Transport of LightGases Blended with LNG

LNG TransportIndustry Summary

LNG Production Worldwide

LNG supply by year: 2005 to 2013

Supply by country: 2013 YOY

Markets: 2013 YOY

• LNG Tankers – Plentiful, Many Sizes

• LNG Sources – Growing Number

• LNG Receiving – Slowly Growing Number

• Limited Excess Capacity

– Oversupply in 2008 has virtually disappeared

– Lower gas cost has seen increase in LNG transport by about 40% since 2008

– US Gas Supply Increasing Promising Substantial LNG Exports within a decade

Shipping LNG: Supply & Demand

• 226 ships built through 2006• 163 ships built in 2007 through 2013• 46 ships planned for delivery in 2014 or later

Growing Industry & Transport Capacity

LNG Value Chain

• Transport of Natural Gas costs about $3.50/MSCF using LNG from source to

destination (5000 km)

• Natural Gas sells for about $4 to $16/MSCF ($200 to $800/tonne)

• Natural Gas can be bought for $1 to $4/MSCF

• Profit highest transporting to Far East from Middle East

Cost of Transporting LNG

Established LNG Sea Links

Qatar Gas -Major LNG Source

LNG TransportEquipment

LNG Storage

LNG Terminals

LNG Terminals

The LNG Transport Cycle

Blended LNG Transport of Valuable Gases:Ethylene, Ethane, Propylene

• Traditionally made from Ethane and Naphtha Cracking

– Ethane reserves are falling except in USA

– Ethane Uneconomical for Shipping as Gas

• Naphtha easily shipped to Manufacturers (has destination value)

• All Major Future Ethylene Production Growth in Africa, Middle East and Far East

Ethylene: Prime Raw Material for Chemicals

Ethylene Production

Chemical Production needs Raw Materials

• Synfuels GTE makes Ethylene from Low Cost Natural Gas Economically

• GTE Ethylene market needs:

– Local Chemical Industry

– Mode of Transport to Traditional Market

Potential New Ethylene Technology

• Methane - $200 to $800/tonne

• Ethylene - $1100 to $1600/tonne

• Propylene – $1600 to $2000/tonne

Destination Value of Gases

Cryogenic Separation of Ethylene from

LNG

Chemicals made from Ethylene

Ethylene Transport Using LNG

Few Changes to Existing LNG Facilities are Needed

• LNG Gasification Facilities Gasify LNG and Deliver Natural gas to Pipelines

• Ethylene/LNG Gasification Facility will Separate Ethylene from Methane

– Deliver Natural Gas to Natural Gas Pipeline

– Deliver Ethylene to Ethylene Pipeline

Handling Ethylene/LNG Blend

• Pipeline from Ethylene source to LNG Liquifaction Plant

• Cross exchanger for Ethylene/LNG

• Pumps to Move Blend to Storage Tank

• Optional Separate Storage Tank for Cryogenic Blend

Liquifaction Equipment Additions are Minimal

• Cryogenic Tower to Separate Ethylene from Natural Gas

• Cold Box Condenser

• Fin-Fan Air-heated Reboiler

• Ethylene Pipeline Extension at Destination

Gasification Equipment Additions are Minimal

o Ship Size – 138,000 cu meterso 58320 tonnes displacement*

100% Methane $ 35.0 Million

75 wt% Ethylene $ 63.4 Million

75 wt% Propylene $ 95.1 Million

• All examples above for equal displacement shipping from USA to Japan

• Cost to manufacture ethylene and propylene set at $350/tonne

Example Case - Load Value

• LNG shipping capacity – 60 Million cubic meters ( 25.4 Million Tonnes)

• LNG annual transport – 562 Million cubic meters (237.7 Million Tonnes)

• Worldwide Ethylene Production – 143.4 million tons per year

(252 Million cubic meters)

Market Opportunity is Enormous

ETHYLENE-LNGCROSS-EXCHANGER

REFRIGERATION(EXISTING)

Ethylene

LNG(EXISTING)

LIQUID

LIQUID

ETHYLENE VAPOR

ETHYLENELIQUID

LIQUID ETHYLENEPUMP

LIQUIDBLENDER

VAPOR

ETHYLENE/LNGLIQUID

ETHYLENE/ LNGSTORAGE(EXISTING)

LiquidTransfer

Pump(Existing)

LNG TRANSPORT

EXISTING

GAS LIQUIFICATION (SOURCE)

Process Description

LNG TRANSPORTOFFLOADING

PUMP(EXISTING)

METHANE – ETHYLENECRYOGENIC SEPARATOR

FIN-FANREBOILER

REFRIGERATEDCONDENSOR

ETHYLENEGASIFIER

(EXISTING)

ETHYLENE-LNGLIQUID MIX

METHANE VAPOR METHANE PIPELINE(EXISTING)

ETHYLENE PIPELINE(EXISTING)

EXISTING

LIQUID GASIFICATION (DESTINATION)

Process Description

1. Bring ethylene by pipeline to site of existing LNG Liquefaction Plant

2. Cool and liquefy the ethylene with existing LNG refrigeration

3. Load the ethylene and LNG separately on a slightly modified LNG tanker

4. Unload the ethylene at the ethylene receiving site

5. Unload the LNG at the LNG receiving site

Opportunity A (Add Synergy to Close Ethylene and LNG plants)

1. Load some LNG onto LNG Tanker from LNG production site

2. Move ship to distantethylene production site and load refrigerated ethylene into

separate LNG cooled storage

3. Unload the ethylene at the ethylene receiving site

4. Unload the LNG at the LNG receiving site

Opportunity B (Utilize far apart LNG and ethylene plants)

1. Bring ethylene by pipeline to site of existing LNG Liquifaction Plant

2. Cool and liquify the ethylene with existing LNG refrigeration

3. Blend the ethylene with LNG and ship in existing LNG tanker

4. Separate blend at receiving site

Opportunity C (Simplify Transport through Blending)

Potential GTE/LNG SitesCo-Locations of Ethylene production and LNG Loading (Blue) and Receiving (Green)