A Contemporary Examination of Stranded Gas and Monetization Strategies with Floating CNG

Abstract

Abstract One of the largest untapped energy resources in the world is "stranded" gas in offshore fields, which fall beyond the reach of pipeline systems, but lack the reserve magnitude to justify larger infrastructure investment like LNG. The United States Energy Information Administration (US EIA) estimates that gas reserves total over 6,100 tcf worldwide, with approximately half of this volume being classified as "stranded" offshore gas. These fields are currently undeveloped due to lack of an economic means of production & transportation to market. A portion of these fields are undeveloped simply because they lack the reserve magnitude to warrant development; these fields are justifiably uneconomic, but others might simply be limited by a lack of a commercially available gas monetization technology. Subsea pipelines have traditionally provided the only method of delivering gas from an offshore field to a consumer. While the energy industry is building deeper and longer pipelines than ever before, construction and operation of a subsea pipeline can become uneconomic in more complex scenarios where there is a long distance to a market, deep water to cross, geopolitical issues or geotechnical issues such as seismic activity to be considered. Where pipelines have faced technological, economic or geopolitical challenges, a small number of floating liquefaction vessels (FLNG) are being developed to exploit the higher range of field sizes, approximately 3 tcf and above. However, the capital investment required to develop an LNG project is significant; excluding field development costs, the price tags for current LNG liquefaction developments are estimated between $7 and $14 billion US dollars (with the exception of a few brownfield or conversion plant developments) (Ernst & Young, 2013). Small-scale and modularized LNG liquefaction and transport technologies are emerging with lower capital cost requirements, but these technologies are better suited to barge-mounted, near-shore development models rather than actual floater type applications (General Electric, 2014) (Humpuss Intermoda, 2014). Emerging floating technologies, such as gas-to-wire (GTW) for power generation, gas-to-liquid (GTL) for synthetic fuel conversion, and compressed natural gas (CNG) ships for marine gas transport, are being developed to focus on development of the significant number of fields which fall outside the reach of pipeline gathering systems, but are too small to justify investment in deepwater pipeliens or LNG development. In this paper, a practical analysis of worldwide offshore gas fields has been conducted to determine and classify the number of fields which could define the market for floating marine CNG development, based on field size, water depth, and proximity to market. This analysis reveals that there are over 375 of these gas fields worldwide, containing upwards of 375 tcf of recoverable reserves between them. A technical value chain description of a marine CNG operation is also provided. The findings of this paper confirm that a marine CNG development with floating compressed natural gas (FCNG) and CNG ships is a commercially available gas delivery solution which can simply and economically monetize many of these offshore stranded gas reserves.