GPR has heard that a pending flood of liquefied natural gas (LNG) to the U.S. has been in the works for years, but it has yet to materialize due to delays at the regas end of the chain here and higher netbacks elsewhere.Ian Salmon, principal at Featherwood Capital, explained at the Red River conference last week how some changes might be in the works as more LNG trains come online in producing countries, and shipping and transfer technology become more efficient. Featherwood Capital is an investment banker that has been involved in numerous LNG projects, both upstream and downstream. Five major producers now operate in the Atlantic basin: Nigeria, Trinidad & Tobago, Norway, Egypt and Algeria, which has volumes available from expiring contracts. New production is likely to begin hitting the market from Qatar, Egypt and Equatorial Guinea by the end of the year.

Currently, more than 9 billion cfd of LNG production capacity is in development in Qatar, Nigeria, Norway, Egypt, Algeria, Yemen and Equatorial Guinea. These countries are looking for buyers in North America and Europe to sign supply deals through 2012.

Proposed projects in six countries and potential projects in four others could add an additional 10 billion cfd into the Atlantic market in 2012-2014.GPR has heard insiders and outsiders to the LNG trade pine over the years for a bigger spot market. Salmon said this has been limited because capital costs at both ends of the value chain require long terms deals to meet financing obligations, and shipping costs are as much as a third of product value. Most LNG spot deals now are either diversions or sales of excess capacity. Salmon said the LNG spot market will develop further as the new trains begin production. Technology Improvements in LNG Trade Examining parts of the value chain, he added that the standard for new, land-based liquefaction trains is 1 billion cfd, larger than existing trains. And for years there have been substantial variations in LNG quality specifications, but that’s changing.

Higher LPG extraction rates can deliver LNG to meet target market specifications that are increasingly stringent. Meanwhile, Salmon said that offshore liquefaction is being actively investigated by a number of parties, and there is ongoing development of ship-to-ship transfer technology. In addition, LNG vessels have been ordered that do not rely on steam for propulsion, and new, larger diesel or diesel-electric ships can cut fuel costs significantly.

Shipping is often the single largest cost element in the LNG supply chain. Salmon also said that a number of existing terminals are being modified to accept larger vessels.The ability to accommodate large vessels, he added, can provide a terminal with a competitive advantage, since producers will be able to see the netbacks on their volumes.

Terminals being built on the U.S. Gulf Coast have substantially greater throughout capacity than traditional facilities. Air-to-air heat exchangers are being employed at new warm weather regas sites, Salmon said, providing an efficiency gain of about 1% of throughput over submerged combustion vaporizers. And the latest generation of regasification vessels utilizes intermediate fluid heat exchangers, boosting daily send out capacity to 1.2 billion cfd with minimal environmental impact. Meanwhile, Salmon said that offshore regas terminals are gaining support, since they reduce “not in my backyard” issues.

They have a minimal onshore footprint and can be located in remote, secure areas. At the same time, the concept of floating storage and regasification units requires ship-to-ship transfers, and has only been proven in minimal sea-state conditions.

This month’s technology focus centers on the industry push into arctic exploration and production opportunities. Like deepwater, arctic regions of the world are believed to hold enormous potential oil and gas reserves. And like deepwater, operating under arctic conditions brings its own set of technological challenges.

As you will see, this month’s issue of Offshore examines some of the solutions developed for arctic exploration. You’ll want to look at all of them because tomorrow’s headlines may well come from these frozen locations.Despite the challenges, operators are investing in arctic areas where resource estimates range into the hundreds of billion boe, says Leta K. Smith of IHS, who authored a special arctic overview this month.

The arctic is a busy place again, but there has been a shift in the locus of activity, says Smith. Before 1980, Canada’s Mackenzie Delta dominated, with 50% of the exploration wells drilled. Exploration drilling shifted to Russia, peaking in 1986 when Russian exploration wells accounted for 59% of the 78 arctic exploration wells drilled. More recently, exploration activity has shifted back toward the US and Canada.

Since 2000, 149 exploration wells have been drilled in the arctic – 57 in the US, 51 in Russia, 23 in Canada, and 18 in Norway.

Medium-sized companies and national oil companies are joining super-majors in many of the world’s technically challenging environments, Smith says.An area to watch is the US Beaufort Sea. In April, the MMS announced the preliminary award of 92 offshore tracts to six companies from the bid round held earlier in the year. The MMS estimated that the original 9.7 million acres offered could contain as much as 7 Bbbl oil and 32 tcf gas.In the Norwegian sector of the Barents Sea, Hydro (now Statoil-Hydro) recently announced the results of the Nucula prospect, which contains an estimated >300 MMbbl of recoverable oil. If subsequent appraisal deems it economic, Nucula will be the first commercial discovery in the Barents Sea since 2000.

Don’t miss Smith’s comprehensive analysis, followed by the full arctic report, beginning on page 32.DOT focus on Arctic

Not surprisingly, this month’s issue also highlights PennWell’s Deep Offshore Technology International Conference and Exhibition (DOT) to be held in Stavanger, Oct. 10-12. The theme of this year’s DOT, hosted by Statoil, is “Deepwater & Arctic – Oceans of New Opportunities.”The conference includes a full track of sessions on arctic technology, with sessions on Arctic Drilling & Production, Lessons Learned in Deepwater Operations, Riser Technology, Well Construction/Petroleum Technology, Field Architecture and Economics, Flowlines and Pipelines, Completion Design in Deepwater, Flow Assurance, Station Keeping, Seabed Boosting and Processing, Construction/Installation, Floating Facilities, Long Distance Tiebacks, and more. The special DOT Preview begins on page 64.Drilling in icy watersSpeaking of technological innovation, the potential impact of ice-loading on drilling and production facilities must be addressed if the industry is going to tap the wealth of reserves hidden in arctic regions. A group of industry professionals has proposed a concept to meet this challenge. The new design, called MonoCone Arctic platform, can withstand up to 13,000 tons (11,807 metric tons) of ice-load, a maximum wave height of 45 ft (14 m), and a 6-knot current in the warmer season.

San Francisco – Ever since Siemens acquired the former Future Energy gasification technology from Sustec 15 months ago, it has been undertaking investigations on how to improve gasification for future applications.“We need a 15-20% cost reduction to get the ‘third wave’ of IGCC [integrated gasification combined cycle] going,” Siemens IGCC business development manager Harry Morehead told the Gasification Technologies Council 2007 conference here.Unfortunately, energy-project engineering, procurement & construction (EPC) costs are “skyrocketing,” which has put a damper on several proposed IGCC projects, he noted.Meantime, development of “reference plants” (now underway) will help to trim the cost differential between IGCC and conventional pulverized-coal plants, he showed.

But government incentives and stakeholder risk-sharing also are needed to push IGCC forward in the near-term, he added.What’s more, carbon capture & storage (CCS) “has become a given for IGCC – a significant challenge,” he said, since governments have yet to define a legal framework for CO2 storage. Nor has the real market cost/value of CO2 been well-defined, world-wide.

But while many IGCC projects may be snagged by cost and CO2 issues right now, non-IGCC gasification projects are moving ahead, he noted. Among the newer projects in which Siemens is involved: a resid gasifier at the Sokolovska refinery in Czech Republic (now in start-up); two coal-to-chemical gasification projects in China (Shanxi Lanhua ammonia plant, and Shenhua Ningxia, a propylene project); the proposed Secure Energy coal to synthetic substitute natural gas (SNG) project in Illinois; and the in-development Dodds Roundhill coal gasification project in Canada (for Sherritt, to produce syngas for IGCC and hydrogen for industrial users).

Currently, Siemens has nine 500-megawatt (thermal) gasifiers on order or being manufactured, Morehead said. The company’s Freiburg, Germany, test center used for feedstock studies and pre-FEED studies is “booked solid” thanks to growing commercial interest, he added.

As for front-end engineering & design (FEED) projects, Siemens has three FEEDs for proposed IGCC plants underway. However, “the challenge is addressing the cost increase” of such energy projects, he said.This year, Siemens has completed combustion testing of high-percentage hydrogen feed to its SGT6-5000F gas turbine, employing a “new combustion system for IGCC based on existing Siemens diffusion-flame technology,” he said. The scheme allows use of the existing access port for air extraction and integration with an IGCC plant’s air-separation unit.In future, Siemens aims to go beyond its current SFG-500 class gasifier (500-MW) to even larger gasifiers (one shown with a triple burner here) in order to improve over-all plant economics, he said.

This bigger gasifier would enable matching the requirements of Siemens “F-class” turbines, he explained.Also under R&D starting this year: a new gasifier with partial quench and waste heat recovery steam generator system. This scheme, if commercialized, would enable “efficient use of the high temperature heat in the steam generator” for high-pressure or intermediate-pressure steam; water quench of raw syngas and slag; optimization of the reactor; and optimization of partial-quench system, he said.

The idea is to boost plant efficiency without sacrificing reliability and availability, he added. But while the scheme holds promise, “it’s not a given that we’ll commercialize it,” Morehead said in response to a question here. “Adding new technology can add risk.”

Recently I was involved in two hearings concerning repair information availability in the states of New Jersey and Massachusetts. Unlike many who comment on this topic, I am going to let you know where I sit, before I tell you where I stand.I firmly believe – because I practice it every day – that if you use the information that is available, you’ll be successful repairing cars. I also believe that if more people in our industry took the time to strike compromises and learn from one another, the entire industry would be better served.Typical of these types of hearings, there were many presenters, many problems – some perceived, some real. Bottom line: Perception is reality if you cannot fix a car. Because I was presenting against legislation, I was not presenting problems. So don’t take anything I am about to say as being in support of adding more laws to an already confusing situation. I simply don’t endorse that approach.

But if you have a solution, I would be delighted to discuss it.I explained in the hearings that I have been a party to those high-level, top-secret meetings that occurred between representatives for the car companies. Some people are not going to like what they were talking about, but I would hope that you will. The central topic of conversation was, “How can we help these guys to fix our cars so that our customers will buy from us again?” My answer to them: “You can’t unless they want to be helped.”When I demonstrated the use of a scan tool and software refiashing of a powertrain control module to a representative of the New Jersey legislature, I was surprised by the young man’s knowledge of computer systems.

The reflash took some time, so he and I got to chat a bit.It occurred to me that computers are, for lack of a better word, “organic” to his existence. Performing basic maintenance such as refiashing BIOS and upgrading RAM and hard drives is as second nature to him as performing basic car maintenance is to baby boomers.This young man was able to get his head around methods of finding information and using a computer to talk to another computer very quickly.

I don’t think that either he or I had any doubt that the reflash that I was doing would be successful. However, most of the people surrounding us were older and represented the carmakers. I am almost sure that I heard them all breathe a collective sigh of relief when the vehicle started up after I was done.

It’s clear to me that our industry is caught in a paradox. Younger generations have an inherent belief in a computer’s ability to enhance productivity, but older generations still have doubts about integrating technology into their businesses. Engineering types are still not convinced that technicians possess the skills to effectively use the tools they create, yet if one takes the time to teach others something one knows, everyone gets better.

Technology has overwhelmed many of our peers, who truly believe that they are being passed over by “them” or “those who are not ‘me.'” As only one person, I am willing to commit my time to help anybody who is willing to be helped to embrace technology and creative solutions to make our jobs easier and more efficient.

I will also leverage my relationship with manufacturers to help others understand why they do what they do, so that I can help you do what you need to do.In return, I would ask you to pass it on. Find a willing technician or shop owner and help them to not be overwhelmed by technology.

Metatomix’s middleware applies business rules, reasoning to data Do semantic technologies have a place in software-oriented architecture (SOA), and more important, can they break organizations’ reliance on expensive data warehouses? Metatomix believes they can.Sept. 10 saw the release of version 5.0 of Metatornix’s semantic middleware platform.

The platform applies business process rules, and semantic reasoning from industry domain ontologies to information that it collects, enabling customers to integrate data and to uncover and define relationships.“[Semantic technology] eases the way to describe and work with information,” said chief technology officer Colin Britton.

A metadata-based approach offers users a network-centric view of information stored in various silos of data, he explained.Metatomix 5.0 uses the SPARQL RDF query language to perform federated queries across multiple databases and data formats, and now offers support for a number of data types, including relational, filebased and memory-resident, said Britton. Support has also been added for Oracle llg’s semantic layer.

In addition, the new release includes reasoning and validation enhancements to validate semantic data against an ontology, and has an improved business policy engine, licensed from an unnamed third-party vendor. The policy engine permits organizations to semantically describe business actions without writing business rules.

Another new feature is service links, which are data access services that forge links between data, creating reusable modules out of service profiles. Britton cited the example of a state official who queries an individuals driver’s license number, where the semantic engine evaluates how it should respond using business rules and ontologies. It directs the query to the Department of Motor Vehicles, and the registry at the DMV answers, with additional information that the query can use to call other data sources, forming a processing chain.

ENABLES EXISTING STACKMetatomix also updated its application development tool, MetaStudio. MetaStudio is an Eclipsebased IDE that bundles tools and libraries to help developers semantically enable apps. The IDE enables semantic use from within Adobe’s Flex, through Java EE containers to the application platform, said Britton.“We don’t see our role as to be the full stack. People are already investing in that stack.

We are semantically enabling the stack that they have, with an intelligent processing engine,” said Britton.“Metatomix is laser-focused on providing customers with real-world applications of semantic technology,” said Metatomix president and CEO Jeff Dickerson.

Washington, D.C.

– Forecasts are for global food demand to double by 2050, while conventional energy sources and worldwide refining capacity fail to keep pace with world demand. Biomass is the key to satisfying the need for both, the chief technology officer of Archer Daniels Midland (ADM) told Hart’s World Refining & Fuels Conference here last week. Food and fuel production are synergistic for the company, Michael Pacheco explained in a keynote speech to around 100 people. Technological improvements will be needed to convert 1.3 billion tons of biomass that the U.S. could produce to the heating value equivalent of 3.5 billion barrels of crude.

Specifically, ADM is paying particular attention to boosting cropland productivity, developing better feedstocks, creating new and improved products and decoupling biofuels from food, arable land and fresh water.Pacheco indicated how some technology gains might occur by describing how cellulosic ethanol production will evolve from corn-based ethanol. After the normal wet mill production process, cogeneration from coal is added for heat and power.

That’s followed by adding the dry mill process that produces more ethanol plus dried distillers grains, and then adding the different components that go into animal feed. Biomass is then added to the co-firing of coal for cogeneration; Pacheco said 85% of the energy used in ADM’s corn mills and ethanol plants will be derived from cogeneration in 2009. Cellulosic feeds (corn stover) would then be added to a new train of pretreatment, which undergoes hydrolysis and fermentation to be distilled into ethanol. Pacheco suggested the next step in efficiency would require legislation, namely the conversion of the energy inputs to be entirely biomass based, replacing the coal.

This addresses the concern regarding increased greenhouse gas production from biofuels. And ultimately, in an integrated biorefinery, fermented sugars would undergo thermochemical conversion, to be used for heat and power. Noting the energy requirements for biofuels, Pacheco cited another study showing that traditional ethanol and cellulosic ethanol require about 1.75 and 2.25 Btus, respectively, to produce 1 Btu of fuel. He emphasized that the use of lignin – the cellulosic material – to produce heat and power in an integrated biorefinery is what will reduce greenhouse gas emissions and petroleum dependency.

Pacheco cited studies of well-known government researchers and academics showing that current ethanol production technologies will result in 1 billion barrels of oil equivalent (BOE) by 2040. Second generation biofuels will add another 2 to 3 billion BOE, and third generation saline-based aquaculture of biofuels 1 billion BOE more. It takes 64 billion gallons of ethanol to make 1 billion BOE. Over the shorter run, the studies he cited show the U.S. will fly past the 7.5 billion gal/year ethanol production marker from the Renewable Fuels Standard in six to ten months. Production is forecast to increase to 20 billion gal/year in 2016, 35 billion in 2022 and 60 billion in 2030.

“The second and third generation fuel costs will ramp up over time,” he said near the end of his talk. “The early generation technologies enjoy fairly good margins relative to the newer entrants in the field.” ADM currently produces 1.1 billion gal/year of ethanol, and 600 million gal/year of capacity is in development. The company also produces 450 million gal/year of biodiesel.Until last year, Pacheco was director of the National Bioenergy Center at the U.S. Department of Energy’s National Renewable Energy Laboratory – David Givens