Transit Stud Rev (2009) 16:571–576 DOI 10.1007/s11300-009-0094-x

From the Heart of the Middle East, the Energy of the Future: North Adriatic LNG Terminal Arianna Posenato

Published online: 15 May 2009 Ó Springer-Verlag 2009

Abstract Petroleum is still our most important energy source and it will certainly remain that way for a long time to come. Moreover, an end of oil use is not foreseeable at the present. However, reserves are declining. Liquefied natural gas (LNG), on the other hand, is available in abundant quantities. Nevertheless, the use of LNG is useful to solve a significant problem: the LNG power stations produce much lower CO2 emissions than petroleum. In fact, an 80% carbon dioxide reduction should be possible, as several companies are currently working on cleaner power stations, such as the LNG ones. Alternative energies are often not used enough as sources of energy. It is therefore all the more important that energy companies put a great deal of effort into supporting sustainable energy and developing cleaner technology, in order to make people less dependent on power from petroleum. Keywords

Natural gas
Energy cooperation
Environment

JEL Classification

Q40
Q31
Q49

Why LNG? Producing more energy and reducing emissions. In order to satisfy these two needs, the methane, as precious and clean source of energy, is by far the best solution. The Italian consumption is projected to rise by 50% in the next decade, while the national production is going to be declining. Nearly the total amount of gas destined to cover the Italian needs will have to be imported. At the moment, the imported gas comes from four methane pipelines, each one linked to the suppliers (Russia, Algeria, Libya, North Europe). LNG delivery A. Posenato (&) Luiss University, Rome, Italy e-mail: [email protected]

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through ships, on the contrary, could permit a major flexibility in the transport and the access of a competitive product to the farther markets, which is unable to reach local markets otherwise.

The Great Tank of Tomorrow In the 1970s the Gulf’s money was a disaster for Latin America, as it caused a decade-long debt crisis. The Gulf itself suffered by inflicting stagflation on the West, thus causing a 20-year-long slump in oil prices. Again, in the 1990s many of the Gulf’s governments were indebted and insecure. Today the Gulf is once again a source of envy more than concern, as it is managing its wealth better during this boom than it did during the last one. In particular, the Emirate of Qatar is arousing curiosity: according to a research conducted by the Institute of International Finance, it is said to be the least populated State in the Gulf with a double level of GDP per person ($67,000) respect to those in Kuwait and the UAE, and with the highest hydrocarbon revenues per person in the Gulf. By the way, the hydrocarbon reserves hidden in the bowels of Qatar have turned it into an object of great interest not only for the oil industry, but also for the general public which follows the complex issues revolving around the development and procurement of energy resources. In the vast geography of the countries where ExxonMobil is at work for exploration and development of hydrocarbons, ExxonMobil’s entry into Qatar is relatively recent. This country is experiencing a deep social and political change, moving to a new phase, backed by a thrust for renewal which gave a very strong acceleration to economic development.

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The partnership between ExxonMobil and Edison (the Italian Energy Company) with the national Oil Company (the Qatar Petroleum) is the protagonist of one of the biggest oil industry project in the world today, one that will make it possible to develop knowledge crucial to get a competitive lead. Yet, also in the light of some points discussed by the parties, such as, for example, the postponement of production start up, not only has the difficulty of this project been duly appreciated, even though it is undoubtedly one of the most complex ever experienced by the oil and energy industry and requires for its development the best technological and operational resources available. What we want to propose is a clear focus on this global project, which will offer many advantages for the Qatari–Italian partnership. Besides being an excellent technological structure in the Italian production contest, it will also represent an important base of Economic advance for the local operators and, at the same time, an event of great visibility in the international panorama. Moreover, Italy and Qatar are willing to reach an agreement to create special conditions for the gas purchase and for socio-economic interest. Finally, the terminal, according to the Italian commitments with the Kyoto Protocol, will provide clean energy for the whole country.

Terminal’s Technical Features The North Adriatic LNG terminal will be a major import terminal positioned off the north-eastern coast of Italy (Isola di Porto Levante), 17 km offshore in 30 m of water, between Venice and Punta della Maestra in Rovigo. The terminal will provide the Italian gas market with LNG supplied from RasGas II Train 4 in Qatar beginning by the end of 2008 (even though it was supposed to be operative by April 2008). Italy will be able to rely on the delivery of about 6.4 billion cubic metres of natural gas a year for 25 years. The $900mln terminal will receive LNG ships nine miles offshore every three days, regasify and transmit gas to an onshore metering station where it will enter the Italian grid. Adriatic LNG is an Italian company set up to build and operate the platform; it is owned by affiliates of Qatar Petroleum (45%), ExxonMobil (45%) and Edison S.p.a. (10%). The Italian Energy Company Edison is 90% run by ExxonMobil and Qatar Petroleum. The reception terminal, which has been designed to receive up to 6 million tons of LNG per annum, consists of a gravity base structure (GBS) which is a type of artificial island to be installed in shallow water and is the first of its kind in the world. Due to its size, the GBS must be constructed within a ‘casting basin’ or dry dock. Once the construction has been completed, the dock will be flooded and the caisson floated to its subsequent mooring in the Adriatic Sea. Production of LNG from Ras Laffan LNG Company II Train 4, shown at left, began just 29 months after major construction contracts were awarded.

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Capacity for Italian Gas Markets A total of 80% of the terminal capacity will be allocated to Edison for 25 years. Edison has signed a sale and purchase agreement with RasGas II covering this commitment. The remaining 20% of the capacity will be available to third-party users. The Adriatic LNG platform is one of only two in the world currently being constructed. A second Italian project, involving the mooring of a Floating Storage and Regasification Unit (FSRU) off the coast of Livorno, is due to come on-stream at about the same time. With the Adriatic LNG terminal, the Veneto Region and northern Italy will have a new energy facility that will benefit the economy of the country as a whole. The construction of new LNG terminals in Italy has been declared of national interest by the programme drafted by the National Energy and Environment Conference organised by ENEA on behalf of the Government in 1998.

Adriatic LNG Platform Construction The project began in October 2003 and the major contractor for the GSB LNG terminal is Aker Kvaerner. The Company was awarded the front-end engineering design (FEED) contract worth $21mln in January 2004 and was also awarded the contract to conduct detailed design and planning activities in June 2004. The concrete casing of the Adriatic LNG terminal is currently being constructed at the Aker Kvaerner’s yard in an existing dry dock in Campamento, in the bay of Algeciras (south of Spain). The Spanish Company Arup, which has entered into a framework agreement with its client Aker Kvaerner, is managing and designing several aspects of the infrastructure and is carrying out various work activities under this agreement ranging from designing the infrastructure, civil works, site supervision of the depth of the dry dock to advise on Spanish health and safety regulations, regulatory issues and negotiation with utility companies. Another Spanish Company, Acciona, an engineering one, is also working on the construction of certain aspects of the project. The GSB terminal is a concrete platform structure 180 m long, 88 m wide and almost 50 m high. The deck of the GSB provides space for an accommodation block with 60 beds, utility systems such as power generators and 8,000 t of process equipment for LNG regasification. The structure will be equipped with berthing and mooring systems for unloading LNG and can accommodate LNG carrier vessels with capacities up to 152.000 cubic metres of LNG. Two other key players, Necso Madrid and Gleitz Salzburg, are responsible for formwork engineering services on the platform, as lead contractors and designers.

Offloading Gas at the Terminal FMC Technologies SA of France is responsible for the construction of the all-metal LNG offloading system for the project. All-metal marine loading arms have been

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designed and supplied to meet the operating requirements for LNG carriers exposed to wave conditions. The special offshore all-metal loading system provides a viable solution for loading/unloading operations in exposed climate conditions without having to build breakwaters. Wave-induced motions of LNG carriers while at the terminal necessitate the use of a cable targeting system to ensure that operators are able to safely and reliably connect to and disconnect from the manifold flange. The targeting system was tested in full scale during the yard erection test and it was also evaluated during the comprehensive failure mode effect and criticality analysis (FMECA) that was conducted prior to EPC.

The Storage Tanks Hyundai heavy industries (HHI) of South Korea completed the construction of two large storage tanks for the new Adriatic LNG GBS in mid 2006. Each of the rectangular tanks, which are made from 9% nickel steel, weights 4,800 ton and has a capacity of 250,000 m3. The tanks are protected with high-resistance concrete double walls with inert materials (sand) between the two walls. Skanska Whessoe Ltd. of Darlington, in the UK, designed the tanks and subcontracted the $110mln fabrication project to HHI. HHI is using special barges to ship the tanks, each one split into six modules, to Aker Kvaener’s yard where the GBS terminal is being built. On arrival, the tanks will be assembled and placed within the concrete casing of the GBS terminal.

What Happens to the Gas? The terminal will receive only two or three tankers a week and will transfer LNG into the two special tanks. The platform can then regasify the LNG as a controlled process. After vaporisation on the terminal, the LNG will be sent to shore through a 76 cm diameter natural gas pipeline laid under the seabed in order to avoid interfering with the environment and maritime activities. The pipeline’s landfall will be south of the Levante Po River, mouth near Scanno Cavallari and will continue underground onshore to the metering station that connects it to the national grid. SnamProgetti, an ENI affiliate, will be the contractor for the pipeline. An onshore logistics base along the Levante Po will provide support for the terminal’s operations.

Upstream Enhancements Qatar Petroleum and ExxonMobil are joining a partnership making a considerable number of upstream investments associated with the project. These include a wellhead platform with an expected seven wells, pipelines, a 4.7MTA LNG train at

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Ras Laffan City and five conventional LNG tankers to supply the new LNG terminal.

Security and Environment All the aspects over the project, with particular care of security and environmental protection, have been checked on the basis of the most compulsory international standards and have passed all the technical examinations. In respect of the environment, with the contribution of ICRAM (Central Institute for scientific and technological Research Applied to the Sea) and ARPAV (Regional Agency for Prevention and Environmental Protection), an Environmental Plan has been created to provide a check-up of the several participating sites of the project (sea, land, atmosphere) before the start-up, on going and during the practice of the terminal. The terminal will also be equipped with a modern radar-control mean and an anti-collision signal system, in order to avoid possible accidents and minimise the risk for the methane tank, besides resisting to exceptional events, such as storms and seaquakes.

References Notes from a Conference lead by Mr. Falcone (ExxonMobil) and Mr. Pianese (Confindustria) at Luiss, titled ‘‘The Energetic Need in a long lasting term’’ (Rome, 6th June 2008) The Economist magazine (5th copy, May 2008. ‘‘The Rise of the Gulf. Managing Massive Wealth’’)

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