The Developing Narrative of the Liquid Natural Gas Market and its Attendant Infrastructures
Instructor: Keller Easterling
Flowing from its source near the village of Kimble in Buckinghamshire, England, the Thames River passes through the glittering heart of London before ending its journey in the silty waters of the Thames Estuary (Figs 1&2). Travelling east from London along the banks of the Thames, the endless glass wrapping countless luxury apartment buildings soon gives way to an altogether more desolate landscape. Bleak rows of terraced housing frame views of low-lying marshland and the distant smokestacks of a multitude of industrial facilities. The river’s silty deposits create a constantly shifting landscape prone to flooding and neglect, from which the blinking lights of Canary Wharf are just a distant backdrop. It is in this landscape that the Thames meets the North Sea, and at the easternmost edge of the south bank of the Thames is a marshy outcrop that forms the Isle of Grain, an important trade terminal connecting London to Europe and the world beyond. Shrouded in mist most mornings, the Isle of Grain is not actually an island, but rather a marshy outcrop. It is host to the village of Grain and its few hundred inhabitants, as well as Thamesport, a critical link in a global supply chain that provides London’s citizens with their daily material requirements, from televisions to toothpaste.
On a spring morning in 2011, the inhabitants of Grain would have awoken to a strange sight. Emerging from the mist was the monumental form of one of the world’s largest ships (Fig.3). Guided by four tug boats, she was being slowly directed through the estuary towards her final destination - a specially constructed new berth at the Isle of Grain’s Thamesport. Given the port’s significance in British trade with Europe and the Middle-East, the sight of a ship is no rare occasion in these waters, but what was particularly notable about this ship was her sheer size; at 345 meters long and 46 meters wide, the Qatari-owned Bu Samra dwarfed the Bulk Carriers and container ships that typically sail through the area. In addition to her size, the Bu Samra’s presence was notable for another reason: her cargo of liquefied natural gas. Gliding slowly past the town of Grain, the Bu Samra was bringing with her enough energy to fuel 120,000 British households for more than a year. 1 Her cargo of 266,000 cubic meters of liquid natural gas (LNG) was destined for the Isle of Grain’s LNG regasification facility, where it would be converted to the equivalent of roughly 20 billion gallons of natural gas, the energy equivalent of seven-tenths of a megaton of TNT, or about fifty-five Hiroshima bombs. 2
Within each of the Bu Samra’s four enormous storage tanks (Fig.4) was a cargo composed primarily of methane gas cooled to a temperature of -260F. The refrigeration of the gas to a liquid state reduces its volume by a factor of 610 relative to its gaseous state, enabling transportation over long distances at atmospheric pressure. 3 Though pipelines are the most economical means of transporting gas, its refrigeration allows efficient transportation by sea in situations where distance or cost issues make pipelines unsuitable. In this particular case, the gas was being delivered to the Isle of Grain from the distant North Field gas fields, located 70km off the eastern coast of Qatar. That the Bu Samra should seem so out of place in the low-lying marshland and aging industrial infrastructure of the Thames estuary is no surprise; its scale is calibrated to an entirely different infrastructure, one that is located more than 4,000 miles away at Quatar’s Ras Laffan port (Fig.5). The Bu Samra is one of 14 similar ships, taking their place among the world’s largest LNG carriers. They are a new breed of ship, whose size and technological sophistication necessitated the creation of a new shipping class. The Bu Samra is classified as a Q-Max ship, previously referred to as a super-LNG carrier. In this nomenclature, the ‘Q’ stands for Quatar and the ‘Max’ stands for the maximum size capable of berthing at Ras Laffan port, the primary physical limitation to the ships’ size.
Ras Laffan port is located 80km North of Doha. Owned and operated by Qatar Petroleum, the port is continuously expanding its capacity, and in 2006, Qatar overtook Indonesia as the world’s primary LNG exporter. The port’s expansion has coincided with a surge in demand for natural gas, which is promoted globally as an abundant, reliable and clean alternative to oil. The discovery of gas in close proximity to land, and Qatar’s strategic position adjacent to existing maritime trade routes connecting the Far-East with Europe and the Americas, has allowed for the rapid expansion of the country’s LNG production facilities. Discoveries of large gas fields in East Africa and Australia have led to a rush to monetize more established Middle-Eastern gas fields. The large majority of Qatar’s gas is exported, and the companies determining its domestic distribution and exportation promote what the cultural historian David Nye describes as a ‘narrative of human ingenuity.’ Nye describes this as ‘a tale of transformation, in which clever technicians reveal how to achieve growth, progress, and personal success by discovering new resources or recycling old ones.’ 4 Nye describes the emergence of this narrative as a means of presenting atomic power to a wary public, ‘as a fuel thought to be cheap and inexhaustible…ensur[ing] unparalleled richness and opportunities for all.’ 5 Similar sentiments can be found in the official state literature describing the exploration and extraction activities at Ras Laffan:
“RasGas…has developed world-class offshore and onshore facilities for the extraction, processing and storage of gas from Qatar’s North Field…In December 2010, Qatar celebrated the achievement of His Highness the Emir Sheikh Hamad Bin Khalifa Al Thani’s vision for RasGas and its sister company Qatargas, under the guidance of Qatar Petroleum, to reach a production capacity of 77 Mta of LNG. Among LNG producing countries, Qatar now has the largest production capacity: it is the world’s leading producer of a strategically important energy source.” 6
Ras Laffan currently has an annual production capacity of 89 billion cubic meters, a significant increase in capacity compared to Qatar’s first LNG export of 160 million cubic meters to Spain in 1997. The North Field from which Qatari gas is extracted is the largest known gas field in the world, with recoverable reserves of more than 25 trillion cubic meters of gas, making up roughly 21% of proven global reserves of 208 trillion cubic meters. 7 With demand for gas expected to increase 4% per annum until 2020, 8 Qatar is rushing to expand production and transportation infrastructure to meet demand and maintain its status as the world’s primary LNG exporter (Fig.6).
The growth of LNG demand is influenced by a number of factors. Major consumers of LNG such as Britain, Japan and the United States are experiencing the gradual depletion of reserves, thereby limiting their ability to export gas (Fig.7). In addition, gas extraction methods such as fracking, which are necessary to extract all but the most easily accessible gas, have drawn a great deal of criticism from the media in the United States in particular, limiting its ability to export gas economically. A further limiting factor for the United States’ production and processing capacity is an increased sensitivity to the threat of a terrorist attack on an LNG carrier or facility. The threat of destruction inherent in the exploitation of energy sources is termed the ‘narrative of man-made apocalypse’ by Nye. Once again, this narrative emerged in the wake of atomic power, but more specifically, the atomic bomb. Nye suggests that following the bombing of Hiroshima, the ‘public was constantly reminded that both scientists and the systems they designed might get out of control.’ 9 Historic gas disasters such as the Cleveland gas explosion of 1944, coupled with post 9/11 sensitivity to the possible threat of terrorist attack has seen the narrative of apocalypse stifle LNG infrastructural growth in America (Fig.8).
Any LNG carrier entering U.S waters must provide 96 hours’ notice to the local authorities, and is met with a flotilla of vessels from the US coastguard, tasked with escorting each ship to its berth. Bridges along the route and nearby airports are closed for the duration of the ship’s passage. Despite these concerns, there is a great deal of demand for LNG in America, and the existing terminals - Everett, Massachusetts; Cove Point, Maryland; Elba Island, Georgia, and Lake Charles, Louisiana, are to be supplemented by a proposed 40 additional LNG terminals. The construction of these terminals is aggressively debated, as in the following heated exchange in Congress over Energy Bill HR6 in the Energy Policy Act of 2005, a bill designed to ‘move the United States toward greater energy independence and security’: 10
“Mr. Kennedy (D., RI)
“I will tell my colleagues, in Rhode Island we would welcome the chance to have our gas piped in from some other country because the fact of the matter is, our State knows, as every other State that has an LNG facility knows, that if we were to ever have that explode, it would decimate a 50-mile radius. We will take our lives over our jobs, over our taxes, over our security.”
Mr. Markey (D., MA,)
“If you just want the Federal Government to decide in the middle of your district where this most attractive of all terrorist targets will be located, then you vote ``no,’’ but understand the consequences on the floor today.”11
This exchange is an example of the interplay between narratives of abundance that support LNG as a reliable, clean fuel for the future, particularly dominant in countries such as Qatar, and narratives of apocalypse, which are gaining traction in Britain and the United States.
The UK has traditionally relied on natural gas deposits in the North Sea, but as in the U.S, the production potential of these fields is in decline, and extraction of additional reserves is proving uneconomical. The import of LNG is being promoted by the U.K. Government as a means of increasing the security and diversity of the UK energy supply, emphasizing the environmental benefits of gas compared to oil. A primary legislative tool in creating a shift towards LNG reliance was the government’s decision in 1997 to open up the UK gas market to international competition, allowing the UK to expand its natural gas consumption and decrease its reliance on oil. The government emphasizes the potential of LNG to meet the UK’s future energy needs, and technological innovations in the shipping industry that have led to a 30% reduction in emissions during transportation are described as a ‘cleaner way to transport clean energy.’ 12 Thamesport is currently the primary unloading and storage point of LNG in the UK (Fig.9), and the cost of expanding and consolidating the terminal has brought total investment in the plant to around £1.6 billion. 13 The terminal’s annual importation capacity is now 14.8 million tons, equivalent to 20% of UK gas demand, 14 with the UK import dependency forecast to exceed 70% by 2020.
The development of massive new infrastructures related to LNG in the UK, Qatar and around the world, is an evolution in global LNG trade that cannot be understood purely as the result of the discovery of additional reserves. The rapid growth in LNG infrastructures is largely tied to the economics and processes of the global shipping industry, rather than being an inherent result of LNG abundance. Fundamentally, an increase in transportation capacity allows LNG producers to take advantage of economies of scale; larger load capacities equivalently reduce shipping costs, which currently account for up to a third of the price of LNG (Fig.10). Strategies for increasing capacity can therefore generate significant additional profit for LNG producers whilst allowing them to lower product cost, a critical factor in successfully competing for market share.
The ability to increase transportation capacity and the concept of competition are fundamental tenets of maritime economics. Shipping is a truly global industry; businesses based in multiple global maritime centers compete on equal terms with a common language – English. Ships are not only physically mobile, but are able to choose their legal jurisdiction (flag), and with it, the tax and financial environment they operate in. The inherent mobility of the industry ensures that many parts of it still conform to the ‘perfect competition’ model developed by classical economists in the nineteenth century. 15 Supporting core shipping activities are shipbuilding and marine equipment industries such as the South Korean docks where the Bu Samra was constructed. Land based infrastructure such as shipyards and cargo processing facilities is a critical component of the shipping industry, and the primary patterns of its development are tied to the same economic principles that govern maritime trade.
In order to deliver cargo to a ship or distribute a newly-arrived cargo, an extensive network of roads, railways and waterways using trucks, rail cars and barges is required. This land-based system interfaces with sea-based transportation at ports, whose functionality is determined by the type and size of cargoes arriving, and the transportation and storage infrastructure that allows for the distribution of those cargoes inland. The extreme efficiency of the shipping industry is due largely to the economies of scale inherent in the transportation method. Modern transport logistics is therefore fundamentally concerned with integrating sea and land-based transportation systems to ensure cargo flows smoothly and with minimum manual handling from one part of the system to another. 16 This is achieved in three ways: firstly, by adopting international standards for the units in which cargo is transported to allow for truly international trade, secondly, by investing in integrated handling systems to allow cargo to move smoothly through a logistical network, and thirdly, by integrating distribution facilities as tightly as possible with transportation networks. 17 As a result, competition and cooperation are required in equal measure in global transportation infrastructure. In the case of the Qatari gas fields, the demand for cheaper transportation via ever-larger LNG carriers has driven massive infrastructural growth at Ras Laffan port, development that is necessary in order to ensure the lowest-cost, most readily available product (Fig.11). This optimization of logistical infrastructure allows Qatar to gain market share in an increasingly competitive market, and promote the use of gas as an economical energy source internationally.
The financial benefits of providing a more efficient transportation service results in a significant incentive to develop new technologies capable of meeting the demands of clients such as Qatargas, which owns and operates Ras Laffan. The growth in ship size driven by these demands has been made possible by numerous innovations in hull design and propulsion mechanisms. On-board liquefaction plants ensure that any off-gassing of liquid gas in holds is captured and re-liquefied, minimizing waste and greatly increasing transportation range, exposing new markets to LNG producers. Traditional steam turbine propulsion has proven too cumbersome and expensive at the scale of the new super-size LNG carriers, and has been replaced with slow-speed diesel engines which allow for more thermally and fuel efficient transportation. 18 These innovations have fed into other shipping classes, particularly containers, spurring a corresponding increase in the size of container ships and the facilities required to receive and distribute container cargo.
In Ras Laffan, the physical ramifications of this economic climate can be clearly seen on land. In the sweltering dry heat of a Qatari spring, the Bu Samra would have loaded at one of six massive new berths constructed to accommodate Q-Max class ships (Fig.12). Construction of the berths was made possible by an intensive construction process financed by a conglomerate of Qatari and international stakeholders – including Exxonmobil and Shell. Construction of the LNG terminals and berths was undertaken by two companies – Chiyoda and Technip, based in Japan and France respectively. Over the course of 5 years, 75,000 workers poured 750 million man-hours into the project, involving 86 nationalities, and more than 710,000 cubic meters of concrete. 19 In order to allow for delivery of manpower and materials, new roads and bridges had to be constructed, and existing infrastructure was upgraded. The LNG facilities comprise a part of a larger Ras Laffan Masterplan that seeks to maximize the capital investment in the area (Fig.13). Completion of the masterplan would make Ras Laffan one of the world’s largest industrial regions, currently covering an area of more than 295 square kilometers. 20 Infrastructure originally constructed for LNG processing and export is now being leveraged for a host of feeder industries such as helium production, a vast new campus for the accommodation of 115,00 workers, a new safety training college and other industries related to the exploration, storage and export of Qatar’s natural resources.
A degree of magnitude removed from the infrastructural developments in Qatar, the altogether different context of the Thames Estuary is providing the backdrop for an infrastructural expansion on the Isle of Grain. The Isle of Grain Thamesport LNG terminal is responsible for receiving LNG ships and unloading their cargo, storing LNG in cryogenic tanks, managing LNG stock, re-gasifying LNG based on market demands, and sending gas into national distribution systems. 21 In order to take advantage of the economically priced and readily available supply of LNG being exported from Qatar, Thamesport has had to invest in the construction of a new berth, completed on 1st December 2010, providing berthing for Q-Max vessels with a capacity of up to 265,000 cubic meters. However, the limited capacity of existing infrastructure and undeveloped national market also necessitated the construction of the world’s largest above-ground LNG storage tanks. The new tanks are each four times the size of the older tanks, quadrupling the handling capacity at the site (Fig.14). Each tank’s concrete structure alone weighs 72,000 tons, an unsupportable weight in the existing marshy ground conditions. To achieve the tanks’ construction, 1,500 concrete piles were driven into the ground to a depth of 24m to create a stable foundation. 22
National gas distribution infrastructure in Britain is calibrated to the chemical composition of North Sea gas, but the rising costs of extraction, and the government’s willingness to transition to gas as a primary energy source have made it more economical to continue to expand Thamesport with the addition of a plant to add 65 tons of Nitrogen per hour to imported LNG, allowing distribution through existing infrastructure. In addition, National Grid – which owns and operates the LNG terminal - is keen to exploit the ‘green’ credentials of Natural Gas: warm water is required in the re-gasification plant, and an adjacent gas-burning power-plant has been constructed, whose excess warm water is used in the LNG gasification process. National Grid advertises the environmental benefits of this approach: “By using the heated water generated by the power station, Grain LNG can save enough fuel to heat 241,000 homes for a year and reduce carbon emissions by up to 300,000 tons every year, equivalent to taking 100,000 cars off the road. It also means that less heat is dispersed by the power station.” 23 This statement echoes the broader environmental narrative that accompanies the massive infrastructural ramifications of this shift towards a reliance on natural gas. Companies such as National Grid are keen to portray LNG as a safe, reliable energy source of the future, downplaying the threat associated with the fuel, and distancing it from its atomic predecessor.
The construction of the new berth at Thamesport has also increased the size of container ships that are able to berth at the port, accommodating new Post-Panamax class container ships of up to 13,000 TEU that have been constructed to take advantage of the recent technological developments in ship construction. An 87 hectare container park for the storage and distribution of containers has been constructed to deal with this increase in capacity, and rail and road links are continuously updated to meet demand and optimize the capital invested in upgrading the region’s infrastructure. The importance of multi-modal transportation services in today’s market also led to a new masterplan for the area by Foster + Partners, which proposed the construction of a new airport hub on the Isle of Grain directly adjacent to the LNG and container terminals (Fig.15). The airport would be the largest in the world, allowing for efficient onward distribution of goods from the port. The Isle of Grain would also serve as the hub for a new railway connecting lines in the North of England with the rest of Europe. The intent for the masterplan echoes the ambitions of Ras Laffan city in its desire to synthesize and consolidate existing operations to maximize efficiency and take full advantage of the cost-efficiencies related to the economies of scale that drive the shipping industry.
The physical effects of the development of ships such as the Bu Samra are not restricted to its berthing points. In order to reach the Isle of Grain, the Bu Samra would have passed through the Suez Canal (Fig.16), which allows ships to bypass the Cape of Good Hope by linking the Mediterranean and Red Seas. The Bu Samra would have floated through the 195km long canal in a convoy, guided by a series of tugs in a journey taking between 12-15 hours. For workers at one of the canal’s two shipyards – Port Said and Port Tawfit, the sight of a ship the size of the Bu Samra is a relatively new sight. The Suez Canal Authority has had to continuously upgrade and modernize the canal to meet the burgeoning demands of global markets, increasing the permitted draft from 58ft to 66ft in 2006, with current plans set to increase the draft to 72ft in order to allow VLCC (Very Large Crude Carriers) to pass through the canal. The shape of the canal is changing significantly above-water too, as existing passing lanes 24 have had to be lengthened and widened to accommodate new ship classes. The average cost of passage for a single ship is $251,000, and revenues from the canal generate roughly $5.381 billion annually, the single largest source of revenue for the Egyptian government, and an important driver of the local economy. 25 The changing landscape of Suez reflects the canal authority’s desire to capture the greatest possible market share of existing and emerging markets, but the canal itself is also an important regional hub, whose evolution into the primary point of passage for a significant proportion of global trade has been mirrored by the development of numerous adjacent communities and service industries (Fig.17). 12,000 homes have been built to accommodate the canal’s construction workers and administrative staff, serviced by a new hospital, 4 schools, a football stadium, a golf club for canal executives, tennis club and numerous other facilities. In addition, the canal authority has undertaken to provide numerous roads linking the canal to other regional hubs. The canal’s desalination facilities also provide clean water to much of eastern Egypt, while ecological initiatives use waste water from the canal to irrigate surrounding land and allow for silk production and farming activities. 26 The growth of the canal from its opening in 1869 has therefore had a radical physical, economic and social effect on Egypt as a whole, and its continued growth to meet the demands of today’s shipping industry has ensured a continued positive impact on the region (Fig.18).
From the oil fields of Qatar, through the Suez Canal and on to its final destination at the Isle of Grain’s LNG terminal, the Bu Samra therefore navigates not only a well-travelled maritime trade route, but also a dense constellation of seemingly intangible market forces, energy narratives, and political environments (Fig.19). At each stage of the way, the Bu Samra’s passage serves as a spotlight highlighting the potential of these forces to coalesce into physical form, spurring the creation of spatial products that range from the massive new oil tanks bookending the Thames estuary at Thamesport, to a state-of the art hospital in Suez, to the newly poured asphalt defining the approach to Ras Laffan Industrial City. The form and scale of these spatial products is not tied to a single legislative or financial environment; they are shaped by the constantly shifting relationship between trade and territory, competition and control, and numerous other interrelated forces. The Bu Samra is a single point, its wake crashing against the concrete of myriad projects that represent the momentary and often unpredictable ossification of a continuously fluctuating global field.
2 Geoffrey Lean. Rich World, Poor World. (London: Allen & Unwin, 1978), 185
3 The global liquefied Natural Gas Market: Status & Outlook. Report issued by the Energy Information Administration at the U.S Department of Energy. Washington D.C : 2003.
4 David E. Nye. Narratives and Spaces: Technology and the Construction of American Culture. (New York: Columbia University Press, 1997), 81
5 Nye, 81
9 Nye, 83
11 Congressional Record (Bound Volumes): Volume 151, Part 16, p 7367
15 Martin Stopford. Maritime Economics. (London: Routledge, 1997), 48.
16 Stopford. Maritime Economics, 52
19 “LNG in Ras Laffan, Qatar” Publicity material produced by Technip, downloaded at http://www.technip.com/sites/default/files/technip/publications/attachments/Qatar_November_2011_Web.pdf
24 Allowing 2 ships to pass each other travelling in opposite directions
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