An uncomplicated means of extracting value from inconvenient associated gas at remote offshore sites? Or for small but easily expanded marine gas transportation schemes? All bound up in an approach where four-fifths of the cost is in straightforward shipbuilding? Adrian Cottrill gets caught up in the enthusiasm of Calgary-based David Stenning.
As a method for bulk transportation of natural gas, it is elegantly simple. Take a ten mile length of inexpensive standard six inch diameter steel linepipe.
Coil up that pipe into a tight bundle, 50ft across and 11ft high. Then pump it full of gas to a pressure of 3000psi. Christen your invention 'Coselle', derived from 'coiled' and 'carousel'.
Take, say, just over a hundred of these Coselles, and fill a ship with them. Match this up with conventional, moored offshore loading systems, throw in the bonus of minimal need for gas treatment before transport, and you have just found yourself an interesting niche in the market. That, at least, is the theory driving the small Calgary-based company Cran & Stenning Technology.
In the two years since the Coselle idea emerged into the public eye it has been moving steadily along the development path and attracting increasing interest in a number of worthwhile quarters.
'We fit into a middle-distance gap between submarine pipelines and gas liquefaction, both of which require relatively large threshold volumes,' says David Stenning, the engineering half of the Cran & Stenning duo, in his Calgary office. 'Our big market is stranded gas that is within 2000 miles of a market.'
Potential use of Coselles in that role has, for example, been getting an extremely good press on Canada's east coast, where the Newfoundland provincial government is even now in the final stages of a wide-ranging series of utilisation studies for the gas from its offshore sector.
'There have been three independent studies of Coselles versus the alternatives for Canada's east coast,' says Stenning, 'and all three rank us at the top.' A 1998 exercise for Newfoundland industry group NOIA concluded: 'Coselle transportation has significant merit, especially for early field development or exploitation of associated gas from existing platforms'.
Last year Fluor Daniel similarly stated that Coselles 'offer the best potential for commercially utilising solution gas on Canada's east coast'.
And Worley's Rick Bresler, speaking at the annual conference in St John's in June this year, gave the technology a high rating in his very thorough status review of 'non-pipeline options' for Newfoundland offshore gas development.
'Coselles offer useful advantages for stranded gas, and there are no significant technical hurdles,' he said.
The Newfoundland connection has just been further strengthened by July's announcement by Canadian Imperial Venture Corp that it has entered into a joint venture agreement with Cran & Stenning 'to develop, market and licence Coselle technology in Atlantic Canada'.
Canadian Imperial sees the technology as 'suitable for the Atlantic offshore in general and Newfoundland in particular', and 'is enthusiastic over the business opportunities, in particular for an early initiation of Marquise natural gas park at Argentia' (part-owned by the company).
'But the big question is, when will Newfoundland operators want to start commercial production of gas, rather than re-injection?' notes Stenning. That may be some way down the road. But he is confident that 'when gas is ready to come off the Grand Banks, we are the cheapest and most flexible option'.
Canada's east coast is not the only region high on the Coselle hitlist. Other possibilities being considered include moving Sakhalin gas to Japan, Korea and China; as well as routes across the Mediterranean from North Africa to Europe, and from the Middle East to India.
Stranded gas in the deepwater US Gulf and North Sea is also an attractive prospect, as are some opportunities in the Caribbean and south-east Asia.
All this is of great comfort to Stenning as he and partner James Cran push Coselles ever onwards to commercial acceptance. They began this crusade in 1995 when they saw that for many markets LNG was too expensive and pipelines were not feasible.
After examining the shipping of compressed natural gas using conventional pressure cylinders, they concluded that a less expensive method of containment was needed. Borrowing from the coiled tubing and reeled pipelay industries, the Coselle was born.
For much of his earlier career, Stenning had been concerned with Arctic offshore activity. For seven years from 1977, he was Dome Petroleum's supervisor of offshore engineering, concerned with such projects as the SSDC exploration unit used in the Beaufort Sea.
Later he was also involved with Sohio's Mukluk exploration island in the Alaskan Beaufort, as well as doing a good deal of environmental work in the north.
'With Coselles we think we can do better than any other option in a number of settings, both for stranded gas and medium distance marine transportation from gas producing regions,' he says. 'Indeed for gas stranded offshore there is nothing else - it's either Coselles or re-injection.'
So a gas source yielding something around 400 million cubic feet per day, with a handy market within, say, a delivery distance bracket of 500 to 1500 miles would suit him fine. Even just 50 million cfd could be viable. Giant volumes of gas and greater distances bring in the competition.
'Our big competitors are LNG and pipelines,' Stenning points out, 'we sit between them. We can start at lower volumes, can use standard systems for loading and offloading, and can transport associated gas without having to clean it up to the point necessary for LNG.'
Stenning concedes that LNG ships are more efficient at carrying gas, because liquefaction reduces gas volume by a factor of 600, compared with a factor of between 250 and 300 for compressed natural gas. 'We are not nearly as efficient on the sea, but we avoid the huge costs of a liquefaction plant at one end and re-gasification facilities at the other.'
The Coselle is of course not the only compressed natural gas initiative around. There are other approaches such as 36in diameter tubes as long as their transport barge, or bottles in composite materials.
However, 'no-one else is anywhere near as far ahead as us on safety, regulatory approvals or economic evaluations,' reckons Stenning. 'And we have solid patent protection covering the Coselle and several peripheral issues, including loading and unloading methodology.'
At the heart of the Coselle philosophy is the choice of ordinary linepipe as opposed to special, and expensive, pressure vessels: 'That's the biggest cost factor,' says Stenning. 'For $600/t you can get high quality, high-strength ductile pipe that is mass produced in enormous quantities.' Even when formed into a Coselle, cost only reaches $1000/t, he says. In contrast, pressure vessels cost about $5000/t.
The Coselle proposal has its roots in work started by Cran & Stenning in 1995. In 1996, Enron Transportation Services provided funding for preliminary engineering of the concept as part of a wider feasibility study of the entire spectrum of pressure vessels. With Coselles looking promising, about $2.5 million was spent on aspects of design and on ship classification issues.
Coselles emerged into the public gaze in mid-1998 when Enron granted Cran & Stenning the worldwide right to use and licence the technology and the Calgary duo were able to unveil their concept as a promising proposition for industry to take to final development and implementation.
The next big step was a seven month, half-million dollar joint industry project ending in February this year. The eight participants were Conoco, Mobil, BG, Fluor Daniel, McDermott, BHP, Chevron and Shell. (This summer, Marathon also joined the group for ongoing work.)
That JIP proved the ability of Coselles to be loaded with gas offshore, and looked at aspects of handling and how produced liquids behave. One result was a switch in emphasis to associated gas, with its greater mix of constituents, instead of the fully processed, cleaned-up gas assumed in earlier work.
Shipyard costs were developed, with the conclusion that Korean yards would price a first vessel at $110-120 million. Significantly, the JIP concluded that marine terminals would require no new technology and that the same loading systems as currently used for oil could easily be adapted to serve for Coselles as well. The JIP also looked into pipe coiling, for example taking advantage of McDermott's reelship expertise.
The next JIP phase will take the big jump: demonstrating the manufacturing techniques for Coselles. First stage of this work will be to build and test a prototype Coselle at a cost of about $500,000.
A second stage will be to develop full-scale fabrication capacity for Coselles, working with a future fabricator. However, 'you are looking at $5-8 million to set up the facility,' points out Stenning, and this phase is unlikely to kick off until a pilot project has been developed. 'Building a few Coselles is uneconomic - it's the old chicken and egg situation.'
Before that phase, Cran & Stenning is aiming to find a pilot project to test the broad principles in a commercial venture, but for the time being using straight pipe. That will allow most of the elements - for example pigging - to be proved.
A strong contender for such a pilot project has been identified: moving Venezuelan gas to Curacao for electricity generation and water desalination. 'Since the distance is only about 130 miles, three barges and one tug could meet the full present demand,' says Stenning.
Two companies are said to be interested in executing feasibility studies, and a start to construction could be made by the middle of next year. Likely cost of the scheme is put at around $20 million.
Describing the overall Coselle transportation sequence, Stenning says: 'We can transport a wide range of gas qualities, including rich associated gas. On the production platform we probably need a second dehydration stage, and compression facilities - there's usually plenty of that available.'
On the transport vessel, all valves and fittings are above deck in a manifold system that provides a common link to the Coselles in the hold. That hold is filled with an inert atmosphere of nitrogen. Focus of work at present is on a Panamax size vessel carrying 108 Coselles, stacked six high. This has capacity for 330 million cubic feet of gas (a gas weight of 7700t).
If a Coselle were to leak, low pressure venting protects the hold, while high pressure venting is provided for each Coselle. Transport temperature depends on the application but is currently put at between 10°C and 40°C, though 'we would like to go to -20°C'.
Unloading is a mirror image of loading, emptying the pipes to a pressure of 10 atmospheres, leaving about 3-5percent of the gas. Typical time to load or unload such a vessel is put at around 18 hours.
As to the amount of energy consumed in the delivery process: the Coselle method is claimed to eat up only 5 percent (just compression and running the ships), while the gas-to-liquids approach consumes a massive 38 percent. LNG comes in at 14 percent.
Asked why a pipe diameter of 6in has been chosen, Stenning points out that while storage capacity increases with the square of pipe diameter, pipe wall thickness also goes up, taking steel weight with it.
'The volume of gas that can be stored is directly proportional to steel weight. So you lose nothing by choosing a relatively small diameter. It also allows a tighter bending radius.'
The small diameter of the Coselle pipe yields major safety advantages. Even if the pipe is fully ruptured, the flow of gas is choked by the pipe, restricting the rate at which the Coselle decompresses.
'In any case, the minute we get a leak we'll vent it through the high pressure system, while in the hold the low pressure venting system kicks in,' points out Stenning. 'We can take a full rupture of a Coselle and nothing happens.
A further advantage is that the thin-walled linepipe is more ductile than pressure vessel steel, so a crack will not propagate quickly and the Coselle will leak before failure, allowing time for venting.
'Both DnV and ABS agree that a "first principles" approach to Coselles is needed,' he continues. 'This leads to safety factors more like pipeline codes than pressure vessel codes. A Coselle is after all a 10 mile pipeline in an inert atmosphere - it has no heads and is inspected like a pipeline: by intelligent ultrasonic pig.
'ABS has provided classification guidelines and approval in principle, and DnV has carried out the safety study, concluding that we are at least as safe as other gas ships,' says Stenning. 'It helps us that LNG has a great safety record.'
With the innovative and flexible Coselle technology allowing the sort of phased approach to transportation which is not possible with trunk pipelines and LNG schemes, Cran and Stenning give every appearance of being on a roll. They also see room for further improvement. 'Work to date has taken a conservative approach in most areas of design,' they say. '
The key to lowering costs further is to store more gas per tonne of steel. The three main ways to do this - all within normal engineering practice - are: increase steel strength (from X70 to X80); lower gas temperature; and/or increase allowable working stress. These could yield a 30 percent improvement.'
By Adrian Cottrill
© 2000 Mena Report (www.menareport.com)