In 2001, EnerSea introduced a major breakthrough in CNG marine transport technology: its VOTRANS (Volume Optimized Transport and Storage) system. The patented innovations advanced by VOTRANS include a 60 to 100 percent increase in the gas that can be stored per unit of containment steel, along with a 10 to 20 percent increase in the quantity of gas cargo that can be cost-effectively evacuated from the CNG storage system, compared with conventional CNG concepts. This performance is made possible with VOTRANS’s optimization of storage conditions and by employing its proprietary gas-loading and discharging processes.

The net result of VOTRANS is a greatly improved cost effectiveness for the transportation of CNG by sea. As a regional solution, VOTRANS CNG marine transport offers a useful alternative to the use of liquid hydrocarbon fuels and LNG deliveries.

Where’s the gas?

Breaking News: Energy prices remain near historic highs, having been sustained at or near record levels for several years. Supply capacity is tight and consumer demand is ever increasing, with no downturn in sight.

This is the kind of news that sets project developers’ hearts aflutter. So why haven’t the new gas commercialization technologies been able to deliver on their promise to help connect remote, undeveloped gas resources with increasingly desperate energy markets?

Instead of forging ahead on apparently robust margins and a rosy outlook, a number of major gas projects are stalled. The headlines are full of tales of delay and frustration, with anticipated gas development projects such as Gorgon, Gassi Touil, Camisea, Sakhalin, Sunrise, and many more continuing to sputter along or postponed altogether.

At the same time, markets in the Caribbean, Mediterranean, Southeast Asia/Asia Pacific, and elsewhere that lack easy access to multiple and plentiful fuel sources are desperately seeking gas import solutions. Poorly connected energy-consuming markets now have little choice but to pay between $8 and $15 per million Btu for fuel oil and diesel stocks that might be satisfied by more affordable natural gas imports.

These markets are eager to provide gas to their consumers, but there are few non-committed, long-term LNG supplies available to satisfy the burgeoning demand. But even given such a hospitable climate for gas development, no major E&P companies approved new LNG liquefaction plants in 2006.

A few reasons emerge for why LNG projects are being delayed or cancelled. For one, massive capital-intensive projects are almost always complex, involving diverse stakeholders with often conflicting (and not always economic) agendas, and thus they take a long time to plan and approve. This has always been the case for such large-scale projects, but additional factors explain their slow progress, given such a seemingly favorable climate.

The most commonly cited culprit is project costs, which have recently escalated at a staggering rate. This trend, prevalent throughout the petroleum industry due to supply and demand forces created by sustained high oil prices, is particularly acute in the LNG sector. Bechtel Group, Inc. has indicated that new LNG plant construction costs have risen three-fold over the past six years, and Poten and Partners, Inc. has reported a similar trend.

Zeus Development Corp. has investigated cost escalation of LNG projects and suggests that the causes include rising steel prices (particularly the price explosion for nickel steel needed for LNG), environmental issues, and EPC costs due to a shortage of LNG engineers and construction workers.

Is there reason to expect that current CNG marine transport projects won’t suffer a similar fate? Fortunately there is good evidence to support the CNG efforts.

The VOTRANS system is not immune from some of the LNG cost drivers mentioned above, but it does have some important advantages. First, the CNG containment system is designed to use high-strength carbon steel – no expensive high-nickel steels or other alloys are needed. It is based on standard hull designs and proven gas-processing and handling components, so a greater base (and lower cost) of engineering and construction personnel, equipment, materials, and yards can be employed in project execution.

Because CNG projects are smaller in scope than LNG ones, some of the governmental and supply cost drivers can be mitigated. Export volumes need not be sourced by the world’s gas elephants, and many regions with smaller resources can be considered for CNG projects. Therefore, CNG solutions can access supplies with more favorable export gas prices as well as government-take terms for the producers. Also, CNG receiving facilities cost a fraction of LNG terminals, especially from the perspective of smaller markets, further improving the economics of delivered gas via CNG.

Despite the use of extensively proven processes and materials, VOTRANS is often deemed “new technology” since it is not yet operating in a commercial service. To address this concern and to satisfy American Bureau of Shipping class requirements, EnerSea undertook rigorous prototype testing and validation programs of the VOTRANS containment cylinders and process system during 2004 and 2005. Ten full-scale storage cylinders were tested along with a fully functional model of the VOTRANS gas-loading and offloading process system. The successful results from both test programs were approved by ABS, which has granted Class Approval in Principle to EnerSea and also declared that the VOTRANS system is now ready for project construction phase.

In addition to its efficiency and cost effectiveness, the VOTRANS CNG system is highly flexible and lends itself to a diverse range of applications. These features include the ability to load and offload CNG vessels from either near-shore jetties or offshore buoy terminals; accommodation of either lean or rich/associated gas streams; project scalability by simply deploying additional ships to the fleet; and the ability to redeploy vessels and terminal equipment.

VOTRANS transport solutions have been designed for projects having a wide range of gas rates – from relatively small volumes (10 million to 70 million cubic feet per day) using CNG barges, to very large volumes (over 500 mmcf per day) transported by VOTRANS ships.

Regions with the potential for CNG projects span the world, and include areas that have marine-accessible gas resources located between 100 and 2,500-plus miles from coastal markets. Some particularly ripe areas include the Caribbean and Mediterranean Seas, the coasts of Africa and South America, Atlantic Canada, and Far East/Southeast Asia. Over the past two years EnerSea has been engaged in planning efforts for many projects worldwide. So when will a CNG project receive its final investment decision and enter construction and operation? The answer is still unclear, due to the variety of project issues and stakeholders involved in gas infrastructure projects, especially international ventures. However, given the number of CNG prospects moving into advanced stages of development planning, there is reason to expect that there will be a final investment decision to approve a project within the next year.

Once this occurs, the major hurdle for CNG projects will be gone and the projects currently “racing to be number 2” will sail ahead.

John Dunlop is the VP of business development at Houston-based EnerSea Transport LLC.