SHIPPING GAS NATURAL GAS MIGHT BE A LUCRATIVE N.Z. EXPORT

Press, Volume CIX, Issue 32127, 24 October 1969, Page 10

SHIPPING GAS NATURAL GAS MIGHT BE A LUCRATIVE N.Z. EXPORT

< Specially written I6r “The Tress'' by

R. H. LAUNDER)

Developments in the technology of shipping natural gas might be responsible for lucrative benefits to New Zealand, should large quantities of natural gas be found in wells being drilled off the Taranaki coast.

Only a short while ago, large supplies of natural gas from the off-shore wells, whether found in association with oil or hot, would have embarrassed rather than pleased finders. The Kapuni gasfield will satisfy any economic demand the North Island is likely to make in the next 25 years, and South Island demand would, in any foreseeable conditions, be too small to be viable. Any additional gas would not be wanted in New Zealand, in quantity, at least: hence the interest New Zealand might have in the possibility of exporting natural gas. Of course, this is not to say that marketing a large gas find overseas would be a simple matter, or one achieved without heavy cost. Nevertheless, some recent developments suggest that if it is found in good quantities, natural gas might be an extremely valuable addition to New Zealand’s exports. Two recent moves by Shell Oil give hints of what might happen if natural gas

were found in large quantities in the Taranaki off-i shore wells, where Shell con- 1 ducts the operations on behalf of its partners in the Shell, BP, Todd consortium (BP conducts operations for the consortium on others of its leases).

Recently, Shell signed a £650 million deal with Japan to ship 65 million tons of liquid natural gas (L.N.G.) from Brunei over the next 20 years. A much more ambitious possibility is being investigated by the Shell group. The project is to ship huge quantities of natural gas from Nigeria to New York. This bold and imaginative scheme would involve a fleet of up to 20 specially-built tankers, requiring an investment of £2OO million. The proposed L.N.G. processing plant in Nigeria would cost at least another £5O million.

U.S. Gas Economy The prospect of shipments to the United States East Coast is especially interesting. considering that the United States has the world’s most highly-developed gas economy, with gas delivered to consumers by pipe-line from indigenous United States and some Canadian sources. In fact, with the demand for an almost sulphurfree fuel, there is now a danger of domestic gas shortage in tbe late 19705, and! substantial LIN.G. shipments are regarded as a useful safeguard. Even discussing the possibility of shipping natural gas from Nigeria to New! York—or from Brunei to; Japan for that matter—illus-j trates how increasingly important liquified natural gas is becoming as a storable form of natural gas for movement from energy-surplus areas of the world to energydeficient areas. “Peak-shaving” Whether imported or locally-produced, L.N.G. is now widely recognised as useful for what, in the gas-using industry, are called “peakshaving” operations (coping! with peak demands) in large !natural gas markets. Nineteen L.N.G. peak-shaving 1 plants have already been; built or contracted for in the Western world, 13 of them in the United States. The Institute of Gas Technology estimates that, in about 10 years. United States requirements of L.N.G. for peakshaving will reach more than 10 times the currently in- 1 stalled and planned capacity.

There will be similar trends elsewhere as gas distribution develops on a large scale and over wide areas. One important consideration that may have a considerable effect on increasing consumption is the growing concern about air pollution. Natural gas is an ideal fuel from this respect and its use by industry can therefore been expected to become even more widespread. Algeria To Britain Tanker shipments of L.N.G. from Algeria have been going on for close on five years. The first commercial scheme of this nature was developed, before the North Sea discoveries. for the delivery of L.N.G. from Algeria to the British Gas Council’s terminal at Canvey Island in the Thames estuary. Since then, a delivery to France has been made by the concern transporting to Britain. Esso plan this year to make deliveries to both Italy and Spain from Libya, and Union-Marathon from Alaska to Japan. The trade is now on the threshhold of a big expansion and diversification.

The basic principle upon which the trade depends is that methane can be liquified at atmospheric pressure by being cooled to minus 258 degrees Fahrenheit and can then be shipped in special insulated tankers. At its destination, before delivery to users, the liquefied gas is reformed in a special installation.

Tanker Costs ' At the present relatively ’ early stage of development. ' the cost of a iiquefied-gas ' tanker is about double that ’i of a crude oil tanker of comparable size even though the “oil tanker, because of the in product densi- ' I ties, would have twice the carrying capacity. Ton for ton 'moved, therefore, the capitalcost ratio is around 4:1. • Reckoned in thermal terms, > however, this improves some- • what to about 3:1, since a ton ; of liquefied natural gas contains 20 per cent more heat ;[than a ton of crude oil. i; If the current off-shore -drilling— —or any oil exploration on New Zealand soil or 11 its continental shelf—reveals : a commercial quantity of i natural gas. but little oil. this • need be no cause for disappointment. The world market i for gas is wide open, and, to - great financial advantage to ■ itself, New Zealand might ; join the at present exclusive ranks of exporters of natural . gas.

Mr Launder recently attended a seminar of the international oil industry, conducted by Shell International Petroleum Company, Ltd, in London, and bv Bataafse International Petroleum Maatschapplj N.V., at The Hague.