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A Comparison Of Gas Supply Options For Power Generation In The Caribbean Islands

Prepared For : Professor Mukul M. Sharma Natural Gas Engineering Prepared by Zephrine Millard 109002412 Date Submitted: 29th January, 2008

A Comparison Of Gas Supply Options For Power Generation In The Caribbean Islands Executive Summary Justification There is a requirement for the supply of affordable and secure fuel alternative for cheap power generation between the Caribbean islands. Currently, fuel for power generation is being handled by the use of diesel fuel but this isnt the most economically efficient commodity available to the Caribbean community.

Given that Natural Gas is the cheapest fuel alternative available for power generation, what remains to figure out the methods of delivery for this fuel. Transportation of this commodity possesses several challenges because of the gaseous nature of the fuel. This paper evaluates several alternatives for transportation and the most economically viable alternative. The options are as follows: Natural Gas Pipelines Compressed Natural Gas[CNG], Liquefied Natural Gas[LNG], Methanol and Hydrates Transport It can be concluded from the comparative study that CNG and hydrates transport are most likely the most economical models that can be implemented within the Caribbean for all users involved regardless of size, however, any such project must be implemented on a scale that makes it viable for the region. CNG transport may just be the easiest to implement in terms of speed and scale of implementation technology required. Advancements in technology have lead to this position but whether the system will be efficient for the Caribbean remains a matter of implementation strategy.

Introduction Statement of Problem There is a need for the Caribbean islands to source cheaper and cleaner alternatives to fuel or energy for electric power generation. In this regard, the Government of Trinidad and Tobago is positioned favourably to provide a supply of natural gas to the islands of the Caribbean for power generation. The islands of the eastern Caribbean [Antigua & Barbuda, Dominica, Grenada, Guadeloupe, Martinique, St. Kitts & Nevis, St. Vincent and the Grenadines, St. Lucia] generated some 3,142 GWh in 2005 [Source EIA]. The other islands such as Barbados, Puerto Rico, Jamaica and Dominican Republic generated 871 GWh, 22, 100 GWh, 3,696 GWh and 13, 489 GWh each respectively [Source OLADE]. This would give a total energy consumption of about 43, 298 GWh in 2005. Currently, most of the smaller islands are using diesel as fuel for their power plants which gives the required power for electricity generation but is a bit more costly when compared to natural gas. Natural gas gives 10, 050 Btu per SCF or while diesel gives 139, 200 Btu per gallon but by price, natural gas is priced at US $7.83 per million British thermal units (mmBtu) [Henry Hub price as of 02/01/2008] while diesel is 255.25 cents per gallon (at US Gulf Coast price as of 14/01/2008) which works out to be US$ 18.34 per mmBtu. By simple power conversion, it is obvious that this gives a significant market for fuel in the Caribbean if Natural Gas was to be exclusively used for power generation. However, not every island will have its power supply run exclusively by natural gas so consumption of natural gas wont probably account for all electricity generated. It is the transport of this gas to the islands of the Caribbean that, however, poses a problem to any investment into the placement of infrastructure for natural gas transportation. The Caribbean islands are discrete territories spanning an island archipelago which extends about 1,462.8 miles along the island chain. Because of the phase of the fuel, transportation of this commodity to these discrete islands is the most challenging task.

There are several options that are available for the transport of Natural gas over water to island destinations and this essay shall attempt to discuss a few of these alternatives and the advantages and disadvantages of the technical and economic issues. These options for transport are via undersea pipeline, Gas to hydrates [GtH], Gas to Methanol [GtM], Compressed Natural Gas [CNG] and Liquefied Natural Gas [LNG]. Undersea pipelines is a simple concept enough to understand in that it requires the use of an underwater pipe probably between 22 to 36 inches in diameter laid on the sea floor connecting the source of supply directly to the demand. Gas to hydrates [GtH] refers to the dissolving of natural gas in water to form a substance called a hydrate. Hydrates made when methane gas mixes with water and are usually formed at high pressures and low temperatures. They have a molecular structure such that the methane gas atom is encaged within water molecules. This macromolecular cage is held together by hydrogen bonding of the water molecules. GtH involves three basic stages: production, transportation and re-gasification where transportation of the hydrate would take the form of tankers with specialized equipment that will store the hydrate in a stable condition. The hydrate would then be warmed to remove the hydrogen from the water. Methanol is a chemical commodity that is made from syngas which itself is made from methane in natural gas. As a chemical commodity, methanol is used as a feedstock chemical in pharmaceuticals and specialty chemicals manufacture. This method of transportation involves also the usage of methanol as the fuel for power generation. The methanol would be shipped in tankers to the point of destination and used as the fuel source. The natural gas can also simply be compressed and this would be referred to as CNG. The gas is chilled and compressed at least over 2500 psia to bring the gas down to a smaller and more manageable volume. Currently, new technology in transportation of CNG has come along and specialized ships can be used to carry the CNG to any specified destination.

The most prevalent form of transportation of gas over sea is by liquefying the natural gas and transporting it as a liquid. This is called LNG. In this process the gas is cooled to below -160 C while the gas is expanded and cooled in a number of cycles until the gas reaches a liquid state. This gas is then stored at -160 C and atmospheric pressure and is placed on ships under the same conditions. The LNG is shipped to a regas facility where the LNG is offloaded stored and slowly reheated to be used as a gas. Currently, there exist regas facilities in Puerto Rico and the Dominican Republic and a Liquefaction plant in Trinidad. This probably makes this option feasible for these two islands but whether it would be economic to have regas facilities elsewhere will be discussed further in the essay.

Literature Review There have been several papers written on the economics of these varied options of gas transportation and have discussed the advantages and drawbacks of each method. The danger of the comparison of these options is the tendency not to be able to compare all the factors because of the intrinsic differences of the different forms of transport. For example, LNG , CNG and pipeline may be considered physical methods of converting the gas whilst hydrates and methanol are more chemical in principle. The energy used in the chemical process is hard to compare to that used in a physical process. Also, any analysis of transport options will have to include the infrastructure that is already in place in the Caribbean and will have to be cognoscente of the volumes of gas needed by the islands. With St. Lucia and Barbados about 300 miles away, Dominican Republic about 600 miles away and Jamaica about 1000 miles away and the fact that the smaller islands would require much less volumes of gas, the analysis can become quite difficult and cumbersome. The monetization of stranded or associated gas has been a difficult issue for many gas producing countries as some of these reserves are producible technically but are not economical in specific amounts. This is an area for the use of these various techniques of gas transportation to remove, store, transport and use the gas in the most economical fashion. The

Caribbean region also provides a suitable market for smaller volumes of gas and hence investigation of these different techniques of transportation is noteworthy. The transport of gas via undersea pipeline is a very tedious and intricate program. At current world prices and taking into account cost estimates of current world projects, the cost of an undersea pipeline could be between US$ 3-9 million dollars per mile of pipeline. With a length of over 1400 miles going along the island archipelago, that makes the range between US$ 4.2 to 12.6 billion dollars and this is a tidy sum of money for any project and a great deal the man power as well is also needed to operate this pipeline. The only way this pipeline would be viable is if the cumulative consumption of the gas will enable cost recovery. It may just be safely feasible at 1 TCF per year but much scepticism about whether the Caribbean will consume so much is not unfounded. Recent technological advances in hydrate technology may allow the use of small scale and economic plants to convert the gas into hydrate, storage to carry hydrate to its destination and the regas facility to remove the gas from the hydrate have been quite prevalent in recent years. In Japan, a world leader in developing the technology for production and shipping of manufactured hydrates is Japans Mitsui Engineering and Shipbuilding Ltd., (MES) and with the assistance of the New Energy and Industrial Technology Development Organization (NEDO), MES has completed a pilot manufactured GtH production plant capable of producing 600 kg/day of high-speed production manufactured GtH. More importantly, MES has built, in collaboration with National Institute of Advanced Industrial Science and Technology and the University of Osaka, a process plant for pelletizing, transportation, storage and high pressure regasification of hydrates on mass, as a joint study project with Japan Oil, Gas and MetalNational Corporation. They have successfully achieved continuous regasification of NGH under high pressure on mass. In collaboration with the National Maritime Research Institute and Osaka University and with the support of the Corporation for Advanced Transport & Technology, a shipping carrier is also being designed to complete the supply chain. The dewatering stage of hydrate production is proving to be the major obstacle to overcome in production. Transportation techniques with hydrates in stable and metastable configurations have been studied at -200 C to 50 C which lowers the cost of

refrigeration for the product. Hence, the technology is definitely present but has yet to be implemented commercially on any scale. As a chemical commodity, methanol has seen increased interest in its use as a fuel for power generation and several advances in reducing the cost of syngas production are also seeing potential as avenues for cost reduction. Currently UTT [in collaboration with Methanol Holdings Trinidad Limited (MHTL)] is performing a detailed technical and economic feasibility of methanol to power using a standard gas turbine generator with minor modifications, focusing on meeting the fuel needs of Caribbean territories. A company called Advantica has been developing compact reformer technology in the form of a compact steam reformer and a catalytic partial oxidation (CPO) reformer for natural gas to syngas conversion. CPO differs from the adiabatic reforming process currently available from Haldor-Topsoe and others in that there is no burner or combustion zone within the reactor; the reactions between natural gas, oxygen and steam are entirely catalytic. This significantly reduces cost on the syngas stage and several other academic institutions are currently pursuing development in catalysts that are more robust, faster and cheaper to use. Methanex price for methanol is US $ 2.5 per gallon as of 20th January, 2008. New technology in tanker transportation design has attracted great interest in using CNG in smaller niche markets. These tankers are called the Coselles [coil in a carousel] and the VOTRANS [Volume optimized Transportation and Storage]. Both systems offer fairly simple methods of fabrication and hence lower tanker cost in transportation of CNG from producer to consumer. LNG is by far the most popular means of transporting natural gas over large expanses of water. Atlantic LNG of Trinidad and Tobago has successfully installed 4 liquefaction trains with the largest capacity train built in the western hemisphere. The last train being quite a success in that it was built and may have achieved cost savings as high as 30% CAPEX. Regas facilities already exist as close as 600 miles away but it has been found that the transport of LNG to smaller consumers is quite uneconomical. One LNG tanker can hold as much as 2.8 BCF of gas as 130,000 M3 LNG.

Discussion

Infrastructural Requirements Table 1 Summary Volume Reduction/ Compression Undersea Pipeline CNG Device Compressors and boost stations [every few miles] Large Compressor Coselle, Unit VOTRANS, Large walled steel LNG Liquefaction By Turbo expansion GtM Gas Turned To Syngas and Converted to GtH Methanol Gas Dissolved in pure water Custom built hydrate carrier Reheating hydrates, Regas adds hot water to the hydrate slowly Methanol Tanker cylinders (old) LNG Tanker Turbo expander, JT valves, Syngas process production Pipeline Transportation Vessel Energy of Process [MAIN] Compressors and booster stations Compressor Regas terminal, Off load the gas into a tank on land or a distribution system Facility to slowly heat liquid back to gaseous state Relatively none None needed Regasification Process

Volume of Transport vehicle

To Transport 4.5 BCF per year

Phase Changes During Transport cycle

BTU rating

Cost per MBTU

P,T Of Transport

Undersea Pipeline

Dependent on length of pipeline

12.33 MMSCF/D

none

Approx 10,050 MBtu per MMSCF

US $7.83

Over 3000 psia at ambient temperature 0 to -40 0 F, Over 3000 psia

CNG

tanker size 74,286 M3 [given LNG tanker size] Tanker holding 130,000 M3 Tanker holding 3000 gallons

none

LNG

94,500 Tons LNG 0.72 billion gallons [2.165 million metric tons] Energy equivalent value

GasLiquidGas Gas[chemical change] SyngasLiquid methanol GasHydrate [solid]gas US$ 39.8 [given US$ 2.5 per gallon] 62,800 Btu per gallon

-1600 F, Atmospheric pressure 10 C at atmospheric pressure

GtM

GtH

4.431 million kg of hydrate*

-20 to 10 C , between 200 psia to atmospheric pressure

*Hydrate assumption based on Type 1 Cage macromolecule.

Economics Taken from Barner and Gerwick, Hydrates for Transport of Stranded Natural Gas, SPE84225 VLCC- Very large crude carrier NGH- Natural Gas Hydrate carrier

This shows that GtH is definitely more economical in the range of the Caribbean islands. But CNG is technology that is also cost comparative with GtH so this leaves a lot of questions as to which technology is easier to implement. Give the table above, CNG technology can be adapted to many variable scales because of the simplicity of the equipment involved. Reference: SPE 92047 SPE 00084255 SPE 00081022

SPE 102160 SPE 109182 SPE 94840 SPE 93492 http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V2S-49CKW331&_user=4675006&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_acct=C000 063817&_version=1&_urlVersion=0&_userid=4675006&md5=3971de48b220e405d a0272b3316e1637#sec1#sec1

ClassNK Magazine 2006, ISSUE No. 58