Poster PO-53

LNG TRANSPORTATION BASED ON A HUB-AND-SPOKE SYSTEM Yasuhiro Uodome Manager Osaka Gas Co., Ltd. Osaka, Japan

ABSTRACT Demand for LNG is growing continuously in Japan, reflecting the proposal of the “IGF (Integrated Gas Family) 21 Plan,” which promotes the use of natural gas to improve safety in gas supply operation and to take advantage of its superb environmental characteristics and excellent supply stability, rising concerns for the environment, and hikes in crude oil prices. However, since Japan relies on imports for its natural gas supply, the stable procurement of LNG is a crucial issue for local gas companies that do not have their own LNG import terminals. To respond to the needs of local gas companies, Osaka Gas is supplying LNG stably to these companies by using its LNG import terminals as hub facilities. To deliver natural gas to local gas companies, Osaka Gas uses a variety of transportation modes to suit the conditions and situations of each customer. ①

Ground transportation by using LNG lorry trucks

②

Freight transportation by using bulk containers

③ Marine transportation by costal tankers Osaka Gas will continue its efforts to ensure a stable supply of natural gas by flexibly responding to the needs of local gas companies.

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1. INTRODUCTION 1.1 Japan's import of LNG LNG has been commercially available in the international marketplace since 1964. Japan began importing LNG from the United States (Alaska) in 1969. Approximately 2/3 of the imported LNG is used for generating electric power, and the remaining 1/3 is processed and supplied as city gas. In 2005, the amount of LNG imported into Japan reached 58 million tons, representing about 43% of all LNG transactions worldwide. This makes Japan the world's largest LNG importing country. Japan depends on imports for about 96.3% of its natural gas demand. Japan imports about 3/4 of the total LNG supply from countries in the Asia-Pacific region, such as Indonesia, Malaysia and Australia, and procures the rest from Qatar, Brunei, Oman, etc., in the Middle East as well as other regions around the world. 60 50 40 30 20

Amount of 2005 ：58.0 Million ton

M illion ton/yr

Oman：

A lgeria,etc O m an Q atar A ustralia M alaysia Indonesia UAE B runei U SA

２％

Qatar：１１％ Australia：１７％ Malaysia：２３％

Indonesia：２５％

10

ＵＡＥ ： ９％

USA：

２％

Brunei：１１％

0 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05

Figure 1. Japan's LNG imports 1.2 Current conditions of gas companies in Japan About 210 gas companies operate in Japan. Among them, about 158 supply natural gas.(Jan/2007) In Japan, LNG import terminals are located near large energy-consuming regions such major cities, and processed gas is supplied from the import terminals to customers through pipelines. However, there is no nationwide pipeline network in Japan and almost all gas companies supply gas independently by using their own pipelines. In January 1990, the Agency for Natural Resources and Energy of the Japanese Ministry of Economy, Trade and Industry proposed the “IGF (Integrated Gas Family) 21

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Plan” to promote the use of natural gas with the aim of improving safety in gas supply operation and taking advantage of its superb environmental characteristics and excellent supply stability. This plan proposes the conversion of city gas supplied by gas companies in Japan to natural gas or other high-calorie gas by 2010. Its ultimate goal is to convert all city gas supply to natural gas. Although many gas companies presently supply natural gas in Japan, there is a great difference in business scale between the major companies and small- to medium-size ones. The amount of gas supplied by Japan's four major companies, including Osaka Gas, accounts for about 80% of the whole. In recent years, increases in the financial burden resulting from investments in equipment and facilities necessary for natural gas conversion are forcing many small- and medium-sized gas companies to sell their businesses or merge with other companies. As such, conversion to natural gas is a major issue for small- and medium-sized gas companies. 1.3 LNG import terminals in Japan There are 22 LNG import terminals (including 3 terminals under construction or scheduled for construction), and most of them are owned by power or gas companies. In Japan, most of the LNG import terminals are concentrated in the areas facing the Pacific Ocean. Gas companies that do not have their own LNG import terminals must obtain LNG from a terminal in one way or another.

Number of ＬＮＧ Terminal : ２２

（Under construction or Planning :３）

Himeji Osaka Gas（’84） Nigata Kepco(’79) （’84） Sakaide（’10 Mizusima（’06 Okinawa Hatsukaichi （’10）

Zyoetsu（’12

Kawagoe （’97）

（’96）

Tokyo

Yanai（’90） Tobata（’77） Fukuoka（’93 Nagasaki（’03

Hiroshima Fukuoka

Oita Kagoshima（’96

（’90

Nagoya Osaka

Sendai（’97）

Ogishima（’98） Higashi Ogishima（’84） Sodegaura（’73） Futsu（’85）

Negishi（’69 Shimizu（’96） Senboku1 （’72） Chita LNG （’83）Chita Kyodo（’78） Senboku2 （’77） Chita Midorihama（’01） Yokkaichi LNG （’88） Sakai LNG（’05） Yokkaich Works（’91）

Figure 2. LNG import terminals in Japan

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2. OSAKA GAS' LNG DEALINGS 2.1 Osaka Gas' service area Osaka Gas' service area is indicated in green in the map below. Osaka Gas has two LNG terminal facilities in two locations: Himeji and Senboku in the southern part of Osaka. These LNG terminals receive LNG, gasify LNG and supply natural gas as city gas to customers. Himeji Terminal processes about 30% of the LNG imported by Osaka Gas, while Senboku Terminals handle the remaining 70%. The blue lines indicate Osaka Gas' high-pressure 4-MPa pipelines. The pipeline from Himeji Terminal meets the pipeline from Senboku Terminals at a location near Kyoto, and forms a loop. The red lines represent medium-pressure 1-MPa pipelines. The total length of the pipelines, including other low-pressure pipelines, amounts to 55,900 km (reference information: Earth's circumference = 40,000 km), and they deliver natural gas to some 6,700,000 households in the service area.

Number of Customers : 6.7million Total Length of Pipeline : 55,900Km

Figure 3. Osaka Gas service area 2.2 Amount and scale of LNG imported by Osaka Gas In 2005, Osaka Gas imported approximately 6,790,000 tons of LNG. Himeji Terminal receives about 30% of the total based on the ratio of LNG processing, and Senboku Terminals receive the remaining 70%. Senboku Terminals are the third largest LNG import base in Japan in terms of both tank capacity and transaction volume, while Himeji Terminal ranks seventh in tank capacity and tenth in transaction volume.

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Boasting these large-scale LNG import terminals, Osaka Gas is the second largest gas company in Japan. However, the company's natural gas pipeline network covers a limited area, extending about 50 to 100 km from Osaka, which is a huge natural-gas-consuming city.

Amount of 2005： ６.７９Million ton

×103ton 70

Himeji SenbokuⅡ

60 50

Himeji：２９

SenbokuⅠ

40 30

SenbokuⅡ：５９

20 10 0

Senboku 1：１２

83

85

87

89

91

93

95

97

99

01

03

05

Figure 4. LNG imported by Osaka Gas 3. LNG transportation based on a hub-and-spoke system 3.1 System outline As stated earlier, local gas companies that have not switched their gas supply to natural gas are small in business scale, located in low-demand areas, and situated away from existing LNG import terminals. These are the main factors that are causing a delay in the conversion to natural gas. In order to further promote the use of LNG in the future, it is essential to ensure long-term stability of LNG supply to local gas companies. Local gas companies must find a way to procure LNG since they do not have their own LNG import terminals. Osaka Gas uses its LNG import terminals as hub facilities to meet local gas company needs for the stable supply of LNG. Himeji Terminal, which is located in the western part of the Osaka Gas service area, is especially active in ensuring a stable supply of LNG to local gas companies by using various transport methods to suit the actual situations of each customer. The following introduces the transportation methods used by Himeji Terminal. 3.1.1 Ground transportation by using LNG lorry trucks 3.1.2 Freight transportation by using bulk containers 3.1.3 Marine transportation by costal tankers

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Indonesia

local gas local gas company local gas company company

Malaysia Australia

LNG import terminal

Brunei Qatar

local gas local gas company local gas company company local gas local gas company local gas company company

Oman, etc Figure 5. Outline of Hub-and-Spoke System 3.1.1 Ground transportation by using LNG lorry trucks

Conversion of city gas to natural gas and the use of natural gas in the industrial sector have been promoted in recent years, in part due to the environmental friendliness of natural gas. As described previously, natural gas is sent through pipelines. For local gas companies that are not connected by pipeline, LNG is delivered mainly by lorry trucks. LNG lorry trucks transport gas to local gas companies and industrial customers located within a distance of about 200 km from the terminal. There are five lorry truck shipping gates at Himeji Terminal, and they are all equipped with loading arms. (Senboku Terminals have six gates, three of which are equipped with loading arms and the remaining three gates use flexible hoses.) Lorry trucks come in a variety of sizes, but each vehicle carries about 10 tons of LNG. As many as about 40 lorry trucks leave Himeji Terminal on a busy day. In total, Osaka Gas ships about 110,000 tons of LNG per year.

Figure 6. Lorry Truck Loading Facility

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Figure 7. Lorry Truck

3.1.2 Freight transportation by using bulk containers Diversifying the transportation methods is critical for ensuring a stable supply of LNG. In view of this, Osaka Gas also uses railroads to deliver LNG, since this transportation mode offers the following advantages. ①

Freight trains run on rails, thus ensuring stable and scheduled transportation. Freight transportation is less likely to be affected by the accumulation of snow in the northern parts of Japan where road conditions worsen due to snow during winter.

②

Freight transportation offers a cost benefit when the amount of transported LNG remains constant.

③

Freight trains do not use gasoline engines that produce emissions, thus helping to conserve the environment.

In November 2004, Osaka Gas began shipping LNG in bulk containers from Himeji Terminal. At present, the terminal delivers LNG in ten containers on a busy day to locations as far away as 400 km by rail. For the transportation of LNG by freight train, LNG is loaded into a container mounted on a dedicated trailer truck at the terminal. The container is then carried to the railroad station by the trailer truck. At the railroad station, the container is unloaded from the trailer truck and loaded onto a freight train. After the container is carried to the destination railroad station by train, it is unloaded from the train and loaded onto a trailer truck again to be transported to the destination local gas company.

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The bulk container used for freight transportation is structured like a Thermos bottle and has steel-frame reinforcement. It is designed to meet the stringent standards of strength required for railroad transportation. Each container can carry about ten tons of LNG, and two containers can be loaded on a freight train. Utmost caution is exercised to ensure safety, not to mention strict abidance of all laws.

Freight cars Himeji LNG Terminal

Trailer truck

Himeji Freight Station

Freight train(４０７ｋ

Freight Station

Trailer truck

Customer

Figure 8. Bulk container of freight cars 3.1.3 Marine transportation by coastal tankers The use of coastal tankers for the transportation of LNG has long been recognized as a safe and economical mode of LNG transport, but this method has been rarely used because priorities have been on the nationwide construction of medium-scale LNG import terminals and pipeline networks. However, since many cities and industrial areas are located in areas along the long coastlines of Japan, the marine transportation of LNG using coastal tankers is likely to draw greater attention in the future as an effective mode of LNG transport. Osaka Gas began using coastal tankers to convey LNG from Himeji Terminal in December 2005. The coastal tanker is a 2963-ton vessel and measures 86.2 m. It can carry about 1,000 tons of LNG. In a high-demand period, Himeji Terminal sends LNG using about ten coastal tankers per month.

Coastal Tanker

•

Specifications of tanker

・ Length: 86.2m ・ LNG load: 1,060t ・ Tonnage: 2,963 t

Figure 9. Costal tanker

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3.2 LNG transportation volume Figure 10 shows the amount of LNG shipped from Himeji Terminal. The red dots indicate local gas companies. The Osaka Gas satellite terminals are indicated by the light blue dots. The orange dots represent the customers who receive LNG by coastal tankers, and they are also local gas companies. In 2005, LNG was delivered in 6,310 lorry trucks and bulk containers, totaling 51,685 tons. Since the use of coastal tankers began near the end of that year, only ten coastal tankers delivered LNG totaling 9,998 tons in that year. All in all, Himeji Terminal shipped 62,480 tons of LNG. In addition, Senboku Terminals delivered LNG totaling approximately 50,000 tons in the year by using about 4,500 lorry trucks. Therefore, the total amount of LNG shipped by Osaka Gas is approximately 110,000 tons per year.

explanatory note

Station of freight cars

Red circle:City Gas Yellow circle: Industrial use Watery circle :Our company

Freight cars

Nihonkai

Kanazawa

Gas

Nov.’0 Nov.’04 4 Freight cars

Komatsu Gas

Fukui

Bulk container of freight cars

Takefu

Tsuruga Gas

Toyooka Energy （

Matsue

LNG lorry trucks LNG load: about 10t

Tottori Gas

Yonago Gas

Ogaki

Toho

Osaka Gas Sasayama Toshigas Itamisangy o

150k 100k Okayama

Dec.’05 Costal Fukuyama tanker

Mizushima

Gas

Osadano

Tsuyama

200k

Gas

Tango Gas Fukutiyama

Izumo

Hamada

Toho Gas （Kyu-Gifu）

Osaka Gas （

Toyooka Energy

50km Sumoto

City

Otsu City Ueno

Himeji LNG terminal

Kuwana

Toho Gas （Yokkaichi）

Osaka Senboku Gas Sakurai LNG

Kawachinagano Gas

Toshigas

Toho Gas （Okazaki）

Toho Gas （Tsu）

Gas Nabarikintetsu

Gas

Daiwa Gas Gojo Gas

Hiroshima Shikoku Gas

Yamaguchigodo

Costal tanker

Shikoku Gas

Ube

Nakama

Length:86.2m Saibu LNG load: Naogata

Shikoku Gas

Dec.’05 Costal tanker

Shipments of LNG from Himeji (’05) Trucks :51,485 ton, 6,310 lorries 10 cargos Tankers: 9,998 ton, Total :61,480 ton Shikoku Gas

Shingu

Gas

Figure 10. Location of LNG shipping 4. Summary Stable procurement of the LNG that is used as the source material for city gas is a very important issue for local gas companies, and Osaka Gas continues to address this issue in an effort to contribute to the long-term stability of gas supply to general users. As the demand for LNG is expected to continue growing in the future, the hub-andspoke system introduced in this paper will play an increasingly important role in LNG transportation. By using this system, Osaka Gas responds flexibly to LNG demand with the aim of contributing to the stable supply of city gas. PO-53.9