EMGC '13: Gas infrastructure development critical for Eastern Mediterranean
By Adrienne Blume
NICOSIA, Cyprus -- Gulf Publishing Companys inaugural Eastern Mediterranean Gas Conference (EMGC) in Nicosia, Cyprus, concluded Wednesday with Day 2 of the technical presentations. The conference, which took place from April 810 at the Hilton Cyprus, featured speakers from top companies operating in the region, including host sponsor Noble Energy.
Day 2 of EMGCs technical program addressed regional infrastructure developments in the morning, while the afternoon focused on resource development in Cyprus and Israel. The conferences final session examined the future of the Eastern Mediterranean in light of the resource potential and infrastructure developments needed. The following includes highlights from several of the days presentations.
FLNG outlook and development. Victor Alessandrini, FLNG Business Development Manager for Technips Offshore Business Unit, spoke about the market and future developments for floating LNG (FLNG).
Worldwide demand for LNG could increase by 50% by 2035 from 2012, according to Mr. Alessandrini (pictured right); and a myriad of opportunities to meet LNG demand after 2015 exist. These opportunities include gas resources from basins in the Middle East, the Atlantic and the Pacific.
FLNG offers new opportunities for gas producers and is characterized by several environmental and economic considerations and benefits, particularly as it is a mobile and environmentally non-invasive way of processing gas into LNG and transporting it to various locations. From an economic point of view, FLNG offers cost optimization in areas with high construction costs, and it can exploit deeper reserves and reserves located far offshore.
FLNG is also an ideal solution when pipeline construction would be too complicated or time-consuming. Furthermore, FLNG can be used in scenarios where insufficient reserves exist for a dedicated onshore LNG plant, and it enables the monetization of associated gas instead of flaring or reinjection. According to Mr. Alessandrini, an increasing number of international oil companies (IOCs) are examining FLNG to monetize their gas resources.
Some technical challenges of FLNG include incorporating what is essentially a full LNG plant onto an FPSO; gas processing facilities must be adapted to a marine environment. Space, weight and stability management are major considerations when planning an FLNG project, Mr. Alessandrini noted. Offloading LNG between two vessels at sea is a delicate process, as is importing large quantities of high-pressure feed gas. Equipment and piping loads are impacted by sea motion, and the marine environment (i.e., salt, humidity, etc.) is another factor that must be taken into account when designing an FLNG vessel.
Pushing design limits for pipelines. Uri Nooteboom, President of INTECSEA, spoke about pipeline development through the ages, starting with a slide showing an illustration of the first known pipelines in useaqueducts and terracotta water pipes in ancient Greece.
The first modern trunkline, which was used in the delivery of brine supply, dates back to 1595, according to Mr. Nooteboom. Oil pipelines did not appear until the 1860s, with the first such line established in Pennsylvania. A present-day challenge for pipeline design is the installation and use of large-diameter, deepwater pipelines.
Mr. Nooteboom (pictured right) outlined several gas pipeline design principles, noting that deepwater gas lines are more challenging to build than liquids pipelines due to the design parameters involved. Pipeline pressure and the distance required for gas transportation determine the diameter of the pipeline, while the diameter of the pipeline and the depth of the water determine the wall thickness of the line. Therefore, the diameter and wall thickness of the pipeline, plus the water depth, determine the complexity of the pipeline design.
Mr. Nooteboom acknowledged that the large-diameter, deepwater pipeline sector is still growing, and that the future of pipeline design will rely on technology, innovation, engineering talent and effective contracting strategies.
Terminal storage in Cyprus. Managing Director of VTT Vasiliko Ltd., George Papanastasiou, highlighted the benefits of the VTT Vasiliko (VTTV) storage terminal for Cyprus. This terminal will serve as a hub in the Eastern Mediterranean to capture flows of fuel oil from the Black Sea to the East; middle distillate supplies from the East to the West; and gasoline from Europe to the Eastern Mediterranean and the Red Sea region.
According to Mr. Papanastasiou (pictured right), the rationale for the VTTV terminal project is driven by the need for new storage facilities, as aging storage terminals in Lanarca, Cyprus are slated for relocation. The VTTV project will offer better logistics for local markets and serve as an option for the storage of Cyprus compulsory fuel stocks.
Cyprus also provides a favorable location within the EU and features deepwater ports close to shore to accommodate deliveries by large vessels. The VTTV facility is expected to generate 18 million (MM) per year of revenue for Cyprus and enable the commercial import and export of products.
Additionally, Mr. Papanastasiou noted that VTTV will boost foreign investment and commercial development in Cyprustwo goals that were discussed in a later presentation by Dr. Symeon Kassianides of Hyperion Systems Engineering Group.
Cypriot growth aspirations. In his presentation, Dr. Symeon Kassianides, Chairman and CEO of Hyperion Systems Engineering Group, examined Cyprus readiness to address the challenges and opportunities before it. Dr. Kassianides noted that both the public and private sectors, including the government, universities and petroleum organizations, are preparing the country for an upswing in work opportunities in the oil and gas sectors. He also confirmed that FEED studies are being performed for an LNG terminal in Cyprus.
According to Dr. Kassianides, long-term potential projects in Cyprus include a methanol plant, an ethylene facility, a gas-to-liquids (GTL) plant (if gas reserves are large enough to warrant GTL production), a fertilizer plant for urea and ammonia, and steel and aluminum factories.
We strongly believe in Cyprus as an upcoming energy hub for the future of the Eastern Mediterranean, Dr. Kassianides said. He added that Hyperion Systems Engineering Group is both well-poised and determined to play a major role in the development of the Eastern Meds energy resources.
Israels energy goals. The afternoon session kicked off with a presentation by Jay Epstein, Business Development Manager for Israel Natural Gas Lines, on the infrastructure needed for the development of Israels natural gas sector.
Mr. Epstein shared details on the governments plans for increasing the capacity of the gas transmission system, according to the expected future demand in light of new gas discoveries. He also spoke about the governments strategies for bridging the gas supply shortage between the depletion of present gas reservoirs and the development of future reservoirs. Ensuring supply security and establishing 500 million cubic meters of additional natural gas storage capacity are other major goals, Mr. Epstein noted.
Gas as transport fuel. Next, Chairman of Israels Dor Chemicals Ltd., Gil Dankner, spoke to attendees about the use of natural gas and its derivatives as alternative fuels for transportation. According to Mr. Dankner, the main objectives for doing so are threefold: To overcome the OPEC monopoly on oil prices; to find a reliable, low-cost and practical alternative for oil/methanol blending; and to lower emissions to mitigate air pollution.
Dor Chemicals was recently granted permission to commence testing of a fuel blend of 15% methanol and 85% oil, or M15. The testing, which is being carried out in conjunction with the Israeli Ministry of Environment and Ministry of Transportation, has been found to significantly reduce carbon monoxide (CO) emissions from vehicles. Mr. Dankner said his company is also testing methanol as a low-cost alternative fuel for emissions reduction in gas turbines.
The future of the Eastern Med. During EMGCs eighth and final session, The Future of the Eastern Mediterranean, the CEO of Cyprus National Hydrocarbons Co., Dr. Charles Ellinas, noted that the establishment of the Vasiliko LNG terminal is vital, as it will enable Cyprus to access markets in Europe, the Far East, and other global regions. Dr. Ellinas downplayed the benefits of pipelines in gas distribution, saying that they do not offer flexibility in specific markets and are, therefore, subject to longer-term commercial and political risks.
By 2025, Cyprus could be poised to export 25 million tons per year (MMtpy) of LNG if the Vasiliko facility grows into an important regional LNG hub, Dr. Ellinas said. Cyprus LNG exports could rise to 35 MMtpy in 2035, from a projected 5 MMtpy in 2020, under the governments most optimistic scenario.
Dr. Amit Mor (pictured right), CEO of Israels Eco Energy Ltd., next spoke about natural gas developments and prospects for regional cooperation. Dr. Mor praised Noble Energys efforts in developing the regions resources and emphasized the importance of the Tamar field to Israels gas-fired power sector. He also noted that the Israeli government plans to protect the Tamar development to ensure domestic energy security.
Dr. Mor opined that an LNG feeder tanker scheme would be most appropriate for Cyprus in the near term. These smaller LNG vessels, which cost between $5 MM and $20 MM, according to Dr. Mor, are a cheap and easy solution for Cyprus LNG aspirations. The CEO cautioned Cyprus to move quickly on this scheme so that near-term opportunities to export LNG are not missed.
Concluding EMGCs eighth and final session was Noble Energy Inc.s Director of Operations for the Eastern Mediterranean, Terry Gerhart. Mr. Gerhart detailed Noble Energys development plans for the Tamar and Leviathan fields, as well as for the Cyprus A development.
Our primary goal is to expedite this project to gas delivery as soon as possible, Mr. Gerhart said, referring to Cyprus A. He noted that the assessment and development of the play is strategically and economically significant for both his company and for the country of Cyprus. Mr. Gerhart expects the first well to be drilled at Cyprus A in June 2013. Additionally, an LNG plant to process the Tamar, Leviathan and Cyprus A gas could begin operations near the end of the decade and accommodate up to three trains, Mr. Gerhart said.
Inaugural EMGC a success. Speaker Chris Barton, Senior Vice President of KBRs Oil & Gas Business Development, praised the transparency of the conference. Meanwhile, another executive at Tuesday evenings gala dinner noted that the professionalism and caliber of speakers at EMGC far surpassed those of related events held previously in the region.
During his closing remarks on Wednesday afternoon, Gulf Publishing Company President and CEO John Royall thanked attendees for helping make the inaugural Eastern Mediterranean Gas Conference a success. Mr. Royall said that the conferences networking, forum-building and awareness-raising objectives had exceeded original expectations.
Major companies such as Noble Energy, Eni, Total, Woodside Petroleum and others have made significant investments in the region, Mr. Royall noted. Theres a lot of noise out there, but my advice to the industry and to all of you in this room is to look where the experts are investing their money, he said. And theyre investing it here, in the Eastern Mediterranean.
Photo 1: Technips Victor Alessandrini discusses the global outlook for FLNG developments.
Photo 2: INTECSEA President Uri Nooteboom explains proposed pipeline routes for the Eastern Med.
Photo 3: VTT Vasiliko's George Papanastasiou details plans for the VTTV storage terminal in Cyprus.
Photo 4: The conference hall was packed during Dr. Amit Mors late-afternoon presentation.
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