17th international conference & exhibition on liquefied ... · 17th international conference...

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<Title of Presentation> By: <Author Name>, <Organization>

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17th INTERNATIONAL CONFERENCE & EXHIBITION

ON LIQUEFIED NATURAL GAS (LNG 17)

CRITICAL SUCCESS FACTORS FOR

ELECTRICITY GENERATION PROJECTS

BASED ON LNG

By: Pablo Quiroga, Repsol-Gas Natural LNG

Enrique Dameno, Repsol

April 18th, 2013

17th INTERNATIONAL CONFERENCE & EXHIBITION ON

LIQUEFIED NATURAL GAS (LNG 17)

© STREAM

2

Content

1. Introduction and purpose

2. Infrastructure

3. Business models and challenges

4. LNG market: competition, hurdles, regulation

5. Conclusions

BBG regasification terminal and BBE CCGT power plant. Bilbao

V3

© STREAM

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Introduction and purpose

This presentation outlines the challenges that the

sponsor of an LNG power generation project faces, the

ways to overcome them and be successful

1

Oil prices have driven power

generation costs extremely

high in many markets

Natural gas is seen as one

solution to reduce the energy

bill

Not all projects manage to

fulfil their objectives in time

and within budget Source: World Energy Outlook 2012. IEA

-

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

10 000

2010 2015 2020 2025 2030 2035

Po

we

r C

ap

ac

ity (

GW

)

World Power Plants Capacity by fuel type

Marine

CSP

Solar PV

Geothermal

Wind

Bioenergy

Hydro

Nuclear

Gas

Oil

Coal

CSP: Concentrating Solar Power

Solar PV: Solar Photovoltaics

Energy is one of the key

factors in economic

development

© STREAM

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Infrastructure. The facilities 2

LNG Terminal Electric power plant

LNG Discharge

and reception

LNG

Storage

LNG

Regasification

Electricity

generation

Transformation and

Delivery to the network

ECOELECTRICA regasification terminal and power plant. Puerto Rico

© STREAM

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LNG regasification terminal 2 Typology Onshore and Offshore

Onshore

81 Terminals

Sendout capacity range:1 to 30 Bcma

LNG Storage: 30,000 to 2,700,000 m3

1 or 2 berthing points

Offshore

14 Terminals

Regasification vessel

11 Terminals

Dock sendout

8 Terminals

Sendout capacity range:1 to 4 Bcma

LNG Storage: 125,000 to 150,000 m3

0 or 1 additional berthing point

Buoy sendout

3 Terminals

Sendout capacity :4 Bcma

LNG Storage: 138,000 to 150,000 m3

No berthing point GBS

1 Terminal

Sendout capacity: 8 Bcma

LNG Storage: 250,000 m3

1 berthing point

Mixed configurations

Vessel storage and onshore regasification

2 Terminal

Sendout capacity: 2 Bcma

LNG Storage: 162,000 m3

1 berthing point

Note: Typical ranges

Onshore

(Canaport LNG terminal)

GBS

(Adriatic LNG terminal)

Dock sendout

(Bahia Blanca GasPort)

Buoy sendout

(Neptune LNG terminal)

Mixed configuration

(GNL Mejillones)

© STREAM

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Power Generation 2 Power plants typology

Steam cycle

Potential fuels: solid (coal, wood, waste), liquid (oil), gas (LPG, natural gal)

Efficiency: 25% - 45%

Gas turbine

Potential fuels: liquid (diesel oil), gas (LPG, natural gas)

Open cycle gas turbine



Combined cycle gas turbine



Reciprocating engine

Potential fuels: liquid (oil), gas (LPG, natural gas)

Reciprocating engine without heat recovery



Reciprocating engine with heat recovery



Steam cycle power plant

(Narcea Power Plant. Spain)

Combined cycle gas turbine

(Barcelona Port Power Plant. Spain)

Reciprocating engines power plant

(Iberafrica Power Plant. Kenya)

© STREAM

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Business models 3

Model A

LNG Terminal

Facilities

Power Plant

Facilities

Project

Company

EPC

Contractor 1

Credit

Lenders

LNG

Supplier

Electricity

Consumers

EPC

Contractor 2

EPC Contract EPC Contract

EPC: Engineering, Procurement & Construction

LNG SPA PPA

Construction Construction

Equity Equity

Credit

LNG Flow Gas Flow Electricity

SPA: Sales & Purchase Agreement

PPA: Power Purchase Agreement

© STREAM

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Business models 3

Model B

LNG Terminal

Facilities

Power Plant

Facilities

Project

Company

BOO

Company Credit

Lenders

LNG

Supplier

Electricity

Consumers

Guarantees

Services

Contract

LNG SPA PPA

Equity Equity

Credit




BOO: Build, Own & Operate

© STREAM

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Business models 3

Model C

LNG Terminal

Facilities

Power Plant

Facilities

Project

Company

BOO

Company

Credit

Lenders

LNG

Supplier

Electricity

Consumers

Services

Contract

LNG SPA PPA

Equity Equity

Credit





EPC

Contractor 2

EPC Contract

Construction

Credit

EPC: Engineering, Procurement & Construction

© STREAM

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Business models 3

Model D

LNG Terminal

Facilities

Power Plant

Facilities

Project

Company

Credit

Lenders

LNG

Supplier

Electricity

Consumers

TSA

TSA: Terminal Services Agreement

LNG SPA PPA

Equity Equity

Credit




BOO

Company 1 BOO

Company 1

Credit

Guarantees

PGSA


PGSA: Power Generation Services Agreement

© STREAM

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Business models 3

Tolling Model

LNG Terminal

Facilities

Power Plant

Facilities

Project

Company Credit

Lenders

LNG

Supplier

Electricity

Consumers

Services Contract

LNG SPA

Equity Equity

Credit



Guarantees

© STREAM

12

Business challenges 3

Power

Market

LNG

Market

Power demand

Uses of electricity

Seasonality

Medium to short term

Reliability

Conditions precedent

Price issues

PPA

Spot power market with

no firm commitment

Global market

Steady production

Take-or-pay

Medium to long term

Guaranties

Conditions precedent

Price issues

LNG SPA

Reduced LNG spot

market

© STREAM

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Power generation economic model 3

Fuels historic

prices estimation

Price Fuel1 = SLP1 * RI + K1

Price Fuel2 = SLP2 * RI + K2 · · · Price FuelN = SLPN * RI + KN

Fuels historic

prices

Reference index (RI)

historic prices

Current electric

system

Costs of electricity

generation

Costs of electricity

generation with gas

Other costs: regasification,

gas transportation, etc.

Current averaged

generation costs CostElectricity = SLPE * RI + KE

Ceiling price

for gas Ceiling priceGas = SLPG * RI + KG

Ceiling price

for LNG Ceiling priceLNG = SLPLNG * RI + KLNG

Fixed costs Variable costs

Amortization Fuel

Financial costs Emissions (CO2)

Fixed taxes and fees Income Tax

Fixed Operation and Maintenance Variable Operation and Maintenance

© STREAM

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Real life markets are very complex structures

LNG market 4

Small-Mid Scale Regas Project

Engineering &

Technology

Commercial & Markets

Permitting & Authorities

Organization & Structure

Finance

Competitors

Geopolitics

Energy Markets

Risks

LNG Regas and

Power Generation

Project

Environment

© STREAM

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Business challenges 5 Financing

Access to

LNG supply

Commercial

aspects

Gas

regulation

Environment

Electricity

regulation

LNG

technology

Power

generation

technology

Pro

jec

t 1

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Most

Important

Least

Important

© STREAM

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Wrap up 5

LNG is available only to those able to compete with worldwide

LNG demand

LNG price is a significant issue. Economic models ought to

estimate if LNG will be competitive if introduced in an existing

power market

Project sponsors must overcome many uncertainties. Risk

mitigation is mandatory, both for the power generation business

as well as for the LNG supply business

If you want different results, do not do the same things.

- Albert Einstein -

© STREAM

17

Thank you for your kind attention

www.streamlng.com

Pablo Quiroga L. REPSOL – GAS NATURAL LNG

Business Development & Technology Manager

[email protected]

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