The power generation sector drove the gas demand growth over the preceding decade, accounting for half of the total increase in consumption due to abundant supply in mature markets, fuel switching in emerging markets and decline in nuclear generation. This trend is expected to continue and the sustained demand for electricity is giving rise to a new wave of gas to power projects. Many of the proposed projects on the near-term horizon will rely on LNG import infrastructure for gas supply.
In the last decade, the majority of LNG-to-Power projects have relied on consortia of LNG providers, import terminal owners & operators and power producers to deliver electricity. This setup, while allowing everyone to concentrate on their area of expertise, presents a complex landscape of risk given the larger number of counterparties and shared facilities. The LNG import and power generation facilities are likely to be supplied by different contractors creating the risk of loss of revenue if one side of the project is delayed. The market has recently seen cases where FSRUs had to be redeployed as carriers due to shore infrastructure delays. Other issues, such as the congruity between gas supply, terminal use and power purchase agreements, present further complications.
The recent technological development of integrated floating LNG-to-Power solutions is likely to shake up the status quo. Several concepts of floating power solutions have been outlined and without going too deeply into technical details, those can be split into two main categories: powerships and powerbarges. The overall difference between the two is that a powership with all its electricity-generating-equipment installed on its deck is still a ship, meaning it can sail on its own, while the powerbarge is a barge and requires a towing assistance for the sake of moving it around from one location to another.
Power is generated by a gas turbine or engine – that depends on specific projects needs insofar as it may call for a baseload capacity utilisation or require a rapid ramp-up and ramp-down flexibility. There is no hard limit for the installed power generation capacity but it is usually structured from 30-40 MW to 600 MW and upwards. As for the LNG storage, it can be integrated within a ship’s or barge’s hull or housed in a separate structure. Integrated storage has its merit, however separate LNG storage offers additional flexibility as some LNG-to-Power projects include a bridging period with HFO.
There are multiple concepts within the LNG-to-Power technology with different draft and length, turbine and engine efficiency, emissions and fuel autonomy (which is a derivative of power capacity and LNG storage volume) that can be tailored to fit a specific project.
KN, recognising the utility of this technology, is actively looking for opportunities to deploy this infrastructure. In the meantime, we are building our floating LNG-to-Power expertise in tandem with Höegh LNG in our own backyard by working on another FSRU industry’s first project to utilise spare FSRU power generation capacity. This will enable KN to harness the volatility of power markets by integrating the FSRU into the Lithuanian electricity system to expand the value proposition of FSRU technology. While significantly smaller in scale to standard power generation projects, this innovation is bridging the gap between floating LNG technology of today and tomorrow.
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