EMGC ’15: Eastern Med leaders tout gas transport, monetization options

Managing Editor

NICOSIA, Cyprus -- Day 2 of the EMGC 2015 conference proceedings opened with several perspectives on gas monetization in the Eastern Mediterranean. Dr. Nestor Fylaktos, Post Doctoral Fellow at EEWRC of The Cyprus Institute, spoke about the possibility of Cyprus catering to global LNG markets.

An LNG plant would allow for short-term contracts anywhere in the world, but at a high cost and with insufficient proven reserves. It would also be very expensive and would need to compete with a glut of LNG plants being planned and constructed throughout the world, Dr. Fylaktos said.

Another option worth considering is the use of Egypt's idled regasification capacity, and still another option is the construction of an FLNG vessel.

Pipeline construction is risky because it is tied to only one export market (Europe), while CNG has been assessed as a viable option, although the technology is at an early stage of maturity, Dr. Fylaktos said.

Cyprus eyes gas use alternatives. Dr. Symeon Kassianides (pictured), Chairman and CEO of Hyperion Systems Engineering Group, next shared his ideas on alternative gas monetization in Cyprus.

The Aphrodite field discovered offshore Cyprus is estimated to hold 4.5 Tcf of gas reserves. Potential production from Aphrodite is 800 MMscfd; at present, Cyprus demand for power generation is estimated at 100 MMscfd.

The current thinking, Dr. Kassianides explained, is that gas can be delivered to Cyprus and Egypt via two pipelines, using a floating production, storage and offloading (FPSO) vessel. Cyprus would take only the gas it needs to meet its power demand, and the rest could be exported.

According to Dr. Kassianides, the end goal for Cyprus should be larger than the development of its gas resources. The country's development goals should also include:
  • Discover and verify hydrocarbon prospects
  • Find ways to multiply benefits from the gas discoveries
  • Reposition the economy and raise Cyprus to another level
  • Achieve sustainable and environmentally responsible growth.
The gas can be converted to other products, thereby helping industrialize Cyprus' economy. These products include synthesis gas, methanol, ammonia, urea fertilizer, petrochemicals and others.

Options for using this gas include power generation; syngas to methanol production; urea fertilizer production and other uses. A power generation project would involve the construction of a pipeline and require 100 MMscfd of feedstock gas, while a methanol plant would cost an estimated $1B to construct and require 140 MMscfd of feedstock. An ammonia urea plant would cost approximately $1.4 B to build and require 160 MMscfd of gas.

Another option, an advanced methanol-to-olefins plant with polyethylene and propylene production and an additional methanol facility, would cost an estimated $2.5 B to construct and require 240 MMscfd of feedstock. Altogether, these potential projects are estimated to cost $4.9 B and require 640 MMscfd or more of gas feedstock to operate.

Gas monetization in Israel. Gil Danker, Chairman of Dor Chemicals Ltd., discussed alternative gas monetization in Israel. Isolated nations like Cyprus and Israel must reexamine strategies for marketing and exporting their gas due to cost, logistical issues and geopolitical pressures, Danker said.

He advocated the use of feedstock gas for methanol blending into transportation fuels, which would reduce vehicular emissions and energy use. Dor is carrying out projects to convert diesel and natural gas turbines to run on methanol. The company is also studying the construction of two methanol plants, one in Israel and one in Cyprus.

Gas storage options. Frederic Vrinat, Business Development Manager for GTT, shared his company's perspective on LNG storage options for the region. He provided details on a design and construction concept for an onshore LNG terminal, including the selection of a stainless steel membrane.

He also discussed the possible use of small-scale LNG tanks to store LNG with membrane technology. Above-ground onshore LNG storage solutions include in-pit and gravity-based structure options, Vrinat said.

Next, Bill R. Alashqar (pictured), Managing Director of US Independents for GE Oil & Gas, presented cases for the utilization of LNG terminals, floating LNG (FLNG) vessels and FPSO vessels in the region.

FLNG can be an efficient solution for multiple wells, such as those in Noble Energy's Eastern Med fields, Alashqar said. They are also more environmentally efficient solutions than onshore LNG terminals. GE is studying the possible development of an FPSO vessel for use in Noble Energy's Eastern Med gas operations.

CNG transport technology. David Stenning, President and COO of SeaNG Corp., shared ideas for the monetization of Eastern Med gas reserves via compressed natural gas (CNG). LNG and CNG are synergistic technologies, Stenning explained, although liquefying gas costs nearly 10 times as much as does compressing gas.

CNG can add value to an LNG development by offering an alternative transport option through new CNG ships with coiled-pipe technology. The Sea NG Alliance will provide the ships, so investment in CNG ships is not needed by producers or customers, Stenning said.

SeaNG's technology involves the use of small-diameter coiled pipe in coselles, which can efficiently store CNG on a ship. The technology complies with all safety, environmental and transportation regulations to ensure safe transportation of the compressed gas via ship. The ships are sized for different market needs and feature different numbers of coselles, depending on the volume of gas transported.

CNG transport via ship makes the most sense when a mid-range amount of gas (less than 1 Bcmy to approximately 5 Bcmy) must travel a medium distance (approximately 100 km to 1,500 km), Stenning explained. This is compared to pipelines, which are designed to transport large volumes of gas over short distances; and LNG vessels, which transport medium to large volumes of gas over long distances.

CNG delivery via ship is economical for delivering Eastern Med gas to Cyprus, Turkey, Greece and Italy, with shipping tariff costs of around $2/MMBtu for shorter distances and $4/MMBtu for longer distances. This transport technology could replace the construction of pipelines to many Eastern Med markets at a lower cost, Stenning said.

EastMed pipeline project. Dimitris Manolis, Deputy Development Director of IGI Poseidon, delivered the last presentation of the morning. Manolis presented the proposed EastMed pipeline, a project supported by the EU and by the governments of Cyprus, Greece and Italy.

The target of the EastMed project is to connect European domestic gas sources in the Levantine basin to Central Europe through Cyprus, Greece and Italy, allowing the development of the recent discoveries in the area. The project includes different sections: a section between the gas sources and Cyprus; an offshore section between Cyprus and Greece via Crete, with a maximum offshore length of 600 km; and an onshore pipeline crossing the Greece mainland, ending at the starting point of the Poseidon pipeline.   

The EastMed pipeline, which could transport 14 Bcmy of gas, is technically feasible and economically viable. The project would also help promote EU energy supply security, ensure the development of domestic resources and realize a European direct connection with EU neighboring resources.

Pre-FEED studies for the EastMed pipeline are expected to conclude in the fourth quarter of 2015. These studies aim to optimize the design of the project according to the requirements of all stakeholders, from buyers to sellers. IGI Poseidon will apply for co-financing from the Connecting European Facility (CEF) program, to obtain financial support for the development of this export option.

Stay tuned for more news from EMGC 2015.

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