6th International Conference on Gas Hydrates

DEVELOPMENT OF NATURAL GAS OCEAN TRANSPORTATION CHAIN BY MEANS OF NATURAL GAS HYDRATE (NGH) Nogami, Tomonori; Oya, Nobutaka; Ishida, Hiroshige; Matsumoto, Hitoshi 2008-07-31

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DEVELOPMENT OF NATURAL GAS OCEAN TRANSPORTATION CHAIN BY MEANS OF NATURAL GAS HYDRATE (NGH)  Tomonori Nogami * , Nobutaka Oya Mitsui Engineering & Shipbuilding Co., Ltd. 6-4, Tsukiji 5-chome, Chuo-ku, Tokyo 104-8439 JAPAN  Hiroshige Ishida, Hitoshi Matsumoto Mitsui & Co., Ltd. 2-1, Ohtemachi 1-chome, Chiyoda-ku, Tokyo 100-0004 JAPAN  ABSTRACT While  alternative  natural  gas  transportation  technologies  against  currently  available  pipeline  or liquefied  natural  gas  (LNG)  are  expected  to  develop  to  be  suitable  for  small  and  medium  or remote  gas  fields,  Mitsui  Engineering  &  Shipbuilding  Co.,  Ltd.  (MES)  has  been  studying  natural gas  hydrate  (NGH)  transportation  chain  and  advocated  at  ICGH2005  the  NGH  chain  was economical compared with conventional LNG system under some conditions. Meanwhile,  MES  has  been  carrying  out  research  and  development  on  the  relevant  technology development  including  construction  of  600  kg/day  class  NGH  production  and  pelletizing  plants and  a  re-gasification  facility  and  the  process  technology  resulted  from  this  R&D  leads  to  the forthcoming  demonstration  plant  of  5  ton/day  production  (under  construction)  to  be  dedicated  to the demonstration project of small-lot NGH land transportation in western Japan. As the latest achievement, MES and Mitsui & Co., Ltd. (Mitsui) established NGH Japan Co., Ltd.  (NGHJ)  in  April  2007,  in  order  to  study  in  detail  on  actual  viability  of  NGH  ocean  transportation chain.  NGHJ, MES  and  Mitsui  have  been  conducting  a  practical  feasibility  study  on  certain  cases in  Southeast  Asia  in  cooperation  with  6  Japanese  leading  companies  related  to  natural  gas businesses. The study suggests that NGH chain was appropriate as a media for transportation from Southeast Asia to Japan and regional transportation within Southeast Asia in view of economics.  Keywords : demonstration project, NGH Japan, feasibility study, base case                                                         *  Corresponding author: Phone: +81 3 3544 3193 Fax +81 3 3544 3096 E-mail: t-nogami@mes.co.jp  1.  INTRODUCTION  Since  the  idea  of  ocean  transportation  of  natural gas  by  means  of  natural  gas  hydrate  (NGH) utilizing  so  called  ?self-preservation  effect?  was advocated  by  Dr.  Gudmundsson  of  Norwegian University  of  Science  and  Technology  in  1996, various  kinds  of  research  on  NGH  ocean transportation chain have been made in all over the world,  as  in  the  case  of  Marathon  Oil  Corporation which  constructed  a  test  plant  of  NGH  production and  started  its  experimental  operation  in  the United States. Mitsui  Engineering  &  Shipbuilding  Co.,  Ltd. (MES) has been continuously investing in research and  development  for  NGH  technology,  just  like  as it  has  been  conducting  its  research  and development  on  NGH  production  process,  carrier ship,  and  re-gasification  process,  etc.  since  2001, and  as  it  constructed  the  experimental  plant  for process  development  (Process  Development  Unit: PDU)  and  the  research  and  development  facility for  scale-up  of  the  process  (Bench  Scale  Unit: BSU)  and  continued  their  experimental  operation. Meanwhile,  MES  executed  a  new  conceptual design  (Figure  1.)  and  economic  feasibility  study of an NGH ocean transportation chain by means of NGH  pellets  based  on  enormous  amount  of  data and  knowledge  accumulated  through  those research  and  development,  and  it  introduced  that  NGH  supply  chain  was  regarded as  economical by the  cost  advantage  of  18  to  25%  in  the  case  of Proceedings of the 6th International Conference on Gas Hydrates (ICGH 2008), Vancouver, British Columbia, CANADA, July 6-10, 2008.   transportation  of  0.4mtpa  (NG)(1,500  nautical miles)  to  1mtpa  (NG)(3,500  nautical  miles) according  to  the  specific  comparison  of  NGH supply  chain  and  LNG  supply  chain  in  its economic feasibility study.  In  this  manuscript,  we  illustrate  the  latest  situation of  the  further  research  and  development  and  the up-to-date  feasibility  study  that  MES  and  Mitsui, the  NGH  business  partner  of  MES,  have  been implementing  for  advancement  of commercialization  of  NGH  ocean  transportation chain,  particularly  about  the  joint  study  on international  NGH  ocean  transportation  chain made  by  the  group  of  9  companies  that  have  a keen interest in NGH technology.           Figure  1.  Natural  gas  ocean  transportation  chain by means of NGH pellets  2.  LATEST  SITUATION  OF  R&D  AND  UP-TO-DATE FEASIBILITY STUDY  MES is, in cooperation with The Chugoku Electric Power Co., Inc. (CEP), currently implementing the demonstration  project  of  natural  gas  land transportation  by  means  of  NGH,  with  the assistance  of  New  Energy  and  Industrial Technology  Development  Organization  (NEDO) for  three  years  since  2006.  In  the  project,  we constructed  the  NGH  pellet  production  plant  of  5 ton/day  (NGH)  using  waste  cold  heat  of  LNG  at Yanai  Power  Station  of  CEP,  and  we  will  deliver NGH  by  the  dedicated  NGH  lorry  (pellet container)  to  the  natural  gas  based  cogeneration and  a  collective  housing  several  kilometers  away, where  NGH  would  be  dissociated  to  natural  gas and water and consumed (Project Y). Although the project  is  different  from  the  business  model  of ocean  transportation,  the  typical  expectation  for the  function  of  NGH,  it  will  greatly  contribute  to enhancement  of  NGH  commercialization,  since the  practical  data  of  production,  storage, transportation  and  re-gasification  would  be accumulated while natural gas is actually delivered by means of NGH and consumed. On  the  other  hand,  in  parallel  with  the  progress  of research  and  development,  MES  and  Mitsui,  who has  the  considerable  experience  of  value  chain development  and  business  operation  of  natural  gas by means of LNG, established NGH Japan Co, Ltd. (NGHJ),  the  joint  company  dedicated  for commercialization  of  NGH,  and  they  took  a  step further  from  ?the  desk  study?  and  are implementing  a  practical  evaluation  of  the viability and study of commercialization.  3. JOINT STUDY BY 9 JAPANESE LEADING COMPANIES  As  the  latest  achievement,  MES  and  Mitsui  are currently  executing  an  up-do-date  feasibility  study on  natural  gas  supply  chain  by  means  of  NGH with  the  assistance  of  Japan  Oil,  Gas  and  Metals National Corporation (JOGMEC) since November, 2007.  The  study  is  led  and  directed  by  NGHJ  and implemented  in  conjunction  with  the  other  6 Japanese  leading  companies  related  to  natural  gas business,  consisting  of  E&P  companies,  shipping firms  and  natural  gas  users  (INPEX  Corporation, Japan  Petroleum  Exploration  Co.,  Ltd.,  Mitsui O.S.K.  Lines  Ltd.,  NYK  Line,  The  Chugoku Electric Power Co., Inc., and Tokyo Gas Co., Ltd.) In this project, the research group composed of the companies  that  have  the  considerable  experience and  track  record  of  natural  gas  related  business  is studying  the  feasibility  as  the  total  supply  chain comparing  with  the  corresponding  supply  chains of  small  sized  LNG  and  compressed  natural  gas (CNG),  by  exchanging  each  data  and  perceptions. The  study  is  more  objective  than  before  in  both quantitatively  and  qualitatively,  since  the  member companies  belonging  to  the  different  industry sectors  with  each  interest  are  discussing  the  issues and  evaluating  the  viability  from  various  points  of view. The outline of the study is introduced below.  4 ? OBJECTIVE OF FEASIBILITY STUDY   (1) Natural gas field to study First  of  all,  since  the  study  started  from  the  purpose that  it  aims  at  the  feasibility  of  the  natural  gas transportation  by  means  of  NGH  to  Japan,  the  study group  investigated  the  natural  gas  reserves,  energy policy,  the  positioning  of  natural  gas  and  their prospect  of  Southeast  Asian  countries  as  well  as  the current  situation  and  future  forecast  of  natural  gas Un loadin g jetty  NGH pr oduction  plant  Loadin g jetty  Re  -  gasification  plant  Natural gas  GTCC power  station  Power  mar kethigh  pr essur e natural gas  NGH carrier sNGH pellets tan k  Exh austed h ot water  For mation wat erSour  gas r emover  Dissociated water Water mar ket or boiler  feed water  Fr esh water or Sea waterN   G   H  H  H  H  NGH pellets tan kP  P   N   G   H  N   G   H  N   G   H  N   G   H  demand  of  each  countries.  As  the  result  of  the analysis  of  the  investigation,  we  selected  the  case,  as the principal study objective, in which the natural gas is  converted  to NGH and  delivered  to  Japan  from  the natural  gas  field  that  is  already  found  but unmonetized in Indonesia, considering the following; a)  small  and  medium  gas  field  are  much  located,  b) the  conditions  of  transportation  distance  seems severe  in  the  case  of  Japanese  destination,  c)  the supply record of LNG is sufficient.    (2) Conceptual design of NGH supply chain The  study  assumes  the  case  in  which  NGH production  plant  of  1mtpa  (NG)  is  constructed  in Indonesia.  Following  the  investigation  described  in (1),  the  group  studied  the  pretreatment  process  and NGH  production  process,  designed  based  on  the latest  technology  concept  composed  of  scale-up  and compactification, and developed the specifications of equipments  and  materials.  As  for  the  re-gasification plant,  the  group  assumed  to  construct  the  plants  of 0.25mtpa  (NG)  each  in  consideration  of  gas  users located in Japan, and designed in the same manner as the  production  plant. As  for the  carrier  ship,  after  the studying  the  navigation  route  that  links  export terminal  in  Indonesia  and  receiving  terminals  in  each region  in  Japan  and  its  schedule,  the  group designated  specifications,  size  and  fleet  constitution, taking  the  consideration  of  the  amount  of  NGH  to transport. In  addition,  it  estimated  the  cost  of  equipment  and materials,  design  and  engineering,  and  construction based  on  these  engineering  data  and  calculated  the cost  of  plants  and  ship  carrier  with  the  accuracy  of +/- 20%.  5.  BASE  CASE  OF  SUPPLY  CHAIN  TO STUDY  The  study  presumes  the  introduction  to  power plant  and  city  gas  supply  as  the  application  of natural  gas  at  demand  side  in  Japan,  and  it compared  to  supply  chains  with  LNG  and  CNG, which  is  the  same  sort  of  medium  as  NGH  in terms of physical conversion. In  comparison,  the  group  designated  first  the hypothetical  chain  model  as  the  ? base  case ?   of the  evaluation,  considering  practicality  and identification  of  conditions  (apples  to  apples).  At the same time, it set a study condition range for the factors  of  production  capacity,  transportation distance,  etc.  and  analyzed  the  sensitivity  of  the economy,  and  made  them  a  basic  material  of  the study on optimized business model and scenario of introducing NGH. Although the detailed conditions of the each sector of  supply  chain  are  described  in  the  next  chapter and thereafter, essentials of base case are shown in Figure  2.  and  conceptual  diagram  of  natural  gas supply chain is illustrated in Figure 3. Meanwhile,  chemically  converted  media  such  as GTL  (Gas  to  Liquid)  and  DME  (Dimethyl  Ether) are  scoped  out  from  the  study,  since  their application is assumed as substitute for liquid fuels.     Figure  2. Essentials of base case of the study               Figure  3.  Conceptual  diagram  of  natural  gas supply chain  6. EXPORT TERMINAL   (1) Basic conditions The  study  dealt  in  the  project  to  develop  the unmonetized  small  and  medium  stranded  gas  field due  to  the  market  distance  and  insufficient economy  as  the  business  case,  construction  of NGH  production  plant  to  be  located  in  green  field on the land next to shipping port was designated as the  base  case.  The  necessary  utilities  were assumed to be procured within the terminal. As  for  the  upper  stream  cost  (exploration  and production) and the cost of transportation up to the  57,000DW T x8(@220m x40m  x22m)7,000t(NG)x8NGH chain60,000 m3  x2(@210m x 35m x 22m)27,000 t(NG)x2LNG chain28,000 m3  x8(@230m x 52m x 28m)6,700t(NG)x8CNG chainNatural gas value chain (Base case)Indo nesia ( stand  alon e)  to Japan ( stand alon e) (2 ,60 0 nautical m ile)1ATM -20d eg C Solid1ATM -162deg  C Liqu id15MPa -30 deg C Gasproduction plant, they are evaluated as the feed gas cost,  and  the  feed  gas  was  assumed  to  be  received at the battery limit (BL) of the plant. On  the  other  hand, the  small  and  medium  gas  field that could be monetized may be 0.5 to 3TCF class, taking  the  account  of  the  economy  of  the  upper stream.  If  the  operation  period  is  supposed  to  be 8,000  hours  per  year  for  20  years,  the  production capacity would be 1 to 3mtpa (NG) 1 . In the case in which  the  product  gas  would  be  sold  to  Japanese users,  production  of  1mtpa  (NG)  was  designated as  the  base  case  considering  the  transportation distance  with  reference  to  the  past  study.  In addition,  3mtpa  class  (NG)  is  supposed  to  be  the bottom  line  of  economical  production  capacity  in the  case  of  LNG,  the  study  tried  to  find  out  the cross  point  with  the  LNG  curve  by  analyzing  the sensitivity in accordance with the capacity.   (2) Conditions of the raw materials Although associated gas is imaginable as the small and  medium  gas  resource  in  addition  to  the ordinary  natural  gas,  the  study  dealt  in  the  typical composition  of  feed  gas  which  is  ordinary  in  East Kalimantan, Indonesia. Since the feed gas includes CO2  and  H2S  that  is  unwelcome  to  the  product gas,  their  removal  is  necessary.  Next,  the  heavy gas is further removed and the residual C1 rich gas was  supposed  to  be  utilized  as  the  fuel  gas  for NGH production. In  this  study,  the  recovered  heavy  gas  shall  cover the  necessary  energy  in  the  plant,  and  the  amount of the raw gas that corresponds to the 1mtpa of C1 rich  gas  in  the  case  of  NGH  production  was figured out. Also in the case of LNG and CNG, the internally  required  energy  and  the  product  gas shall  be  covered  with  the  same  amount  of  the  feed gas as the case of NGH (Figure 4.).   Raw ga s Sweet ga sAcid gasC1 rich ga sProduct  ga sAci d ga s removalC1 rich ga s sepa ra ti onProducti on pla ntMedia Flow rateNGH 125t/hLNG 119t/hCNG 130t/hMedia Flow rate ?NG H 14t/h 10.1?LNG 20t/h 14.4?CNG 9t/h 6.5?Media Flow ra teNG H/LNG/CNG158t/hMedia Flow rateNG H/LNG/CNG139t/hMedia Flow rateNG H/LNG/CNG19t/hMedia Flow rateNG H 125t/hLNG 119t/hCNG 130t/hFuel gas Figure 4. Material balance of feed gas processing                                                         1  1TCF  ?  20  years  (constant  production)  ? 50BCF/year  ?  1.35BCM/year  ?  1mtpa Consequently,  LNG  process  produces  less  product gas  since  it  requires  much  energy,  and  CNG process  produces  more  product  gas  since  less energy  is  required.  In  the  end,  the  economy  of each  medium  was  evaluated  in  view  of  the economy per the amount of the product gas.   (3) NGH production plant NGH  production  process  is  composed  mainly  of the  following  four  section;  1)  NGH  slurry formation,  2)  Dehydration,  3)  Pelletizing,  4) Cooling  and  Decompression.  Since  NGH production  process  of  MES  is  high  pressure system  (5.4MPa/4 ? ),  there  is  a  limitation  for scaling-up  the  equipment.  In  this  study,  the maximum  capacity  is  designated  as  6,000ton/day (NGH)  per  train  and  therefore  the  total  capacity  of four  trains  was  amounted  to  24,000  ton/day (NGH).  The  diagram  of  the  train  constitution  of NGH supply chain is shown in Figure 5.  Wat er Tank C ooling  Sys temof  Process W at er NGH D ehyd rat ion NGHPellet izer C ooling &DecompressionN GHP elletSt orageN GHP elletC arrierNGHPelletSt orageR e-gas if icat ionSyst emDissociat ion Wat er TankExport Termi na l Receivi ng TerminalJOGME C  Ph ase1NGH  Ocean   T ran sp ortatio n  ChainTrain Co n stitu tio n  DiagramProd uct  GasTo  Wate r Tan k Prod uct G asTo  Wate r Tan k Prod uct G asProd uct G asF eed  GasTo  Wate r Tan kTo  Wate r Tan kNGHPelletLoad ingNG HPelletUnload ing Figure 5. Train constitution of NGH Supply chain  (4) Storage and shipment system As  for  the  capacity  of  the  storage  at  the  export terminal,  the  amount  of  two-day  production  was added to the total cargo capacity of the carrier ship, considering  the  risks  including  delivery  delay (39,000m3  x  4).  The  system  of  NGH  storages  is based  on  the  existing  silo  system  for  coals.  In addition,  the  raw  material  water  tank  was  also equipped  in  order  to  receive  the  water  dissociated at  the  receiving  terminal  and  conveyed  back  in  the ballast  tank  (46,000m3  x  2).  Besides,  the  loading system (24 hours/ship) from the storage tank to the carrier  ship  was  adopted  (2,400t/h  x  24  hours). Layout  of  NGH  export  terminal  (1mtpa)  is  shown in Figure 6.                Figure 6. Layout of NGH export terminal (1mtpa)  7. RECEIVING TERMINAL  (1)   Possible NGH capacity to adopt Historically,  Japanese  leading  electric  power companies  and  city  gas  supply  companies  have been  adopting  LNG.  In  this  study,  NGH  was assumed  to  be  introduced  as  a  complement  to LNG.  In  the  meantime,  assumption  of the  capacity of  0.25  to  1mtpa  (NG)  to  adopt  is  practical, considering  a  demand  for  natural  gas  of  an existing  terminal.  As  for  the  dissociation  water,  it is  assumed  to  be  entirely  recovered  as  the  base case,  since  it  is  subject  to  requirement  of wastewater  treatment  in  the  case  its  application  is limited in electric power or city gas business. As  the  NGH  adoption  scenario  at  electric  power company, the following two cases were assumed; Case P1:   Adoption  as  the  substitute  for  the existing LNG (0.25mtpa (NG) class) Case P2:   Adoption  at  the  grass-roots construction  or  expansion  of  NGH based  power  station  (0.25mtpa  (NG) class) ?   Case  P2  is  inclusive  of  fuel  conversion  needs, industrial  application,  demand  of  joint  thermal power station, etc.  As  the  NGH  adoption  scenario  at  city  gas  supply company, the following two cases were assumed; Case G1:   Adoption for the existing LNG terminal (0.25mtpa (NG) class) Case G2:   Adoption  at  grass-roots  construction  of NGH  terminal  jointly  by  the  group  of small  and  medium  users  (0.25mtpa (NG) class)  (2) NGH adoption by electric power company In  the  adoption  of  NGH  by  the  electric  power company,  gas  turbine  combined  cycle  (GTCC),  oil based  thermal  power  station,  and  coal  based thermal  power  station  would  be  the  target  of introduction.  In  the  case  of  GTCC,  where  the power  plant  is  already  ready  for  natural  gas,  NGH can  be  introduced  without  serious  remodeling, except  for  control  system.  But  the  entire  fuel conversion  to  NGH  is  not  practical.  For  the meantime,  partial  adoption  of  NGH  is  expected  to facilitate  diversification  of  fuel  source.  Adoption at  grass-roots  construction  or  expansion  of  GTCC is imaginable.   (3)  NGH adoption by city gas supply company Although  most  of  the  city  gas  suppliers  are  small and  medium,  the  major  suppliers  can  study  to introduce  NGH  of  0.25  to  1mtpa  (NG).  Since  they totally  rely  on  LNG  for  gas  source,  adoption  of NGH  is  expected  to  be  helpful  for  diversification of gas source and cost reduction. In  addition,  it  is  possible  that  the  major  suppliers may  study  on  construction  of  small  and  medium receiving  terminal  in  accordance  with  the expansion  of  supply  area.  NGH  is  adoptable  in such  cases.    On  the  other  hand,  NGH  may  be applicable  for  further  small-lot  transportation (possibly  by  domestic  vessel  or  lorry)  for  the  sake of  small  and  medium  suppliers.  In  the  case  of small-lot  transportation,  higher  price  could  be secured  (substitution  for  LPG)  while  cost  may increase.  Adoption  of  NGH  would  be  possible  in such  a  situation,  though  it  is  subject  to marketability and economic efficiency.   (4)  Storage system NGH  requires  space  for  storage  almost  ten  times of  that  for  LNG,  taking  void  space  in  the  tank  into account.  Tank  capacity  has  to  be  designated, considering  availability  of  lands  and  the  situation that  NGH  would  be  used  as  complement  to  LNG at LNG terminal. In  this  study,  its  capacity  was  assigned  to  be capacity  of  carrier  ship  plus  consumption  amount of  two  days  (34,000m3  x  3)  and  the  capacity  of NGH  carrier  was  designated  57,000DWT  in  the base  case.  In  addition,  storage  tank  of  dissociation water was also assumed to install (60,000m3 x 1).  (5) Re-gasification system  In  the  case  adopted  as  complement  to  the  existing LNG  terminal,  NGH  is  assumed  to  be  used  for base  load  operation,  since  the  cheaper  source  is expected  to  be  consumed  preferentially.  In  the case  adopted  at  grass-roots  construction  or expansion,  capability  of  load  control is requisite in accordance  with  demand  of  electricity  or  city  gas. Consequently,  in  re-gasification  of  NGH,  high pressure  gas  of  5MPa  class  has  to  be  continuously obtained  by  continuous  dissociation  of  NGH supplied  at  -20 ?   under  the  atmospheric  pressure. This  study  is  based  on  scale-up  of  re-gasification system  utilizing  continuous  pressor  equipment (amount  of  NGH  pellet  processing:  250  ton/hour, amount  of  outgoing  gas:  32  ton/hour).  Layout  of NGH  receiving  terminal  (0.25mtpa)  is  shown  in Figure 7.              Figure  7:  Layout  of  NGH  receiving  terminal (0.25mtpa)  8. OCEAN TRANSPORTATION  (1)   Study of transportation distance In  the  study,  the  average  transportation  distance was  designated  as  2,600  nautical  miles  (approx. 4,800  km)  with  reference  to  the  navigation  route between  Japan  and  Bontan  where  LNG  export terminal  for  Japanese  market  is  located,  as  the export  terminal  was  assumed  to  be  located  in  East Kalimantan,  Indonesia.  The  distance  is  rather negative condition for NGH transportation. It takes 7 to 8 days for the carrier ship at 15 knot.  (2)   Model of NGH pellet carrier The  concept  of  NGH  pellet  carrier  is  based  on refrigerated bulk  carrier  and  has  an enclosed cargo hold  system  to  store  NGH  pellet  in  the  natural  gas at  -20 ?   under  the  atmospheric  pressure.  In  order to  reduce  the  gas  users?  initial  investment,  the unloading  system  was  supposed  to  be  equipped with the carrier ship. As for the unloading method, a  mechanical  system  is  adopted  which  is  ordinary as a method for coals and other solid cargo.  (3) Size of carrier ship and fleet constitution As  the  result  of  a  study  on  an  optimal transportation  chain  that  links  export  terminal  and receiving  terminals, size  of  the  carrier  ship and the fleet  constitution  was  designated  as  57,000DWT  x 8,  considering  the  followings;  1)  the  recent  port conditions  in  Japan  that  is  expected  to  receive  a large-scale  LNG  carrier  of  QFLEX  type (210,000m3,   315m   x   50m   x   12m), 2) Requirements of  users  to  minimize  the  land  for  storage  tanks,  3) Draft  of  the  carrier  that  can  be  received  by  the existing  LNG  terminal  (less  than  12  m),  4) Japanese  port  situation  to  disapprove  unloading  at multiple  ports,  etc.  As  for  the  carrier  ship  in  LNG supply  chain,  size  of  the  carrier  ship  and  the  fleet constitution  was  designated  as  60,000m3  x  2, considering  the  factors  such  as  1)  LNG  cannot  be stored  for  a  long  period,  2)  Multiple  carriers should  be  prepared  from  the  viewpoint  of  security as  a  project,  3)  carriers  can  be  procured  from  the market  on  spot  in  case  of  an  emergency,  etc.  Size of  the  carrier  ship  and  the  fleet  constitution  was designated  as  29,000m3  x  8  in  the  case  of  CNG supply chain in the same manner.  9. COST ESTIMATE  The  group  estimated  capital  expenditure  (CAPEX) and  operational  expenditure  (OPEX)  for  each  of supply  chains  of  NGH,  LNG  and  CNG.  In estimation,  it  reflected  the  skyrocketing  prices  of equipments  and  materials,  by  adopting  plant  cost index,  prices  of  steel  products  and  foreign currency exchange rate as of end of January, 2008.  As  for  OPEX,  it  is  designated  as  the  accumulation of  the  annual  amount  discounted  by  10%  for  the project life of 20 years.             Figure 8. Comparison of Life Cycle Cost (LCC) 40 2610116612 366254 3248020406080100120140LNG NGH CNGImp o rt  t ermin alCarrierExp o rt  t ermin alPro ces s  Plan t100116 126 Figure  8.  shows  the  comparison  of  life  cycle  cost (LCC)  of  supply  chains  of  NGH,  LNG  and  CNG, just  by  totaling  CAPEX  and  OPEX.  Each  figure in the  graph  is  the  relative  value,  when  the  total  LCC of NGH is looked on as 100. Total  supply  chain  cost  of  NGH  was  proved  lower than  LNG  by  14%  and  lower  than  CNG  by  20%. NGH  could  be  regarded  as  competitive  against LNG  and  CNG,  when  we  compare  LCC throughout the project life in the base case.   10. ECONOMICAL EVALUATION  (1)    Summary  of  economical  evaluation  on  base case The  study  dealt  with  the  supply  chain  in  which natural  gas,  produced  at  a  gas  field  of  1TCF reserve in Indonesia, is converted to either of NGH, LNG  or  CNG,  delivered  for  2,600  nautical  miles by  ocean  transportation  and  finally  supplied  for four  users  (electric  power  company  and  city  gas supply  company)  with  grass-roots  introduction  or expansion  needs  as  the  base  case.  In  the  case,  cost of  NGH  was  confirmed  lower  than  LNG  by  14% and  lower  than  CNG  by  20%  on  the  basis  of  LCC for  20  years.  The  financial  analysis  using  Internal Rate  of  Return  (IRR)  based  on  the  estimated  costs suggests  that  the  project  economics  of  NGH  ocean transportation  chain  attains  the  level  that  could  be considered as worth serious consideration of actual investment,  although  it  is  subject  to  the  relevant conditions and circumstances.   (2)   Sensitivity analysis  In  addition,  the  group  conducted  a  sensitivity analysis  in  accordance  with  several  kinds  of parameters.  According  to  the  analysis,  on  the premise  of  transportation  for  2,600  nautical  miles equivalent to the distance from  Indonesia to Japan, NGH  can  constantly  expect  economic  efficiency between 1 and 3mtpa (NG) class production. NGH indicates  an  efficient  level  even  in  the  case  of 1.5mtpa  (NG)  in  which  LNG  is  generally considered  as  uneconomical.  Consequently,  NGH could  be  confirmed  as  advantageous  against  the other  media  including  CNG  in  the  case  of  these production capacities (Figure 9.). In the next place, sensitivity  by  transportation  distance  was  analyzed and  the  additional  cases  of  1,000  nautical  miles (domestic  in  Indonesia)  and  3,500  nautical  miles (West  Australia  to  Japan)  as  well  as  the  base  case (Figure  10).  Although  NGH  is  always advantageous  to  LNG  in  every  case,  it  is  more suitable  for  the  shorter-distance  transportation project under the current conditions of soaring cost of  equipments  and  materials.  Particularly  about CNG,  it  seems  competitive  only  in  the  case  of short  distance  project,  since  it is the  most  sensitive to the distance. 0.5 1.0 1.5 2.0 2.5 3.0 3.5P roduct ion Cap acit y  (mt p a)IRRLNGNGHCNG Figure  9.  Sensitivity  analysis  by  production capacity  0 1,000 2,000 3,000 4,000Tran s p o rta tio n  Dis ta n ce (n au t ic al mile )IRRLNGNGHCNG Figure  10.  Sensitivity  analysis  by  transportation distance  11. CHALLENGES Despite  the  perceptions  that  NGH  is  advantageous under  the  certain  conditions,  the  subject  of  further investigation  was  also  discussed.  The  challenges are principally categorized to two issues.  (1)   Optimization of NGH supply chain According  to  the  study,  in  the  natural  gas transportation  chain  from  small  and  medium  gas field of 1TCF class to Japanese users and the chain within  the  Southeast  Asian  region,  NGH  was confirmed  to  be  more  economical  than  LNG  and CNG  under  some  conditions,  and  it  is  also confirmed  a  certain  level  of  project  feasibility  can be  secured  even  under  the  current  gas  market. Nevertheless,  since  LNG  is  a  well  matured medium,  strong  inducement  of  introduction  of NGH  by  user  side  should  be  investigated.  From now  on,  optimization  for  the  currently  designed entire  chain  covering  from  NGH  production  to consumption  is  requisite  in  addition  to  the  further cost  reduction.  Issues  such  as  the  study  of  the handling  of  the  dissociation  water,  establishment of  unloading  method  of  NGH  pellets,  and  further study  of  ejection  method  from  the  storage  tank  are taken for examples.  (2)   Deepening of scenario for introducing NGH  Although  the  existence  of  scenario  for  introducing NGH  was  confirmed  as  described  in  (1),  the further  practical  scenario  should  be  studied  that  is more suitable for the actual commercialization. Although the study dealt in the case in which NGH is  produced  by  the  land  plant  after  feed  gas  is delivered  from  a  virtual  gas  field  in  Indonesia,  the actual  small  and  medium  gas  fields  are  often located offshore. In the case pipeline up to the land plant  can  be  assumed  uneconomical  considering the  amount  of  gas  reserve,  there  may  be  an  idea that  production  at  NGH-FPSO  is  practical.  In  the case  of  FPSO  project,  the  construction  period could  be  shortened.  Besides,  the  scenario  that  can demonstrate  the  advantage  of  NGH  should  be further  discussed,  considering  the  governmental policy  of  the  country  endowed  with  gas  and distance from gas field to market and so on.   (3) Study of the pilot project Since  the  capacity  of  NGH  production  plant  of  the ongoing  Project  Y is  5 ton/day  (NGH)  and is  quite small  comparing  to  the  assumed  capacity  of  per  1 train  of  commercial  project  of  6,000  ton/day (NGH),  further  consideration  has  to  be  made  in order  to  shift  to  the  commercialization  phase. Therefore,  the  materialization  of  the  pilot  project of  100  to  200  ton/day  (NGH)  is  much  required  in order  to  study  on  the  issues  for  the  scale-up  and compactification  of  the  process  in  terms  of technological  and  operational  aspects.  The  study group  is  currently  studying  the  requirements  for the  pilot  project  and  is  also  developing  its  master plan.  12. CONCLUSIONS   In  this  study,  the  advantage  of  NGH  was confirmed under the certain conditions.  Meanwhile, monetization of the small and medium gas  field  is  the  topic  that  attracts  every  interest  all over  the  world,  and  the  various  kinds  of  relevant technologies  are  simultaneously  under development.  Even  in  the  technology  of  the  well matured  LNG,  development  of  small-scale production  process  of  land  plan  and,  furthermore, small-scale FPSO is in progress. Although NGH is proved  currently  competitive,  it  loses  the opportunity  to  be  launched  to  the  market,  if  it missed  the  appropriate  the  timing.  MES  and Mitsui  are  exerting  every  effort  in  order  to materialize  the  early  commercialization  by addressing the challenged described in Chapter 11.  13. ACKNOWLEDGEMENT  This  manuscript  mostly  introduced  the  essentials of  the  report  of  the  up-do-date  feasibility  study  on natural  gas  supply  chain  by  means  of  NGH, implemented  in  conjunction  with  INPEX Corporation,  Japan  Petroleum  Exploration  Co., Ltd.,  Mitsui  O.S.K.  Lines  Ltd.,  NYK  Line,  The Chugoku  Electric  Power  Co.,  Inc.,  and  Tokyo  Gas Co.,  Ltd.  with the assistance  of Japan  Oil,  Gas and Metals  National  Corporation  (JOGMEC).  We greatly  appreciate  these  companies  for  their considerable  contributions  and  JOGMEC  for  its financial support.  REFERENCES  [1]  Gudmundsson,  J.  S.,  &  Borrehaug,  A.  (1996). Frozen  hydrate  for  transport  of  natural  gas. Proceedings  of  2nd  International  Conference  on Gas Hydrate, Toulouse, France.  [2]  Kanda  H.,  Uchida  K.,  Nakamura  K.,  Suzuki T.(2005).  Economics  and  energy  requirements  on natural  gas  ocean  transportation  in  form  of natural  gas  hydrate  (NGH)  pellets ,  Proceedings  of 5th  International  Conference  on  Gas  Hydrate, Trondheim, Norway. [3]  Iwasaki  T.,  Katoh  Y.,  Nagamori  S.,  Takahashi S.,  Oya  N.(2005).  Continuous  Natural  Gas Hydrate  Pellet  Production  (NGHP)  by  Process Development  Unit  (PDU) ,  Proceedings  of  5th International  Conference  on  Gas  Hydrate, Trondheim, Norway. [4]  Takahashi  M.,  Iwasaki  T.,  Katoh  Y.,  Uchida K.(2005),  Experimental  Research  on  Mixed Hydrate  Pellet  Production  and  Dissociation , Proceedings  of  5th  International  Conference  on Gas Hydrate, Trondheim, Norway. [5]  Takaoki  T.,  Hirai  K.,  Kamei  M.(2005), Development  of  Natural  Gas  Hydrate  (NGH) Carriers ,  Proceedings  of  5th  International Conference on Gas Hydrate, Trondheim, Norway.  [6]  Watanabe  S.,  Takahashi  S.,  Mizubayashi  H., Murata  S.,  Murakami  H.(2008),   A  Demonstration Project  of  NGH  Land  Transportation  System , Manuscript  for  6th  International  Conference  on Gas Hydrate, Vancouver, Canada [7]  Takahashi  M.,  Moriya  H.,  Katoh  Y.,  Iwasaki T.(2008),   Development  of  Natural  Gas  Hydrate (NGH)  Pellet  Production  System  by  Bench  Scale Unit  for  Transportation  and  Storage  of  NGH Pellet ,  Manuscript  for  6th  International Conference on Gas Hydrate, Vancouver, Canada. [8] Nakata T., Hirai K., Takaoki T.(2008),  Study of Natural  Gas  Hydrate  (NGH)  Carriers ,  Manuscript for  6th  International  Conference  on  Gas  Hydrate, Vancouver, Canada  


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