The Department of Energy (DOE) announced late last month that Houston-based Conversion Gas Imports, LLC (CGI) recently reported its findings on the “Bishop Process” — a novel method of unloading and regasifying liquefied natural gas (LNG) directly from ocean tankers for storage in underground salt caverns. The DOE said initial indications are that a salt cavern-based LNG terminal can be built at about half the cost and twice the capacity of a conventional liquid tank terminal.

The news follows Secretary of Energy Spencer Abraham’s meeting in June with the National Petroleum Council (NPC). During the meeting, Abraham heard their recommendations on engaging consumers in smart energy use and on increasing natural gas supplies, which currently remain tight. The energy secretary had earlier called upon the NPC to host a meeting later this year to discuss natural gas supplies, but felt the situation needed more immediate attention. Abraham also called for a Global Natural Gas Summit, to be held later this year.

“The Bishop Process, if proven successful, has the potential to significantly increase world LNG trade and provide a highly secure, economical and flexible way to expand LNG imports and augment the nation’s energy supply,” Abraham said. “CGI’s report couldn’t have come at a more advantageous time. My meeting last month with the National Petroleum Council raised concerns about natural gas supplies in the United States. Innovative ideas such as the Bishop Process could make all the difference.”

Currently, LNG is unloaded from ocean-going tankers and stored in above-ground storage tanks specially designed to hold the liquid before it can be regasified. Under the proposed Bishop Process, LNG would be received directly from an offshore tanker, pressurized and warmed to 40o F, and then injected into underground salt caverns for storage, thereby effectively eliminating the need to build expensive above-ground cryogenic storage tanks, while simultaneously increasing the storage capacity potential of LNG imports, CGI said.

The company noted that the process is considered a success based on its use of a novel low-cost seawater heat exchanger, adding that traditional heat exchangers use natural gas to heat the LNG. The traditional method cannot keep up with tanker offloading rates at marine terminals, while CGI says its unique high volume, high-pressure heat exchanger enables shorter unloading times. “In addition, ship unloading can be accomplished miles from the storage caverns, providing further security and siting flexibility,” the company said.

The CGI feasibility study joins the recent surge in LNG activity sparked by Federal Reserve Chairman Alan Greenspan’s recent pro-LNG testimony before the House Energy and Commerce Committee. During his June testimony (see Daily GPI, June 11), Greenspan called for an expanded ability to import more LNG in an effort to stabilize the U.S. market for natural gas.

Ultimately, CGI said the Bishop Process could enable the development of LNG receiving and storage facilities that are faster and less expensive to build, and have higher storage and “takeaway” capability than today’s tank terminals. The company noted that salt cavern locations suitable for storage in proximity to significant natural gas distribution systems have been found both onshore and offshore in many LNG-importing areas of the world. CGI noted that in the United States, there are over 1,000 salt caverns being used for hydrocarbon storage and delivery, including the Strategic Petroleum Reserve’s four sites.

However, field tests are required to determine the critical elements needed to reach operational success before the industry moves forward in constructing an LNG receiving facility based on the Bishop Process. The Department of Energy’s National Energy Technology Laboratory, CGI and several industry partners are currently working to define the procedures and costs for these tests. Critical elements to be addressed include:

The DOE said the total cost of the feasibility study was $168,450, of which DOE provided $134,750 and CGI contributed $33,700.

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