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Energy Trends, Technologies

and Jamaica Neville A. Tomlinson, BSME, MSME, Ph.D.

March 15, 2009

Abstract: Today, crude oil accounts for about 90 percent of Jamaica’s electricity production.

This high reliance on oil to produce electricity could pose significant economic challenges to Jamaica’s growth and development. Although global electricity price is expected to increase through 2030, prices will depend on the fuel or fuels used in generating the electricity. In response to emerging trends and to reduce electricity generation cost, Jamaica recently initiated a fuel diversification program aimed at reducing the almost unitary dependence on oil for its electricity. Studies however indicate that oil, coal and natural gas will remain the dominant electricity producing fuels through 2030 with increasingly high prices. Oil is expected to maintain the highest price followed by natural gas and then coal. Of these three, growing environmental concerns makes natural gas the most attractive fuel for use over the projected period. But, economic use of natural gas will depend on gas source, quality and transportation methods and will require a regulatory framework that addresses environmental and safety concerns. This paper considers world energy trends, technology and their implications for Jamaica.

Keywords: Oil, Coal, Natural Gas, CNG, LNG, Coselle, EIS, HAZOP,HAZID

Introduction In today’s global economy countries that have to purchase fossil fuels to produce energy are quite familiar with the paralyzing effects that high prices can have on their economy. Countries like Jamaica that falls into this category face the daunting challenge to develop savvy energy policies and programs to prevent economic collapse. Since the energy market is constantly fluctuating, the policies and programs designed to prevent economic collapse have to be based on world energy trends developed from sound mathematical models hinged on historical trends and existing market forces. This platform provides a sound basis for determining the most economical and suitable energy source or sources to fuel development and the production of electric power over a projected period, generally three or four decades. The importance of this cannot be overstated since energy or the lack of an economically adequate supply has been a key contributor to Jamaica’s economic decline over the past thirty years.

During this period Jamaica saw high electricity costs contributing to the steady migration of most of its industrial infrastructure to places where the cost was more favorable to operations. Of the few that remained, some have since slipped into cessation while others are marginally existing under the continued assault of high electricity prices.

In a move to stabilize and control electricity price, efforts are being directed at fuel diversification in Jamaica. The JPS which is the primary electric power provider in Jamaica uses heavy oil and diesel in about 90% of its power generation [1]. The remaining approximately 10% is generated through a combination of coal, hydro power and wind power. Presently there are proposals underway for the JPS to employ petroleum coke (petcoke) and compressed natural gas (CNG) as fuels in the production of electric power. This is in keeping with the fuel diversification philosophy, which is forward thinking and along the direction adopted by the developed countries

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of the world. The long term hope is that this preemptive move will see the eventual decrease in electricity prices, improve system reliability, and ultimately improve Jamaica’s attractiveness to investors.

This paper examines world energy trends, technologies and the impact these could have on Jamaica.

Energy Trends

It is now common knowledge that energy companies like the JPS is currently operating in a challenging environment. Outside the familiar uncertainties with regard to demand, fuel, labor, and new construction costs, they also must consider the potential impact of concerns surrounding energy-related green-house gas emissions. The investment community is already beginning to push energy companies to shift their investments towards less green-house gas intensive technologies [2].

According to the US Energy Information

Administration (EIA), the statistical arm of

the US Department of Energy, world marketed energy consumption is expected to increase by 50% from 2005 to

2030 [2]. The EIA further projects increased

world consumption of marketed energy from

all fuel sources over the projected 2005 to

2030 period (Figure 1).

Fossil fuels (liquid fuels and other petroleum products

1 natural gas, and coal) are expected

to continue supplying much of the energy used worldwide. Liquids supply the largest share of world energy consumption over the projected period, but the studies indicate that their share will fall from about the 37 percent recorded in 2005 to about 33 percent by 2030. This is largely in response to world oil prices projected to remain relatively high over this period [2].

Although world oil prices declined sharply at the end of 2008 with the slowing of world economies, a EIA revised study based on a reevaluation of long term fundamentals projects world oil prices to remain relatively high through 2030 (Figure 2) [3].

1 Liquid fuels and other petroleum products include petroleum derived and non-petroleum-derived fuels such as

ethanol, biodiesel, coal to liquids and gas (hydrogen, NGLs,) to liquids. Petcoke (a solid) is also included.

Figure 1. World Market Energy Use by Fuel Type, 1980-2030

Source: Energy Information Administration (EIA),

International Energy Annual 2005 (June-October 2007)

Figure 2. Energy Prices, 1980-2030 (2007 Dollars per MMBtu)

Source: Energy Information Administration (EIA), International

Annual Energy Outlook Early Release 2009

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Contributing to the uncertainties to world oil prices include the degree to which countries such as Russia, restrict economic access to potentially productive resources. Other uncertain factors include investment decisions which will affect the economic viability of unconventional liquids.

Oil price is expected to stay well above that of natural gas and coal through 2030. Over this projected period coal prices is expected to remain relatively steady and significantly lower than that of both oil and natural gas.

According to the EIA, coal and natural gas account for the largest increments in fuel consumption for electricity generation over the projected period. The 3.1-percent projected annual growth rate for coal-fired electricity

generation worldwide is exceeded only by the 3.7-percent rate for natural gas-fired generation (Figure 3) [2]. Sustained high prices for oil and natural gas make coal-fired generation more attractive economically, especially for coal-rich nations like China, India, and the United States.

The outlook for fossil-fuel-fired generation could be altered substantially by international agreements aimed at reducing greenhouse gas emissions. In the cross-hairs is the electric power sector which offers some of the most cost-effective opportunities for reducing carbon dioxide emissions in many countries. Coal—the world’s most widely used source of energy for electric power

generation—is also the most carbon-intensive. An implicit or explicit cost to emitters of carbon dioxide could see power providers adopting alternative no- or low-emission technologies that currently are commercially proven or under development, which could be used to replace some coal-fired generation [3].

In addition to developing technologies to minimize the harmful effects of fossil fuels to the environment, increased attention is now turning to the development of so called green or renewable energy sources. The increased attention emanates from the recent spike in oil prices and the crippling effects it displayed on some economies including the USA. Green energy sources – wind, solar, bio-fuels, hydro and geothermal, are being investigated if not as replacements, as sources capable of substantially reducing the dependence on fossil fuels. There are, however, significant hurdles to the efficient deployment and marketing of new, sustainable energy technologies, including high cost, adequate financing and information dissemination. Long technology lifecycle (LTL), and expensive infrastructure modifications are probably the two most detrimental hindrances to the immediate adoption of new energy technologies. LTL refers to the typically long life span of older technologies, up to between 40 and 50 years for power plants. Unless there is a mandated phase out of these old systems, such as the U.S. Clean Air Act to replace dirty coal fired power plants, there will be significant lag period between the development of new energy technologies and their full scale industrial and commercial use [4].

Figure 3. World Electricity Generation by Fuel, 1980-2030 Billion Kilowatt-hours

Source: 2005 Energy Information Administration (EIA), International Energy Annual 2005 (June -October 2007)

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Fossil Natural Gas

Until then, and against this backdrop Jamaica, without question, has to continue the use of fossil fuels as the primary source for electricity production. In the wake of projected high oil prices, the EIA forecast coal to remain the most economical through 2030 followed by natural gas.

The drawback with coal is the comparably significant insult to the atmosphere its emissions cause (Table 1). Presently existing scrubbing technologies to reduce these emissions are expensive. Research to develop cheaper alternative are ongoing, but even after research produces new alternatives it could be several years, as much as a decade, before these alternatives are commercially and economically available. In retrospect, the projected cost for oil and the problems with coal leaves natural gas as the remaining viable alternative that Jamaica may have to rely on as it struggles to regain economic prosperity.

When considering natural gas, it is

important to be mindful that fossil

natural gas has its more than fair

share of problems and concerns.

Wellhead natural gas generally

comes associated with a variety of

other compounds which usually

requires removal prior to final use.

These compounds include

principally ethane, propane,

butane, and pentanes and in

addition water vapor, hydrogen

sulfide, carbon dioxide, helium,

nitrogen, oxygen and other

compounds including elemental

mercury. The amount of each

compound depends on the gas

source. Table 2 provides an

indication of the typical

composition of wellhead natural

gas [5].

Table 1: Fossil Fuel Emission Levels - Pounds per Billion Btu of Energy Input

Pollutant Natural Gas Oil Coal

Carbon Dioxide 117,000 164,000 208,000

Carbon Monoxide 40 33 208

Nitrogen Oxides 92 448 457

Sulfur Dioxide 1 1,122 2,591

Particulates 7 84 2,744

Mercury 0.000 0.007 0.016

Source: EIA - Natural Gas Issues and Trends 1998

Table 2: Typical Composition of Natural Gas

Class Component Formula Shorthand Percentage

Hydrocarbons Methane CH4 C1 70-90%

Ethane C2H6 C2

0-20% Propane C3H8 C3

i-Butane iC4H10 iC4

n-Butane nC4H10 nC4 0-8%

i-Pentane iC5H12 iC5 0-0.2%

n-Pentane nC5H12 nC5 0-5%

Cyclopentane C5H10 0-5%

Hexanes and heavier

C6+

Inert Gases Nitrogen N2 N2 0-5%

Helium He trace

Argon A trace

Hydrogen H2 H2 trace

Oxygen O2 O2 0-0.2%

Acid Gases Hydrogen Sulfide H2S H2S 0-5%

Carbon Dioxide CO2 CO2 0-8%

Sulfur Compounds

Mercaptions, Sulfides, Disulfides

R-SH,R-S-R’,R-S-S-R’

trace

Water Vapor H2O trace

Liquid Slugs Free water or brine, Methanol

- , CH3OH

trace

Solids Iron Sulfide FeS trace

Source: [4], NGSA

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The ethane, propane and butane in the gas

composition are termed natural gas liquids (NGLs)

and are very valuable by-products in the gas

stream. They are generally separated and sold

separately for a variety of uses including use as

other sources of energy.

Although mercury in natural gas is normally at low levels, some gases contain sufficiently high mercury concentrations to cause both safety and health concerns. Table 3 shows the concentration of mercury found in wellhead natural gas in a number of countries [6]. Abott and Openshaw noted that much higher levels have been found in individual wells and that the highest known concentration is 4400 µg/ Nm

3 from a well in

Germany. Rios et al (1998) earlier noted that South East Asian gases tend to have the higher levels of elemental mercury, whereas the United States gulf coast gases are usually relatively low, but a wide variation can come from a given region [6].

In general, the amount of each compound permitted in the natural gas sent to a facility or end user is dependent on regulatory or contractual requirements.

When considering the use of natural gas, especially as the fuel source in power plant facilities, it is important to know the gas composition since it will directly impact the facility and equipment design. Facilities designed to accommodate a wide range of gas composition are generally more capital intensive.

Natural Gas Transportation

The movement of natural gas from production to consumption regions requires an extensive and elaborate transportation system. In many instances, natura.gas produced from a particular well will have to travel a great distance to reach its point of use. Transportation modes usually include pipelines or specially designed ships.

Transportation of natural gas to Jamaica would invariably be by ships since Jamaica lies hundreds and in some instances thousands of miles away from gas producing sources.

Traditionally, trans-ocean natural gas shipment is achieved firstly by converting the gas to a liquid, termed liquefied natural gas or LNG. Once liquefied, the gas can then be stored in containers for shipment. LNG is formed when natural gas is cooled to about -260°F (-160°C) at normal pressure. AT this low temperature LNG occupies about one six hundredth the volume of the gas at the same normal pressure. Typically LNG is transported by specialized tankers designed with insulated storage containers and the gas is kept in liquid form through a process termed autorefrigeration.

The increasing use of LNG is allowing for the production and marketing of natural gas deposits that were previously economically unrecoverable. Shipped LNG requires a receiving terminal which includes storage, regassification and sendout facilities. These terminals can be capital intensive, although recent advances in materials and design concepts are resulting in some cost savings. The use of LNG has been increasing steadily over the last few years in response to the promise that natural gas is as a greener source of fuel. Currently LNG accounts for about 2.8% of the natural gas consumed in the US and this figure is expected to increase to about 16% by 2030 according to the US Department of energy. This ambitious projection is expected to face significant opposition by some

Table 3: Elemental Mercury Levels in Wellhead Natural gas from Different Countries.

Location

Elemental Mercury Levels in

µg/ Nm3 (ppbv)

South America 69-119 (8 to 13)

Far East 58-93 (6 to 10)

North Africa 0.3 -130 (0.03 to 15)

Gronigen (Germany) 180 (20)

Middle East 1-9 (0.1 to 1)

Eastern US (pipeline) 0.019-0.44 (0.002 to 0.05)

Mid West US (pipeline) 0.001-0.10 (0.0001 to 0.01)

North America 0.005-0.04 (0.0004 to 0.004)

Source: [6]

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communities.

Construction of a new LNG terminal in the United States involves a rigorous permitting process involving federal, state and local agencies. A typical facility requires over 40 permits. As part of the permitting process, all proposed facilities are required to submit an Environmental Impact Statement (EIS) to the Federal Energy Regulatory Commission (FERC) which evaluates the risk to nearby communities. Approvals to construct new facilities depend on the content of the submittals to the various regulatory agencies. The high cost of transporting and storing LNG as a consequence of the its cryogenic nature has caused engineers to look for other modes of transportation, storage and distribution of the gas.

A developing phenomenon for trans-ocean shipment of natural gas is to ship the gas compressed to about 1% of its original volume. In this compressed state the gas is at pressures ranging from 2000 to 2500 psi. In some instances gas can be compressed to as high as 5000 psi. The underlying concept is that the gas, compressed to this

high pressure, can be made to occupy one six hundred of its original volume, much like LNG, but without the engineering challenges posed by LNG.

Cran and Stennings [7] developed the Coselle method for transporting large volumes of compressed natural gas.

This storage containment system, patented by Sea NG, is based on the principle that the compressed gas is safer to transport in small diameter pipes than in large vessels. Simply, a small diameter pipe approximately ten miles long is wound into a cylindrical storage container. This small diameter, high-strength pipe is coiled into a reel-like structure, called a carousel. The carousel provides support and protection for the transportation and stacking of Coselles. The name “Coselle” originates from a contraction of the words “coil” and “carousel” and is a unique industry term developed a decade ago [7].

The size of a Coselle may range from about 50 to 65 feet in diameter and 8 to 15 feet in height, and could weigh as much as about 550 tons. A single Coselle is designed to carry about 3.0 million standard cubic feet (mmscf) of natural gas, depending on the Coselle dimensions and the gas

temperature, pressure and composition. The Coselles are connected by a proprietary manifold and control system [8].

Other companies such as EnerSea are involved in research and development of alternative methods for transporting CNG. However, Sea NG Corporation is the first and currently the only company granted approval by the American Bureau of Shipping to build ships for the transportation of CNG [9]

Fig 4. LNG Delivery Facility with Tanker

Source: NGSA

Figure 5: Coselle

Source: Sea NG

Figure 6: CNG Ship (Source: Biopact)

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The complete Coselle CNG delivery system consists of a ship fitted with loading and offloading equipment. The size of the ship is defined in terms of its carrying capacity and Sea NG has developed several ship designs ranging in gas carrying capacity from 50 to 450 mmscf.

Studies have shown that the transportation of natural gas in the form of CNG is more economical than transportation as LNG when the shipping distance is less than 2500 miles [10]. Of the twenty top natural gas producing countries in the world (Table 4) [11] only shipment from Venezuela, Canada and the United States satisfy this finding for Jamaica.

Safety & Regulations

Despite its promise, and unlike LNG which has a mature set of regulations, trans-ocean CNG technology is not proven and there are no existing regulations governing the design, construction and safety of CNG trans-ocean shipping and receiving facilities.

Jamaica stands in line to be one of the first countries to receive CNG, transported in ships employing the Coselle technology. Since no regulation currently exist for CNG transported by ships for use in electric power generation facilities that Jamaica could adopt or used to benchmark the safe design of such CNG system, it is therefore essential that Jamaica develop a regulatory framework to govern the operation of CNG systems within its borders. The regulations should be applicable to both offshore and onshore facilities including the mooring or anchoring of marine vessels containing CNG.

Table 4: Estimated Natural Gas Reserves By Country, January 2009

Rank Country

Proved reserves

(trillion cu ft) Rank Country

Proved reserves (trillion cu ft)

1 Russia 1,680 11 Indonesia 106

2 Iran 991 12 Turkmenistan 94

3 Qatar 891 13 Kazakhstan 85

4 Saudi Arabia 258 14 Malaysia 83

5 United Arab Emirates 214 15 Norway 81

6 United States 237 16 China 80

7 Nigeria 184 17 Uzbekistan 65

8 Venezuela 170 18 Kuwait 63

9 Algeria 159 19 Egypt 58

10 Iraq 111 20 Canada 57

Top 20 countries Total 5,667

Rest of the World Total 587

World Total 6,254 NOTE: Proved reserves are estimated with reasonable certainty to be recoverable with present technology and prices Source: Oil & Gas Journal, Vol. 106. 48 (Dec. 22, 2008). From: U.S. Energy Information Administration

Additionally, before any CNG system is allowed to operate in Jamaica, the Jamaica authority having jurisdiction over the facility should mandate the preparation of an environmental impact study (EIS), a hazard operation (HAZOP) study and hazard identification (HAZID) report by the project for its review. These reports empower regulators to assess the feasibility of a proposed facility and ensure that decision-makers consider environmental impacts, identify hazards and develop mitigating measures against hazardous operations for a project before deciding to proceed.

The fragile nature of Jamaica’s economy, compounded by the engulfing global economic crisis, leaves Jamaica with no room for errors in the adaptation of emerging and unproven technology as associated with CNG.

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Comprehensive engineering and regulations that prioritize safety, environmental concerns and above all Jamaica’s interest will minimize Jamaica’s exposure to unforeseen issues.

Conclusion

As Jamaica prepares to embrace emerging energy technologies, in a bid to stem the rising cost of electricity, diversify its fuel sources and participate in the reduction of greenhouse gas emissions, natural gas emerges as the most suitable fuel for achieving these goals in light of world energy trends. Since Jamaica does not have its own indigenous natural gas source, importing it as LNG or CNG are the two options the country must confront. Importation as LNG can be capital intensive requiring specialized storage, regassification and sendout facilities. Positive factors in favor of LNG however are the well established and robust set of design standards and regulations governing LNG use that could be adopted when considering this option. Importation as CNG, on the other hand, is less cost intensive but CNG technology is in its infancy, is unproven and does not have an established set of design standards and regulations for adoption when considering the option to use CNG.

Since the JPS is currently engaged in the development of an electricity generating facility using CNG as the fuel source, it is prudent that Jamaica embark on developing a comprehensive set of design standards and regulations to govern all natural gas and in particular all CNG facilities within its borders.

References

[1] Energy & High Performance Facility Sourcebook, Katrina Buff, Association of Energy Engineers Edition: illustrated, Published by CRC Press, 2003, pp. 30.

[2] International Energy Outlook, Energy Information Administration, June 2008.

[3] Annual Energy Outlook Early Release Overview, Energy Information Administration, December 2008.

[4] Oilfield Processing of Petroleum: Natural Gas, Vol 1, Francis S. Manning, Richard E. Thompson, pp. 5, PennWell Books 1991, ISBN 0878143432, 9780878143436.

[5] Global Trends in Energy Technology Innovations, William Pretorius, Environmental Chemistry.com, June 18, 2007.

[6] Fundamental of Natural Gas Processing, A. J. Kidnay, William Parrish, pp 216, CRC, 1’st Edition, 2006.

[7] Solutions, Barnes and Click Inc, January 2003.

[8] A quick look at CNG Ships, Biopact, September 5, 2007.

[9] Alternative Transportation Fuels Today, September 28, 2006.

[10] CNG: An Alternative Transport for Natural Gas Instead of LNG, Asim Deshpande and Michael J. Economides, University of Houston, 2004.

[11] Oil & Gas Journal, Vol. 106. 48 (Dec. 22, 2008). From: Energy Information Administration.