Published on February 14, 2014
History of the oil & gas industry & review f h l d of the natural gas ( LNG) markets g (& ) Constantinos Hadjistassou, PhD Lecturer, University of Nicosia Energy Engineer, Energy Sequel Updated: Feb., 2014 Feb
Outline 2 History of the Oil & Gas (O&G) industry What is oil? What is natural gas? The O&G industry The natural gas market The Liquefied Natural Gas (LNG) market
Natural gas, liquefaction, storage & transportation 3 Historical perspective of O&G industry The NG & LNG markets Focus industry. markets. on major producers & importers; The natural gas purification process; Main NG liquefaction technologies: a) Classical cascade, b) Mixedrefrigerant, c) Pre-cooled mixed refrigerant; LNG storage facilities: above ground metallic tanks above/below tanks, surface concrete tanks, in-ground frozen earth tanks & mined caverns; Export & import facilities, pipelines, floating storage & regas units; LNG boil-off gas, LNG sloshing, LNG roll-over; LNG tanker designs, containment stms, gas boil-off issues; Safety S f t & security considerations f LNG plants, storage & t it id ti for l t t transport t
Natural gas, liquefaction, storage & transport (2) 4 Historical review of O&G industry, US EU & Asian LNG markets; industry US, Major LNG export players (Qatar, Australia, Indonesia) & import countries (Japan, South Korea, India, China); NG processing including liquids removal, H2O & gaseous components; Liquefaction refrigeration cycles: a) Classical cascade, b) Mixedrefrigerant, pre-cooled refrigerant c) pre cooled mixed refrigerant; Characteristics of above ground metallic tanks, above or underground concrete tanks, in-ground frozen earth tanks and mined caverns; Export & import LNG facilities, floating storage and regas vessels, pipeline insulation, LNG carrier loading arms, etc.; Particulars of LNG tanker designs containment stms gas boil off; designs, stms, boil-off; Layout of LNG plants, LNG storage, particulars of LNG ships; Safety & security concerns confronting LNG infrastructure i.e. cyber y y g y attacks & how to guard against them
Petroleum (oil & gas) formation 5 Natural occurring H/C Petroleum = πέτρα (rock Gr) + oil (oleum Ltn) (rock, (oleum, Accumulation of organic matter (plankton, algae, marine life) with mud in sediments of river beds/lakes Immersing and decomposition of organic matter High pressure & temperature, bacterial action Million f Milli of years oil (&/ natural gas) f il (&/or t l ) forms Heating value of natural gas varies with inorganic compounds ( 2, CO2, H2S): g p (N ) 26.08MJ/m3 to 59.61MJ/m3 Bay of Biscay, France-Spain
Oil and natural gas systems 6 Necessary prerequisites: Organic matter Source rock Rock R k cap ( (permeable strata) bl ) Reservoir (porosity, permeability) Oil/gas migration Right geological timing 1 2 3 4
Natural gas accumulations 7 Geological traps: Reservoirs: a porous & permeable underground formation with individual bank of H/Cs confined by impermeable rock or water characterised by single pressure system; Fields: area which consists of one or more reservoirs related to same structural feature Pools: contain one or more reservoirs in isolated structures. 3 types of natural gases: Associated gas: gas dissolved in oil Non-associated gas: dry gas Gas condensates: high content of liquid H/Cs Natural gas was once a by-product of oil wells (termed as nuisance) Natural gas are classified as: Conventional natural gas: associated with oil or non associated non-associated Gas in tight sands with formations having porosities: 0.001 to 1 mdarcy (md) Gas in tight shales. Shale is fissile, predominantly black, brown or greenish-gray Coal-bed Coal bed methane is found in minable coal beds at <1000m depth Geopressurised reservoirs: due to collapsing strata reservoir pressure > expected pres. Gas hydrates: snow-like solids which trap natural gas
History of the oil & gas industry 8 1859: “Colonel” Drake drills the first oil well in Pennsylvania USA Colonel Drake, Pennsylvania, 1870: John Rockefeller forms Standard Oil 1892: Edison invents electricity 9 y 1896: Ford builds the first automobile 1901: Spindletop “gusher” is discovered in Texas 1908: Anglo-Persian discovers oil in Iran 1911: Standard Oil Trust is dissolved by supreme court
History of the oil & gas industry (2) 9 1938: Oil is discovered in Kuwait & Saudi Arabia 1956: Suez crisis– halts ship transits thru canal 1969: Oil is found in North Sea (Ekofisk) 9 9 ( ) 1972-3: Arab-OPEC oil embargo 1979-81: Khomeini ousts the Shah: oil price panic 1985: oil glut sends oil prices tumbling 1990: Iraq invades Kuwait 2002: Oil found in Campos pre salt pre-salt
What is oil? 10 Naturally occurring organic substance of Η & C Petroleum = natural gas (ΦΑ) & (crude) oil Usually in liquid form. Exists in solid & gaseous states y q g Could contain Ν, S, Ο Found in subterranean formations Combustible When burned it releases thermal energy & heat trapping emissions Raw material Bitumen Hydrocarbons
Benefits from the use of O&G 11 World economy depends on O&G Development tied to energy use 80% of oil used in transportation p Ease of transport (liquid/gas) High energy density (Diesel: 38 MJ/L) Relatively safe – practical Petrochemicals Plastics Nylon Cosmetics Aspirin
Oil reserves 12 Estimates: 6 8 trillion bbls (conventional) 6 8 trl (non conventional) 6-8 (conventional), 6-8 trl. (non-conventional) 1 trillion barrels consumed since 1859 World consumption: 31 bln bbls/year (2009) p 3 /y ( 9) 19th century coal, 20th cent. oil, 21st cent. Natural gas & hydrogen 20th century O&G, and coal → 85% world energy mix Oil represents 40% of world energy mix (Rae, 2010) Boost in production from non-conventional sources
World energy mix: 1990-2030 13 Projections Source: BP Energy Outlook (2013)
Non-conventional hydrocarbons 14 Tar sands Canada sands, Area: 141,000 km2 (15 Cyprus) Estimates: 178 bn of oil equivalent (boe) Production: 1.8 mbbl/d P d i 8 bbl/d Shale oil & gas Hydraulic fracturing US Energy revolution Offshore developments Gulf of Mexico (US) Brazil West Africa East Africa N.West Australia North Sea
Oil price: 1861-2011 15 Source: BP Stat Review (2012) S St t R i
The 7 sisters 16 1 Standard of New York (Exxon) 1. 2. Standard of New Jersey (Mobil) 3. Standard of California (Chevron) 3 ( ) 4. Anglo-Persian Oil Company (BP) 5. Royal Dutch/Shell (Shell) 6. Gulf Oil (Chevron) 7. Texaco (Chevron)
Recently: “big oil” or “supermajors” 17 1 ExxonMobil corp (USA) 1. corp. 2. BP plc (UK) 3. Total SA (France) 3 ( ) 4. Royal Dutch Shell plc (Netherlands) 5. Chevron corp. (USA) 6. Conoco-Phillips (USA)
Today: major oil companies 18 Total SA (France) Royal Dutch Shell plc (Netherlands) Exxon-Mobil corp. ( p (USA) ) Gazprom (Russia) Rosneft (Russia) Saudi Aramco (Saudi Arabia) Chevron corp. (USA) BP plc (UK)
Who controls the world’s oil reserves? 19 Supermajors control 6% world oil reserves 78% of world oil reserves controlled by NOCs NOCs produce 52% of world’s oil (ΕΙΑ, 2007) p 5 ( , 7) Source: PFC Energy (2008)
Are we running out of oil? 20 W ld’ O&G reserves change with t h l i l progress World’s h ith technological Increase: +30.4% Increase: +22.7 %
Biggest oil producing countries 21 Source: BP Statistical Review 2009
22 Natural Gas
What is natural gas? 23 NG: methane (CH4): 70 90% w%, Ethane (C2H6): 5 15% 70-90% w% 5-15% Methane: odourless, colourless, non-toxic, non-corrosive Condenses at −161°C Occupies 1/610 volume in relation to its gaseous state rendering its transport with LNG carriers economically viable Flammable or explosive only in concentration 5-15% in air 5 15% NG discovery in early oil wells considered failure (dry well) Owes its smell to “methanethiol” Natural gas is not LPG (LPG: C3H8, C4H10)
Natural Gas 24 P: Maybe one day “oil” industry will be renamed “natural gas industry oil natural gas” P: Cleanest H/C: CH4 + O2 = CO2+2H20 + thermal en. 142kJ/kg P: Extractability of NG: 70-80% (Oil: 30-40%) y 7 ( 3 4 ) P: Restricted processing before use (vs. oil) P: LNG can be used in transportation P: NG can be converted into diesel P: Pipelines predominant transport mode over short distances N: Not easily “fungible” (difficultly of reaching markets) N: Could cause asphyxia p y N: Costly export facilities; on a par to nuclear plants N: Flaring or vented into atmosphere N: Powerful heat trapping gas
Overview of natural gas (NG) industry 25 Delphi Greece: “eternal flames” eternal flames ~400 BCE: Chinese first to use natural gas for salt distillation Late 17th & early 18th:NG originally used for house & street lighting 7 y g y g g 1821: W. Hart drilled 9m deep NG well in NY. NG for commercial use Post WWII: Major boon in NG use due to emergence of steel pipelines NG mainly used for power generation, petrochemical feedstock & sul. IEA: 21st century “Golden Era of NG”: 25% world mix (by 2035)
Natural gas is an environmentally friendly fuel 26 Air pollutants produced/MMBTU Oil & coal: 1.4x & 1.75x more CO2 than NG 20% less NOx Less particulates Pollutant Natural Gas (kg) Oil (kg) Coal (kg) CO2 53,070 74,389 94,347 CO 18 ~15 34.3 34 3 NOx 41 203 207.3 SO2 0.27 509 1,175 Particulates 3.18 38.1 1,244 Formaldehyde 0.34 0.1 0.1 - 0.0032 0.0073 Mercury
NG from reservoir to finished product 27
Natural gas value chain 28 Natural gas demand subject to seasonal patterns & short term volatility short-term
Liquefied Natural Gas (LNG) history 29 1934: first attempt to export LNG in Hungary 1951: Louisiana to Chicago via Mississippi River 1959: “Methane Pioneer” 1st large scale LNG exports from Libya to UK 959 g p y Early 1980s: NG given impetus LNG vessels operate on 15 to 20 year long selling contracts LNG fleet capacity. 5ΜΜm3 (2008) → 35ΜΜm3 (‘07) → 55ΜΜm3 (‘10) LNG will meet 14 to 16% of global gas demand by 2015 (NGR, ‘07) Typical LNG shipload cost $20 35 m, daily time charter rate of LNG $20–35 m ship ~$70,000
World natural gas reserves (1) 30 Units: Trillion cubic meters (tcm) Total: 208.5 tcm (2011) Total: 131.2 tcm (1991)
World proven natural g reserves (1) p gas ( ) 31 Total: 208.5 tcm
EU natural gas imports (ΕΕ-27) 32
Production & Consumption of NG 33 Source: BP Natural gas , 2013
Future energy projections 34 Natural G Gas Energy sources 2.8 2010: 10 tcf/yr 2030: 15 tcf/yr 1 cubic metre = 35.3 cubic feet
EU Pipeline network 35
US pipeline network 36
Important energy developments 37 2011: Fukushima nuclear incident Germany & Switzerland to p y phase out nuclear energy gy Tendency of emerging economies towards NG US shale gas (& oil) revolution Libya, Syria oil (& gas) disruptions
LNG market 38 LNG: world energy mix from 9% (2010) → 15 5% (2030) 15.5% LNG from offshore Mozambique & Tanzania (100 tcf); q ( ); Australia largest LNG exporter by 2017— Reserves: 400 t f | B R tcf Browse | P l d | Ichthys | Pluto Preclude I hth Pl t US granted two permissions for LNG export by 2017
LNG seaborne transport 39 LNG carriers On-board boil-off liquefaction Operate on 15 to 20 year contracts p 5 y LNG transported under atm. pressure at –161˚C Need for regas receiving terminal Q-max: 266,000 m3 (Qatar)
LNG vessels 40 3 types of ships: Prismatic design Spherical type Membrane d i M b design Materials: aluminium, balsa wood, stainless steel, polyurethane Advanced gas leak detect o syste s dva ced ea detection systems
Compressed natural gas (CNG) 41 Transport in gas state Pressure ~200 bar volume: 200:1 state. 200 bar, None such vessel has yet to be build Attractive solution for short distance LN trade Potential use of composite materials
LNG export prospects 42 1 cubic foot = 0.0283 cubic metres
LNG imports & exports 43
Are we running out of natural gas? 44 There is enough gas to power the world for the next 300 years (IEA)! Increase: +23.7 % Increase: +28.4 %
NG prices 45 cif: cost + insurance + freight
Major NG trade routes 46
47 Thanks for your attention!
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