trb.lng challenges.graykowski
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Multimodal Regulatory and Market Challenges
John E. Graykowski
Maritime Industry Consultants
July 18, 2013
Maritime Industry Consultants 2
Cost advantages
Emissions Reductions
Abundant Domestic Supplies
Consistent with National Energy Policy Objectives
LNG has the potential to transform the maritime and transportation industries!
Why LNG?
Maritime Industry Consultants 3
Domestic supplies of natural gas will continue to increase. LNG will remain less costly as transportation fuel compared with ultra-
low sulfur diesel. Environmental regulations of mobile source emissions will increase,
particularly in the maritime industry. Marine and domestic transportation industries will continue movement
to LNG; creating high volume potential market for domestic gas. International maritime operators will acquire LNG-fuel capabilities and
expect U.S. supplies to be available.
LNG/CNG will become common marine/transportation fuel in next five years.
Assumptions
Maritime Industry Consultants 4
Chicken and egg” problem; e.g. no available infrastructure to support/signal investment in LNG conversion or new equipment; and no certain demand to justify LNG infrastructure investment.
Lack of clear, uniform federal regulatory structures on siting, permitting, operations of small-scale LNG fuel terminals.
Local permitting required; opportunities for intervention by environmental community; NIMBY
Lack of familiarity, understanding, and relationships between marine/transportation industries and gas distribution industry; incompatible fuel pricing and purchasing models.
A catalyst is needed to provide credible signal to marine and transportation industries and federal agencies that LNG infrastructure will be available to the marine and transportation industries.
Challenges to LNG Expansion
Maritime Industry Consultants 5
Ports will be at center of LNG activity in marine industry and platform for expansion to expansion to ferries, trucks, port infrastructure, etc.
Ports control property, have role in siting, permitting, cost and operations of an LNG marine fuel terminal.
Ports have interest in working with regulatory agencies to ensure safe operations. Goal: uniform safety and operational procedures for all LNG marine fuel terminals in the United States.
Ports in best position to work with marine operators and gas suppliers to build broad public support for LNG in transportation industries and facilitate expansion of LNG/CNG use in and around port areas.
Ports can serve as the “anchor” for broad deployment of LNG throughout United States!
Ports as Catalyst
Maritime Industry Consultants 6
Significant and near term emissions reductions in port areas.
Ports viewed as leaders in “Green” initiative and leading expansion of domestic use of domestic natural gas.
LNG infrastructure investment creates new market and employment opportunities.
“First mover” advantages created for ports that lead LNG effort; will be in position to compete for international liner vessels as global LNG conversion occurs.
Opportunities for Ports
Maritime Industry Consultants 7
Federal, State, Local
Regulatory
Marine Operators
Shipyards
PORTS Marketing and public relations
Gas Supply
Interstate and local trucking,
Transit
Rail
Pieces of the Puzzle
Maritime Industry Consultants 8
USCG 33 CFR Part 127 “Waterfront facilities handling liquefied natural gas and liquefied hazardous gas”
PHMSA 49 CFR Part 193 “Liquefied Natural Gas Facilities: Federal Safety Standards”
NFPA 59A NFPA 59A: Standard for the Production, Storage, and Handling of Liquefied Natural Gas (LNG)
FERC Section 7 of the Natural Gas Act (15 USC § 717 et seq.).
Regulatory Gaps with marine facilities
Maritime Industry Consultants 9
Existing regulations aimed at large import/export facilities NOT small scale marine terminals
Regulations conflict or are silent on marine fuel terminals
Application of current regulations has potential of increasing cost and regulatory burdens to point of infeasibility
Terminal property limitations
Why a concern?
Import/Export vs Bunkering
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Import/Export LNG Shoreside Plant
Scale 2 – 3 mtpa 0.2 - 0.4 mtpa
Siting 100’s of acres 10’s of acres
Ship size 87,000 – 200,000 m3 2,000 – 10,000 m3
LNG Flow Rate 12,000 – 14,000 m3/hour 300 – 600 m3/hour
Proposed Corpus Christi LNG Imp./Exp
600+ acres
Notional LNG Bunker facility
+/- 30 acres
Maritime Industry Consultants 11
33 CFR 127.001 Subparts A and B of this part apply to the marine transfer area for LNG of each new waterfront facility handling LNG and to new construction in the marine transfer area for LNG of each existing waterfront facility handling LNG
§ 127.005 Waterfront facility handling LHG means any structure on, in, or under the navigable waters of the United States, or any structure on land or any area on shore immediately adjacent to such waters, used or capable of being used to transfer liquefied hazardous gas, in bulk, to or from a vessel.
Part 127.009 The Coast Guard is authorized by law to establish water or waterfront safety zones, or other measures for limited, controlled or conditional access and activity, when necessary for the protection of any vessel, structure, waters or shore area.
USCG Authority
Maritime Industry Consultants 12
49 CFR 193.2001 This part does not apply to:
In the case of a marine cargo transfer system and associated facilities, any matter other than siting pertaining to the system or facilities between the marine vessel and the last manifold (or in the absence of a manifold, the last valve) located immediately before a storage tank.
§ 193.2007 Definitions.Waterfront LNG plant means an LNG plant with docks, wharves, piers, or other structures in, on, or immediately adjacent to the navigable waters of the United States and any shore area immediately adjacent to those waters to which vessels may be secured and at which LNG cargo operations may be conducted.
PHMSA/USDOT Authority
Maritime Industry Consultants 13
Part 127, “LNG loading flanges must be located at least 300 meters from “each bridge crossing on a navigable waterway.”
NFPA 59A, “a pier or dock … shall be located so that any marine vessel being loaded or unloaded is at least 30 meters from any bridge crossing a navigable waterway. The loading or unloading manifold shall be at least 61 meters from such a bridge.
NFPA 59A, “General cargo, other than ships’ stores for the LNG tank vessel, shall not be handled over a pier or dock within 30 meters of the point of transfer connection while LNG or flammable fluids are being transferred through piping systems.”
Regulatory Uncertainty
Maritime Industry Consultants 14
LNG is new to transportation industries, government and country.
Opportunity to create public policies which:◦Provide uniform regulatory certainty ◦Encourage development of LNG as a transportation fuel◦Provide incentives to industry for rapid expansion of LNG
infrastructure and uses of LNG
LNG is coming to the transportation industry for reasons of cost, abundant supplies and environmental compliance. The ports can and should play a central role in this development.
What can be done?
Maritime Industry Consultants 15
Need genuine public/private partnership among all stakeholders
Led by transportation industries, gas suppliers and ports
Need clear policy commitment and action from Administration and Congress to support LNG/CNG as preferred transportation fuel.
Approach
Maritime Industry Consultants 16
John E. GraykowskiMaritime Industry Consultants
Thank You!