Grain LNG The UK’s Foremost LNG Terminal
description
Transcript of Grain LNG The UK’s Foremost LNG Terminal
Grain LNGThe UK’s Foremost LNG Terminal Ofgem LNG Seminar
11 February 2009
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Content
Background
Terminal Development and Operations
World LNG situation
Commercial and Regulatory Context
Anti-Hoarding Arrangements
Summary
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Grain LNG - Conception
Investment in new terminal driven by:
• Rapid decline in forecast UKCS supply
• Future UK Import dependency (exc. exports): 2010/11 46% and 2014/15 80%
• UK became net gas importer in 2004
• Sustained demand for gas in electricity generation
• LNG enhances diversity of supply and competition benefits
• UK at extremity of European network with limited storage/swing provision
• Access to mainland European markets via Interconnector (UK)
Source: DTI and National Grid Gas Forecast
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Grain LNG Phase 1 – Converted to importation in 2005
• Originally a peak shave storage facility• £130million – low cost, high speed to market• Capacity to deliver up to 4% of current UK demand• 3.3 million tonnes p.a. throughput capacity (~4bcm/yr)• Purpose-built jetty and 4.5km cryogenic unloading line• Approx 1 berthing slot per week
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Phase 1 Operations to End 2008
World regasification capacity ~2x liquefactionTypical utilisation rates 33 to 50%Supplies with destination flexibility choosing highest price market Total cargoes delivered to end 2008 (excluding commissioning cargoes) = 88 (44%)Send-out figures (% of contract throughput) Overall 38% Winter periods 62%
Only UK LNG imports despite Teesside gas port entering service in 2006
Site export Jul 05 to 31st Dec 08
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Total send-out = 66,600GWh
Winter 06/07 - UK Supply problems - higher gas price/higher send out
Winter 07/08 - Higher LNG prices in far east - lower send out
Winter 05/06 - First winter operations
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Recent World LNG Situation Grain LNG Importation Level consistent with External Drivers
Q2/3 2008 – Sellers Market & Asia Dominant Buyer
High oil price
Asia LNG demand high (nuclear shut downs)
Spot price significantly higher than NBP
New emerging markets, China/India
Southern Europe pull, e.g., Turkey constraints
LNG supply delays
Or constrained (Algeria FM, Nigeria FM, Snohvit)
Cost of construction x4 since 1990s
Few new projects being sanctioned
Development of alternative sources, e.g., coal bed methane, shale gas
Import terminals considering export e.g., Kittimat LNG
Q4 08/Q1 09 – Economic Crisis
Oil price collapse
Asia LNG storage full
Fuel switching & reduced demand
Asia spot price closer to NBP
No significant change in supply
Construction prices may fall
Capital for investment constrained
Atlantic more attractive market for LNG
Development of marginal sources reduced
Grain throughput increases
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First Expansion – Commercial Go-Live December 2008
• £355 million investment• Capacity trebled to 9.8mtpa (~13bcm/yr)• Total storage capacity now 770,000 cubic metres• Berthing slots approx 3 per week
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Gas blending – Nitrogen Ballasting Plant
2 x 30 metre high cold boxes
Nitrogen liquefier
~4000 tonne liquid Nitogen storage vessel
Capable of supplying 50 tonnes per hour
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Commissioning cargoes
Al Khuwair Moran Gas Coronis
Mourad Didouche
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Expanded Terminal Operations (first commissioning cargo to date)
Grain LNG – once again delivering at a critical time for UK plc in early January Russia-Ukraine dispute Coupled with cold weather period Expansion commercially live and customers able to respond with gas flow nominations
Statistics since expanded terminal go-live (30 December 2008): Total cargoes delivered 5 (29)% Overall send-out 34% Max. hourly flow rate 361GWh/d
Site export - 1st Commissioning cargo to date
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Second Expansion – Scheduled for Winter 2010/11
• £310m investment • Total capacity 15mtpa (~20bcm/yr)• Up to 20% of daily UK gas demand • Total storage capacity will be 960,000m3 (largest in EU/US)• Second jetty capable of accepting Qmax vessels of 265,000m3
• ~50% increase in berthing slots
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Recent Overview of Development
Phase 2
Phase 1Phase 3
LNG Jetties
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UK Regulatory Context - Committed Importation Projects
Fully liberalised competitive market
NBP gas price
Multiple entry points
Significant 3rd party access
South Hook 10-20 bcm/y (2009-2010)Dragon 6bcm (2009)
Grain LNG- Phase 1 = 4 bcm/y 2005- Phase 2 = 9 bcm/y 2008- Phase 3 = 7 bcm/y 2010
Zeebrugge-Bacton Interconnector25 bcm/y
Excelerate LNGc 4 bcm/yr
BBL Interconnector 15 bcm/y
Zeebrugge LNG
Other mainland Europe gas sources
OnlineUnder development
Langeled Pipeline10-25 bcm/y
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Committed UK LNG Import Capacity (to 2010)
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Grain LNG Business Model and Customers
Phase 1
Phase 2
Phase 3
Grain LNG Business Model
• Independent Terminal Operator
• All capacity sold via Open Season
• Long term contracts to underpin investment
• Customers control ship movements & nominations
• All capacity exempt from regulated 3rd party access
Customers - Different Business Models & Optionality
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Access to the Grain LNG Terminal - Including Anti-Hoarding Hierarchy
Open Seasons (TPA consistent) have led to 6 primary customers
Contracts fully incentivise use of capacity for customers own portfolio of LNG
Further incentivised to undertake tried and tested bilateral deals for LNG access to the UK market
Discussions can start months in advance of slot window
Right up to a few days in advance
Typically FOB cargo or sold at the rail to the primary shipper
Firm product
~ 25% of phase 1 cargoes delivered to Grain have been on a bilateral basis
Several reported in trade press: GDF-Suez, DistriGas, Gazprom
Final clearing of unused capacity via complementary and transparent anti-hoarding arrangements:
Secondary Capacity Access (from customers)
Use-It-Or-Lose-It (across expanded terminal)
Additional counter-parties through which LNG can access UK
Teesside gas port (RWE/Excellerate)
Future - South Hook (Exxon-Mobil/Qatar Petroleum/Total), Dragon LNG (BG/Petronas)
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Secondary Capacity Access in Expanded Terminal
Voluntary arrangements put in place by a Primary Shipper
Current Phase 1 arrangements in place since 31 August 2007
BP/Sonatrach agency publishing slot dates
Auction process, with Grain LNG party to necessary agreements
Firm right to berthing slot, temporary storage
Firm right to unload quantity and quality specified in accepted bid
Firm right to access gas at Grain entry point / NBP for six or seven day period
Phase 2 Secondary capacity products under development
Details via customer contacts available on Grain website
Grain guidelines on access arrangements on public website (GRAINLNG.COM)
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Use-It-Or-Lose-It (UIOLI)
In operation since July 2005
Enhanced as a result of expansion
Full cargo-sized volume being offered
UIOLI Offering:
Publicly via bulletin board on website (GRAINLNG.COM)
Buyers & sellers can register interest in:
Unused slot(s)
Available amount of temporary storage
Deliverability for fixed period
Notice period dependent on release by primary capacity holder
Contractual arrangement between Grain and third party
Terminal General Terms & Conditions apply
Gas Quality variation available
UIOLI and take-or-pay element of main contract incentivises Primary shipper to use or trade
Slot Days notice Volume (m3) Duration (days)
6-Jan 7 135,000 7
9-Jan 7 135,000 7
16-Jan 7 135,000 7
19-Jan 3 135,000 9
21-Jan 7 135,000 7
24-Jan 5 135,000 12
27-Jan 7 135,000 7
28-Jan 7 135,000 7
31-Jan 3 135,000 7
2-Feb Vessel delayed and used 5-Feb slot
Berthing Slots used since 30 December 2008
Berthing Date Ship Name
1-Jan British Merchant
7-Jan Mourad Didouche
14-Jan British Sapphire
18-Jan British Innovator
5-Feb Berge Arzew
UIOLI slots offered since 30 December 2008
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US Gulf Coast 11.0US East Coast 7.8Trinidad 8.9
Snohvit 3.1
Zeebrugge 0.3
Montoir 1.4
Bilbao 1.7
Grain
Sines 2.5
Huelva 3.0Cartagena 3.6
Barcelona 4.3
Panigaglia 5.0
Revithoussa 6.4
Marmara 7.0
Skikda 4.5Arzew 3.7
Marsa El Brega 6.2
Idku 7.1
Damietta 7.3
Arabian Gulf 15.0
Sailing times to Isle of Grainin days ( @ 19 knots )
Liquefaction PlantLNG Receiving TerminalUnder Construction
Bonny 9.8
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Summary
Backdrop - tight supply of World LNG - highest price markets dictating where flexible cargoes go
First phase of Grain LNG
High levels of utilisation
Effectiveness of normal trading arrangements demonstrated by phase 1 customer
Complementary, open & transparent anti-hoarding arrangements in place
Expanded terminal already demonstrating benefits:
Increased competition, supply diversity and security of supply to UK
4 customers - enhanced opportunities for normal, bi-lateral ex-ship deals
More berthing slots which customers are incentivised to trade
Anti-hoarding arrangements enhanced
In the near Future
Number of terminals and counter-parties in UK set to increase
Further improving competition and access for 3rd parties #
New LNG supplies - but will they come to the UK?
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National Grid has invested almost £1billion in critical UK infrastructureGrain LNG provides 3rd party access for World LNG markets
Timely delivery has ensured it remains a cornerstone of UK energy diversity and security of supply