2 4 8
14 16 20
Shipping
22 24
Regasification
Liquefaction
Jean-Marc Hosanski
Senior Vice President, LNG Total Gas & Power
Over the last two decades, liquefied natural gas has grown in importance tobecome a vital element in the global natural gas balance. Consumption of LNG is growing very strongly by about 7% per year anddespite the economic downturn that began in 2008, its share of the gas market is rising steadily as well. LNG met around 7% of world gas demand in 2008 and this figure is projected to rise to nearly 11% in 2015. The traditional LNG markets (Northeast Asia, Europe and North America) aswell as emerging markets (India, China and South America) clearly appreciate theadvantages of an energy source that is at once energy-efficient, clean, and aseasy to transport as liquid hydrocarbons. In this context of strong growth, Total, which was among the LNG industry pioneers, is backed by very solid positions in the upstream and downstream segments of the gas chain. Our objective is to increase our LNG production by developing new projects. Inthis respect, 2009 has been a watershed year for Total: thestartupof two major liquefaction projects Qatargas2 and Yemen LNG willinthe short term allow the Group to boost its LNG production by 50%. Otherprojects under way or under study in Nigeria, Angola, Australia, Russia and Iran will permit thepursuit of production growth through the decade 2010-2020. Our ability to guarantee sales for our liquefaction projects is a decisive advantage inmeeting these objectives, which is why we have been strengthening ourdownstream LNG presence. Total has acquired interests in fourreceiving terminals in India, Mexico, France and the United Kingdom andhasreserved large-scale regasification capacity in a terminal in theUnited States. Wearenowstudying further import terminal projects, including oneinCroatia intended tosupply Southern Europe. By consolidating our portfolio of customers in these growing markets and securing physical access to markets as well, we are in a position to purchase LNG ourselves, thereby facilitating the launch of new upstream projects.
Gas-fired power plants not only help to meet steadily expanding demandfor electricity, with savings in construction time and capital costs, but withcogeneration and combined-cycle technologies, theyalso have limited environmental impact because they are extremely energy efficient. Thismeans that more usable energy is produced fromless natural resources. Leveraging natural gas resources is therefore acritical challenge.
Maintaining integrity
Everything about an LNG project choice of sites for the liquefaction plant, loading facilities and regasification terminal; sizing of equipment; selection of technologies to be used is carefully studied so as to ensure optimum asset integrity. Meteorological extremes and seismic risks are alsoduly taken into account. Optimum safety distances are calculated for each plant site, provision is made for permanent monitoring, and emergency equipment, such as retention tanks and fire-fighting systems to curb the consequences of a potential leak, are always included. Total is participating in a number of advanced research projects to more accurately assess risks and thereby improve facilities design, operating procedures and, where necessary, evacuation conditions. TheGroup also contributes to the industrys international initiatives to enhance LNG shipping and storage safety through its participation in the Society of International Gas Tanker and Terminal Operators ( SIGT TO ), which oversees compliance with stringent construction and operating standards for LNG carriers and terminals.
Patrice Lecomte
Senior Vice President, Health, Safety, Environment&Sustainable Development, Total Gas&Power
The application of thehighest safety standards in the design and construction of the facilities, constantly improved risk management and the promotion of a strong safety culture in our operations are basic rules and imperatives. Totalimplements internationally recognized safety management systems that demand constant vigilance and a commitment to progress.
In Asia
LNG satisfies nearly all gas demand in Japan, South Korea and Taiwan, which together account for around two-thirds of the world market. Northeast Asia is a mature market, long dominated by national and regional impor t monopolies but now experiencing sweeping changes from increased competition between regional players. As monopoly positions are being challenged more and more, a need has arisen for more flexible and diverse supply mechanisms, with more emphasis on short- and medium-term contracts in particular. The Chinese and Indian markets offer extraordinary growth potential for the LNG industry in Asia. Japan, a thirst for LNG Japan has been the worlds largest importer of LNG fornearly 40 years. In 2008, the country accounted for 40% of the global market, importing 69 million metric tons, up 3% from 2007. With 2/3 of imports used for power generation and 1/3 fed into the grid for industrial, commercial and household use, LNG currently meets a little more In China, demand for gas is growing fast and neither the countrys dynamic domestic production nor its pipeline import contracts can meet current needs. In this favorable context, LNG imports are expected to increase by an estimated 15% a year. China is now securing its imports via a growing number of long-term LNG purchase contracts and is building the necessar y receiving facilities. In India, the steady grow th of energy demand and insufficiency of domestic gas resources, at least in the short term, are spurring interest in LNG, particularly for power generation. than 13% of Japans primary energy needs. Given this countrys energy security and environmental concerns, Japans LNG impor ts are bound to incre ase even further in the coming decades. To handle the growing i m p o r t v o l u m e s , J a p a n a l r e a d y b o a s t s 27 L N G receiving terminals (a record that is likely to stand for some time ) and additional facilities are now under construction.
Masaki Yamada
LNG Marketing Manager, LNG Division, Total Gas & Power
In the early 2000s, the first signs of deregulation in Japans energy sector, strong growth in Asian LNG markets and stiffer competition among LNG producers led Total to strengthen its LNG marketing presence inJapan. An LNG office was set up in Tokyo to capitalize on the proximity of the LNG players in Northeast Asia (Japan, South Korea and Taiwan), which is still the
biggest import market in the world, and to leverage newgrowth opportunities in the region. The specific mission of the Tokyo office is to analyze market trends, identify new opportunities for short, medium and long-term supply contracts, and make appropriate marketing recommendations to other Totalunits, working closely with the LNG team in Paris. Our local presence also means that Total can respond faster to new trading opportunities, incooperation withTotal Gas&Power Ltd.
40
5.4%
Totals share of the world LNG market in 2008. The Group marketed 9.15million metric tons of LNG, making itone of the top three international companies inthis market.
26,218
LIQUEFACTION
Colorless, odorless and non-toxic LNG mainly consists of methane (more than 75%) along with ethane, propane, butaneand nitrogen (less than 1%).
Gas is transported from the field by pipeline then processed to remove liquid condensates, acid (CO 2, H 2S and other sulfur compounds) and water. In addition, its mercury content, which can corrode the alloys used in equipment for subsequent stages of the process, is also removed. Heavy hydrocarbons (condensates) and any liquefied petroleum gas (propane and butane) are isolated via precooling and fractionating in a series of distillation processes. The gas then undergoes heat exchanges in a series of refrigeration cycles, becoming liquid at around -160C. Then it is stored at atmospheric pressure until it is loaded on an LNG carrier.
The LNG has to meet stringent commercial specifications that can vary depending on the destination market. These specifications include heating value andWobbe index, which characterizes the combustion properties of the gas.
Liquefaction plants comprise different sections for the successive operations, which include gas purification, liquefaction and storage as well as port infrastructure. The equipment used is very large, requiring specific mate r ia l. A pprox imate l y 10 % of the natu ra l g a s arriving at a liquefaction plant is consumed for its own operations.
Christophe Thomas
Head of the LNG department, Strategy, Business development, Engineering and R&D division, Total Exploration & Production
Total enjoys an international reputation for its LNG proficiency, acquired during many years of active technical participation in a large number of LNG projects involving a variety of technologies, in many different countries. For more than 40years now we have been involved in all the main technological advances, thathave taken the industry from the first small ADGAS and Bontang liquefaction trains to the large-capacity trains now operational in Qatar.
Alternative liquefaction processes are now challenging thenear-absolute domination of the C3-MR process originally developed by Air Products & Chemicals Inc. (APCI). Anoutstanding characteristic of Total is ourinvolvement inprojects using the five or sixmain processes currently available on the market. We are determined to maintain complete freedom of choice, which doesnt prevent usfrom working on improvements to enhance process efficiency. Given the capital-intensive nature of the LNG projects, wehave to be more rigorous than ever in the preliminary phases preceding the investment decision. Nevertheless, forecast future demand for LNG naturally encourages Total to consider liquefaction projects in increasingly difficult locations such as the Barents Sea that require us to devise innovative technological solutions such asmodular plant construction and transfer systems thatcan be used in the open sea.
Dehydration
H 2 O & Hg Removal
Cooling
Scrub Columm
Liquefaction
Main Heat Exchanger
Storage
Boil off
LPG
Deethanizer Depropanizer Debutanizer
LPG
Propane Refrigeration
MCR Refrigeration
LNG takes up 600times less space than natural gas in its gaseous state but contains the same amount of energy. SoLNG can be transported at atmospheric pressure at a temperature of -160Caboard purposebuilt ships to terminals where it is regasified andfed into the natural gas transmission grid.
Fractionation
C5+
Totals net LNG production in 2008 added up to more than 9millionmetric tons. With the start-up of two major Middle East liquefaction projects, Qatargas 2 and Yemen LNG, the Groups LNGproduction willincrease by 50% in the short term. This will lift the Group into ahigherleague, strengthening our position as a leading playerin the LNGindustry and a major producer in the Middle East.
10
An exemplary project
One of Totals top priorities in all projects is to minimize the impact of its activities on the environment and the local communities. The site location for the Yemen LNG liquefaction plant was chosen after studies carried out in consultation with stakeholders (local communities, the authorities, international experts). The plant and associated infrastructure were designed for minimized impact on biodiversity and marine currents. Total also helped to implement a Coastal Zone Management Plan devised by the World Bank to conserve the Gulf of Aden coastline. At the same time, sustained efforts were made to integrate all project activities into the local socioeconomic fabric. Starting in 2006, Yemen LNG implemented a wide-ranging recruitment and training program for local technical personnel. The company has set up its own training center and trained some 200 technicians and operators (among others) who will be working at the plant. Yemeni nationals already account for nearly two thirds of all Yemen LNG personnel and the company aims to raise this to 90% in time. The same attention is being paid to gender diversity, and women already account for more than 25% of the personnel at Yemen LNGs head office in Sanaa.
11
Top priority for Total is to increase its LNG production anddevelop new liquefaction capacity. Several new projects are underconstruction or under study.
6 5 4 1 2
A joint project of Sonangol (22.8%), Chevron (36.4%), BP(13.6%), Eni (13.6%) and Total (13.6%), Angola LNG will process associated gas from oil-producing offshore blocks (Total E&P Angola operates some of these offshore fields and holds a stake in others) and from gas fields dedicated to the project. The gas from offshore fields will be collected and piped to a liquefaction plant currently under construction in Zaire province. The plant will produce up to 5.2million
metric tons of LNG per year, along with associated liquids, and production start-up is planned for 2012. Seven LNG carriers chartered by the project will transport the LNG to the Gulf LNG Energy regasification plant now under construction near Pascagoula in Mississippi (United States). Once regasified, the LNG will be sold to the project partners commercial subsidiaries in the United States. Total Gas & Power North America will purchase and market Totals share of the gas.
Total is a 24% partner in the Ichthys offshore gas field, located in the Browse Basin about 200kilometers off the northwest coast of Australia. Total and its partner Inpex (76%, operator) have launched basic engineering studies for thedevelopment of the Ichthys field and theconstruction of a liquefaction plant near Darwin, 850kilometers to the east. These studies will be the basis for contracts to build the production, processing, transport and liquefaction infrastructure. The development scheme will include subsea wellheads connected to a Central Processing Facility based on a semi-submersible platform, a Floating Production Storage and Offloading unit (FPSO) for the condensates and a gas pipeline to the liquefaction plant,
which will be built near Darwin. The plant will initially have 2 trains with a combined capacity of about 8.4 million metric tons per year of LNG, but provision will be made to include 4 additional trains. The Darwin plant will also produce 1.6 million tons per year of LPG (butane and propane) as well as condensates. The Ichthys plant is expected to operate for about 40years and will make a significant contribution to the local economy, employing more than 2,000 people during the construction phase and about 300 people once the plant is operational. The Ichthys project is expected to go into production halfway into the decade 2010-2020, and the LNG should be shipped to Asian markets, mainly Japan.
Shtokman (Russia)
In July 2007, Total and Gazprom signed an agreement for the first phase of development of the giant Shtokman gas and condensates f ield in the Barents Sea. In February 2008, the Shtokman partners set up a new company, Shtokman Development AG (Total 25%), to design, construct, finance and operate this first phase
of development. Engineering studies are currently under way. The first phase of development targets a production of 23.7billion cubic meters of gas per year, about half of which (7.5million metric tons per year) is to be exported in the form of LNG.
12
Total is a 17% par tner alongside Nigerias national company NNPC, Eni and ConocoPhilips in the Brass LNG project in the Niger Delta ( Nigeria). The project involves two trains, each with a capacity of 5 million metric tons per year, and will export most of its LNG production to the European and American markets. Feedgas will come from the upstream gas operations of
project partners, with Total having the right to provide half the gas. The plant is expected to start producing in the middle of the decade 2010-2020. Details of gas supply for the project are currently being finalized. The engineering studies have been completed and preparation of the plant site is under way. Total Gas &Power will be among the buyers of the LNG produced.
Total has a 15% interest in the Nigeria LNG liquefaction plant on Bonny Island. The plant, which already includes six trains, has a production capacity of 22million metric tons per year. Studies for a project to add a 7 th train
witha capacity of 8.5million metric tons per year are under way. Total Gas&Power has signed a 20year purchase agreement with Nigeria LNG to lift 1.375million metric tons per year of the LNG produced by the future train7.
Total is lead partner for the Pars LNG project in Iran, with an interest of 30%(1). The other partners are Petronas and the national oil company NIOC. The project involves the construction of a liquefaction plant 60kilometers northwest of Assaluyeh. The plant, with twotrains producing 5million metric tons per year each, will take feedgas from Block11 of the offshore South Pars field, which will be developed
under a buy-back agreement, with Total also participating in the development. Half the LNG will be exported to the Asia-Pacific Basin and half will be shipped to Europe. Basic engineering studies have been completed and discussions are under way with NIOC on the contractual framework.
(1) Company estimates after LNG buyers entered the project
13
SHIPPING
Total has gained very solid experience in this key link in the LNG chain through its participation in a large number of projects. Safety requirements and the growing importance of controlling transportation ina more flexible LNG market have led the Group to become more directly involved inshipping.
Dedicated technologies
The need to transport large volumes of liquefied gas over long distances, at very low temperature and in conditions of the utmost safety involves major technical constraints. In particular, LNG carriers require the most efficient insulation possible, both to prevent the LNG from warming up and to protect the adjacent vessel structures from excessive chilling. As a result, only about a dozen shipyards worldwide are able to build LNG carriers. These vessels, costing between $200million and $250million each, are the most expensive cargo ships in the world. World LNG shipping capacity is growing fast, with a fleet of 305 vessels in operation and 76newbuilds on order in June 2009. The major South Korean shipyards dominate the building market. There is also a trend towards larger vessels; the standard size has risen from 125,000cubic meters to 165,000cubic meters, and a number of vessels with capacities ranging from 215,000 cubic meters (Q-Flex) to 265,000 cubic meters (Q-Max) have been built for the Qatar projects in which Total is a stakeholder.
14
Jacques Besse
Vice President LNG Shipping, Total Gas & Power
Since 1995, through its stakes in various LNGschemes Total has been involved in numerous LNG transport operations and we have acquired expertise in developing new projects. With Snhvit wereached a new milestone, chartering our first vessel (Arctic Lady), which will form the basis of a fledgling fleet that is expected to grow as new projects are undertaken. A large team of experts was also set up tosupervise the construction ofthefour LNG carrierson charter to Yemen LNG. In addition, the increase in LNG trading has created aneed for short-term charters. Totals Vetting Department is actively involved inverifying that our shipping operations comply with themost stringent safety standards. Six Total experts are in the field on a daily basis, supervising fleets andship-owners to ensure that the vessels are inprime condition and the crews fully trained.
15
REGASIFICATION
Total has regasification capacity in all three main gas markets: NorthAmerica, Europe and Asia. This direct access to a number of different markets has allowed the Group to consolidate its downstreamportfolio. It is also a key advantage for the development ofnew liquefaction projects.
16
LNG receiving terminals comprise offloading installations, cryogenic storage tanks, pumps and LNG regasification units.
The LNG is heated from 160C to just above 0C at high pressure (between 60 and 100bars), usually using seawater percolation heat exchangers, a technique that is highly energy efficient. The LNG can also be heated by burning some of the gas.
When the gas leaves the terminal, its heating value is adjusted by blending with other stored gases b e fo re i t i s re g a s i f i e d a n d, i f necessar y, by adding nitrogen, butane or propane before the gas is fed into the distribution grid.
17
SOUTH HOOK
SABINE PASS
HAZIRA
18
ALTAMIRA
FOS CAVAOU
HAZIRA (INDIA)
Totals equity interest: 26% Capacity: 5 bcm/year Start-up: 2005
I n d i as s e c o n d r e g a s i f i c a t i o n terminal, Hazira is located in Gujarat state on the countrys northwest coast. Designed to handle 5billion cubic meter s of gas per year, it may later be expanded to process 8 billion cubicmeters per year. Gas arriving at Hazira is sold directly to end-users (power companies, industrial users, fertilizer manufacturers) as well as to local gas companies.
ALTAMIRA (MEXICO)
Totals equity interest: 25% Capacity: 6.7bcm/year Start-up: 2006
Located on the east coast of Mexico, the Altamira regasification terminal came on stream in fall 2006. With a jetty and two 150,000-cubic-meter storage tanks, its initial capacity is 6.7 billion cubic meters per year. The site configuration will allow construction of the third storage tank, which would double the capacity of the terminal. The natural gas from Altamira is sold to the Mexican electricity utility, under a long-term contract, to supply several gas-fired thermal power plants.
19
A changing environment
The rigid contractual relationships that previously g ove r n e d s u p p l y a g r e e m e n ts a r e s te a d i l y b e i n g rewritten. Buyers are now seeking greater flexibility in terms of pricing formulas and cargo redirection clauses and both buyers and producers prefer a combination of long-term, shor t-term and spot contracts. This environment is more conducive to arbitrage transactions, with the growing number of spot deals now accounting for 15% of worldwide trade.
20
Total is consolidating its portfolio of purchases from producers and sales to consuming countries with the aim of marketing more than 100cargos (vessels of all sizes) per year in 2010.
Patrick Dugas
LNG Trading Manager, Total Gas & Power Limited, United Kingdom
We handle all types of LNG transactions for theGroup, including direct purchase of LNG cargos at loading ports or receiving terminals, ship chartering, capacity reservation at regasification facilities for resale in local markets, and spot or short-term purchases/sales. Total has a growing LNG portfolio, with new LNG plants starting up, particularly in 2009 with Qatar and Yemen. Over the years, we have also developed skill in geographical arbitrage transactions and also (mainly for operational purposes) commodity arbitrage (pipeline/liquefied gas arbitrage). Our aim here is to optimize ouruse ofavailable volumes depending on the constraints and opportunities in the marketplace at any given time.
21
Meeting the growing challenges of resource development Research here has three main thrusts: Firstly, offshore liquefaction. This is a very topical theme for Total, which is looking closely at the concept of a floating offshore liquefaction plant and has awarded a contract to a leading specialist engineering company for the conceptual design of a floating LNG plant (offshore liquefaction facilities on a floating hull) and an innovative LNG transfer system operating in open-sea conditions. On two upcoming liquefaction projects Total also proposes to use modular construction techniques, which have significant advantages in remote sites and/or those where work is particularly difficult or costly. Lastly, the promising outlook for Arctic gas reserves has prompted Total to study possibilities for establishing LNG plants in severe climatic conditions, where challenges include, among others, very wide temperature ranges and seas that are ice-bound a large part of the year.
22
Simplifying transfer systems Two other aims of Totals R&D are to simplify LNG transfer systems and to ensure that current systems can be used in a greater range of environments. Total has worked on the development of an LNG transfer system that can be used in open-sea conditions. The system uses a flexible LNG pipe and a light connect/ disconnect apparatus that incorporates the safety systems used in conventional LNG terminals. The Group is also a partner in the Floating LNG Line Joint Industry Program looking at an array of attractive solutions for transferring LNG at sea without the need for overhead transfer (loading boom with flexible LNG line). And for a number of years now, Total has been actively supporting a project to develop a pipe-in-pipe-type subsea cryogenic transfer line. This environment-friendly, cost effective solution has been chosen for the Brass LNG project in Nigeria.
Improving LNG storage systems Storage whether at the liquefaction site or at an import terminal is a vital link in the LNG chain. Total is involved in a number of research programs to improve safety, insulation and construction techniques of cryogenic storage tanks. Lined rock cavern storage has the potential to store large volumes of LNG with only minimal surface facilities required. Geostock, a company in which Total has a 50% share, has helped to test a 15-cubic-meter pilot unit in South Korea. The pilot has now validated the concept and cavern storage is expected to move to the commercial phase. Automation and standardization of the construction of membrane tanks has generated new interest in this technique, mainly for use in projects in difficult zones (the Arctic) or countries with high labor costs (Australia). Evaluation of new construction methods has also led to new solutions that can be optimized to suit site conditions or availability of local labor. For example, construction of a double-walled concrete envelope can reduce the amount of special steel required, as well as special welding techniques, thus allowing a project to use local manpower.
23
Flows
17 SABINE PASS
USA
16 ALTAMIRA
Mexico
Regasification terminals
Site 15 HAZIRA (India) 5 Bcm/year 26% 2005 16 ALTAMIRA (Mexico) 6.7 Bcm/year 25% 2006 17 SABINE PASS (USA) 26 Bcm/year (phase 1) 40 Bcm/year (phase 2) Capacity suscribed byTotal: 10Bcm/year 2008 18 SOUTH HOOK (United Kingdom) 21 Bcm/year 8.35% 2009 19 FOS CAVAOU (France) 8.25 Bcm/year 29.8% End 2009 (e) 20 ADRIA LNG (Croatia) Project under study 10 Bcm/year 25.58% 2015 (e)
Liquefaction plants
Site 1 ADGAS (Abu Dhabi) 5.6 Mt/year 3 trains 2 BONTANG (Indonesia) 22.2 Mt/year 8 trains 3 QATARGAS (Qatar) 9.9 Mt/year 3 trains 4 NIGERIA LNG (Nigeria) 21.9 Mt/year 6trains 5 OMAN LNG QALHAT LNG (Oman) OLNG: 7.2 Mt/year 2 trains QLNG: 3.7 Mt/year 1 train 5.54% (T1/T2) 2.04% (T3) 2000 (T1/T2) 2005 (T3) 6 SNHVIT LNG (Norway) 4.2 Mt/year 1 train 7 QATARGAS 2 (Qatar) 15.6 Mt/year 2 trains 8 YEMEN LNG (Yemen) 6.7 Mt/year 2 trains
Total capacity
5%
10%
15%
18.4%
39.62%
1977
1996
1999
2007
2009
24
Snhvit LNG
Norway
11
Shtokman
Russia
Fos CAVAOU
France
19
20 ADRIA LNG
Croatia
QATARGAS 2
Qatar
PARSLNG 14 Iran
QATARGAS
Qatar
HAZIRA 15 India
ADGAS
Abu Dhabi
2 8
YEMEN LNG
Yemen
BONTANG
Indonesia
9 ANGOLALNG
Angola
10 ICHTHYSLNG
Australia
Total Capacity
13.6%
24%
25%
17%
15%
2012 (e)
Total S.A. Share capital: Euros 5,867,520,185.00. Registered in Nanterre: RCS 542 051 180. Printed in France. October 2009. Designed by: Studios Menthe&Chocolat. Photo credits: All rights reserved Total. M. Roussel, Th. Gonzalez, L. Zylberman, M. Dufour, F. Sejourne, Leren Eiliv, Statoil/Total, L. Sauser, L. Stephane, S. Rivoallon, T.Haga, A.Picard, M.Richards, S.Williams, P.Dugas, Total/Camel, STMFC/Altivue, Getty Images (A.Baxter), D.R., X - By courtesy of: SHI, Cheniere. Illustration : Nando.
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