strong demand for LNG ships This growth, combined with other market factors, has led to higher ship prices “Access to” and “Control of” LNG ships is important Significant investment in ships is required to move LNG to market Slide17: ChevronTexaco Global Gas “Turning Partnership Into Energy” Thank you for your attention ------ Any questions?