Gladstone LNG

Image Source : Santos Assets - GLNG

Location : Curtis Island, Gladstone, Queensland

In 1954, Santos was founded, with its name derived from the acronym for South Australia Northern Territory Oil Search. In 1963, the company made its first major discovery of natural gas in the Cooper Basin. In the 1980’s, Santos keenly developed a major liquids business and by 1990’s it was a sprawling enterprise with interests in multiple petroleum provinces. The unfortunate earthquake and tsunami, that led to a meltdown at the Fukushima Nuclear reactor in 2011, triggered a near-complete shutdown of Japan’s nuclear power capabilities, which at the time accounted for 30% of Japanese generating capacity. This triggered a boom in LNG demand and in many ways contributed to the sanctioning of the Gladstone LNG (GLNG) project along with 2 other projects in the region.

The GLNG project owned by Santos, Petronas, Total and KOGAS, is built on Curtis Island in Queensland, Australia on the edge of the Great Barrier Reef. The plant consumes Coal Seam Gas (CSG) resources from Surat and Bowen basins in south-east Queensland, which is brought on-shore through a 420-kilometer underground gas transmission pipeline. The maiden cargo from the first train was shipped on 16 October 2015, while the second train started production on 26 May 2016. The 2 trains have a combined capacity of 7.8 MMTPA, almost all of which is committed through sales and purchase agreements with PETRONAS and KOGAS.

In recent years, abundant availability of gas has triggered multiple plants being commissioned in the United States and several other countries worldwide. This has led to oversupply in the LNG market, which when compounded with the high capital costs of Australian LNG plants and the excessive operating costs of the CSG fields, has raised serious questions on the competitiveness of LNG exports from Gladstone.¹ Depletion of traditional east coast reserves, which catered to the domestic gas demand, now threatens diverting CSG from export to domestic use.² In July 2017, the Australian Government introduced the Australian Domestic Gas Security Mechanism (ADGSM), which has the power to restrict LNG exports from Gladstone to protect local supply.³ In June 2017, the Institute for Energy Economics and Financial Analysis (IEEFA) made a shocking prediction, which forecasted production shutdown at GLNG within 2 years.⁴

Santos focusses its community investment strategy on shared outcomes, education and community vibrancy, this includes caring for the natural environment (land, air and water projects), developing a future for young people & the region and investing in community health. The GLNG project invested $210 million to upgrade rural roads in the region. The company works with Aboriginal communities and offers employment, training, education and enterprise opportunity.

The company’s Environment, Health and Safety Management System (EHSMS) covers multiple aspects including improving air quality, protecting biodiversity and land, climate change performance, prevention of incidents and spills, efficient waste management and the protection and management of water resources. Santos is involved with various initiatives such as the Witchelina Nature Reserve, research on southern right whales in the Great Australian Bight and securing 25,700 hectares of land on Curtis Island for conservation and protection, in cooperation with 2 other LNG projects in the area.

OWNERSHIP (Equity %)

Santos Limited	30.00%
PETRONAS	27.50%
Total	27.50%
KOGAS	15.00%

General Data

Estimated Capital Cost (USD)	4.25B Per Train
Plant Type	Onshore Modular
Plant Stage	Operating
Final Investment Decision (FID) Year	2011
FEED Contractor	Foster Wheeler Bechtel
EPC Contractor	Bechtel
No. of Trains / capacity	2 Trains / 3.9 MMTPA each
Production Start Year	2015 (Train 1) 2016 (Train 2)
Products	LNG
Gas Type	Coal Bed Methane (CBM)

Technical Data

Cooling Media	Air
Liquefaction Technology	CoP Optimized Cascade®
Refrigeration Train Details:
Propane Strings 1 & 2
Driver	GE PGT25+G4 DLE (with Inlet Air Chilling) Aeroderivative Gas Turbine
Gearbox	Double Helical Speed Reduction Gearbox
Medium Pressure (MP)/ High Pressure (HP) Propane Compressor	3MCL1002 GE (Nuovo Pignone) Horizontally Split Centrifugal Compressor
Low Pressure (LP) Propane Compressor	DMCL1004 GE (Nuovo Pignone) Horizontally Split Centrifugal Compressor
Ethylene Strings 1 & 2
Driver	GE PGT25+G4 DLE (with Inlet Air Chilling) Aeroderivative Gas Turbine
High Pressure (HP) Ethylene Compressor	MCL804 GE (Nuovo Pignone) Horizontally Split Centrifugal Compressor
Gearbox	Double Helical Speed Reduction Gearbox
Low Pressure (LP) Ethylene Compressor	MCL1404 GE (Nuovo Pignone) Horizontally Split Centrifugal Compressor
Methane Strings 1 & 2
Driver	GE PGT25+G4 DLE (with Inlet Air Chilling) Aeroderivative Gas Turbine
Low Pressure (LP) Methane Compressor	MCL806 GE (Nuovo Pignone) Horizontally Split Centrifugal Compressor
Medium Pressure (MP) Methane Compressor	MCL806 GE (Nuovo Pignone) Horizontally Split Centrifugal Compressor
High Pressure (HP) Methane Compressor	2BCL607 E (Nuovo Pignone) Radially Split Centrifugal Compressor
Power Generation	6 x Solar Titan 130 Gas Turbine Generators

Refrigeration Train Configuration

Key Facts

The shareholding of Gladstone LNG (GLNG) underwent a series of changes since the project’s conception by Santos in July 2007. In May 2008, PETRONAS came aboard as a 40% joint venture partner for an investment of USD 2 billion. In September 2010, Total of France acquired 15% from Santos and 5% from PETRONAS. Finally, in December 2010, KOGAS joined as a shareholder by acquiring 7.5% each from Santos & PETRONAS, while Total purchased an additional 7.5% stake from Santos, contributing USD 705.8 million to the development of the project. Currently, Santos holds 30%, PETRONAS and Total hold 27.5% each and KOGAS holds 15%.⁵
Two FEED studies were conducted for GLNG. Bechtel based its FEED study on the ConocoPhillips Optimized Cascade® Process while Foster Wheeler’s was based on the APCI AP-C3MR^TM process. Fluor was contracted for building upstream surface facilities, while Saipem was charged with construction of the gas transmission pipeline and John Holland for marine offloading facilities. The American engineering firm, AECOM was selected as Environmental consultants.^5,6
GLNG is an onshore modular plant with 111 modules, together tipping the scales at 44,000 metric tonnes. Atlantic, Gulf and Pacific Company of Manila Inc. (AG&P) was given the charge to build the modules for Bechtel. The largest module of Train 1 is the 2,500 tonnes chiller which is 48m long and 35m wide. ^7,8
In 2010, GLNG signed 20-year SPAs with PETRONAS of Malaysia and KOGAS of South Korea. PETRONAS agreed to purchase 3.5 MMTPA of LNG with 1.8 MMTPA supplied from Train 1 and 1.7 MMTPA from Train 2. KOGAS also purchased 3.5 MMTPA of LNG with 1.7 MMTPA supplied from Train 1 and 1.8 MMTPA from Train 2. These agreements are equivalent to approximately 9% of Malaysia’s and 11% of Korea’s domestic demand for LNG.⁹
In July 2013, Santos, operator of the Gladstone LNG project, and BG Group subsidiary QGC (now Shell), which operates the Queensland Curtis LNG project, agreed to connect the two pipelines that feed their plants provide enhanced flexibility during the projects’ lifetimes. The move was regarded as the first of many cooperation deals. The interconnect will allow flow of gas between the projects when required, maximizing plant productivity, especially during scheduled and unscheduled down times.¹⁰
Siemens received a 6-year contract from GLNG’s for preventative maintenance, remote monitoring, parts supply and field service for its 16 SGT-400 industrial gas turbines, 9 generator sets and 7 compressor sets. This became Siemens’ single largest service order for its small gas turbine line-up.¹¹
The first cargo from GLNG was shipped to KOGAS’ Incheon LNG terminal in South Korea onboard MISC Berhad operated 152,300m³ “Seri Bakti”.¹²
In 2014, Saipem was awarded Queensland Government’s Premier’s Sustainability Award for Innovation in Sustainable Technologies, demonstrated by designing and constructing the 4.3km long and 42-inch wide Narrows Marine Crossing, which is one longest trenchless marine pipeline in the world. Saipem used Tunnel Boring Machine and Pipe Thruster Machine to build a 4 meters wide undersea tunnel that would carry the pipeline across the vast tidal plains, without disturbing local marine habitat, wildlife and neighbouring coastal environment.¹³